Once you have established yourself as an ethereum miner and have purchased all the necessary equipment to build a suitable ethereum rig, you need to determine if you wish to remain a solo miner or become a part of an ethereum mining pool.
Each of these options has benefits and consequences and is dependent on your personal requirements and to some degree on the processing power of your ethereum mining hardware.
What is an ethereum mining pool?
A mining pool is when a group of solo ethereum miners join forces and combine their processing power for quicker mining results. The shared processing power helps to solve blocks faster and miners can see results quicker than when they mine solo. Each of the contributing miners is paid a share of the block based on their contribution.
The hashrate of the rig is determined by the processing power, so the increased resource of pooled ethereum rigs will result in more blocks generated in a shorter period of time.
Ethereum mining pools calculate payouts on different methods. A PPLNS payment basis, (Pay Per Last “N” Shares) involves some luck but offers on average 5% more than PPS (Pay Per Share) where you get a standard payout for each share completed.
Some pools also run on a predictable solo mining method where the person who contributed the most to the block gets the whole block.
It is important not to confuse ethereum mining pools with ethereum cloud mining. With cloud mining an organisation will own the rigs and do the mining on your behalf and pay you dividends, for mining pool each miner needs to own their own equipment and have software that enables them to join a pool and then earn a share of the blocks mined.
Best ethereum mining pool 2017
The top ethereum mining pool for 2017 is reported to be the joint mining pool of Ethpool and Ethermine. The two have separate sites and different payment methods (PPLNS and predictable solo) but the underlying pool is shared and currently makes up just over 25% of the hashrate network.
Ethermine has over 63000 active miners and Ethpool 1200. Combined they mine over 50 blocks per hour.
F2Pool, also known as Discus Fish, (contributing 21.6% of the hashrate) is based in Asia and Dwarfpool, with servers in Canada and France, (13.3% hashrate) are in second and third place respectively
A single mining pool should never exceed 50% of the hashrate network.
Ethereum Mining Pool vs Solo Mining
As with any option there are positive and negatives for choosing to join a mining pool versus mining solo. When mining solo you do not need to share your rewards with anyone but the chances of earning are significantly reduced and the time from investment to reward can be far longer.
The more mining pools in play, the more hashrate of the network the pools are using and the more difficult it becomes for solo miners to get blocks.
Solo mining is not recommended unless you have processing power over 100mhz.
To calculate the mining profits expected, use the ethereum mining calculator.
Choosing a mining pool
The most important factor in choosing a pool is the reliability of the pool and their reputation for paying correctly. The bigger pools would not have been successful if they did not meet the criteria of their miners so it is always safer to go with the well known.
However there are many ethereum pools available and the payout rates are different, so you may find it more profitable to choose a smaller pool and take the risk.
You should also consider investing in an ethereum hardware wallet as a safe place to store your ether.