Mining Pools and How They Work

The word mining originates in the context of the gold analogy for crypto currencies. Gold or precious metals are scarce, so mining Pools and How They Work digital tokens, and the only way to increase the total volume is through mining.

Ethereum, like all blockchain technologies, uses an incentive-driven model of security. Consensus is based on choosing the block with the highest total difficulty. Miners produce blocks which the others check for validity. The Ethereum blockchain is in many ways similar to the Bitcoin blockchain, although it does have some differences. As dictated by the protocol, the difficulty dynamically adjusts in such a way that on average one block is produced by the entire network every 15 seconds. We say that the network produces a blockchain with a 15 second block time.

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Ethash PoW is memory hard, making it ASIC resistant. Memory hardness is achieved with a proof of work algorithm that requires choosing subsets of a fixed resource dependent on the nonce and block header. As a special case, when you start up your node from scratch, mining will only start once the DAG is built for the current epoch. All the gas consumed by the execution of all the transactions in the block submitted by the winning miner is paid by the senders of each transaction. The gas cost incurred is credited to the miner’s account as part of the consensus protocol. Over time, it is expected these will dwarf the static block reward. A maximum of 2 uncles are allowed per block.

Mining Pools and How They Work

Mining success depends on the set block difficulty. Block difficulty dynamically adjusts each block in order to regulate the network hashing power to produce a 12 second blocktime. Your chances of finding a block therefore follows from your hashrate relative to difficulty. The DAG takes a long time to generate. If clients only generate it on demand, you may see a long wait at each epoch transition before the first block of the new epoch is found.

DAG generation and maintains two DAGs at a time for smooth epoch transitions. Automatic DAG generation is turned on and off when mining is controlled from the console. Note that clients share a DAG resource, so if you are running multiple instances of any client, make sure automatic dag generation is switched off in all but one instance. DAG so that it can shared between different client implementations as well as multiple running instances. It is designed to hash a fast verifiability time within a slow CPU-only environment, yet provide vast speed-ups for mining when provided with a large amount of memory with high-bandwidth. The large memory requirements mean that large-scale miners get comparatively little super-linear benefit. The high bandwidth requirement means that a speed-up from piling on many super-fast processing units sharing the same memory gives little benefit over a single unit.

Communication between the external mining application and the Ethereum daemon for work provision and submission happens through the JSON-RPC API. These are formally documented on the JSON-RPC API wiki article under miner. In order to mine you need a fully synced Ethereum client that is enabled for mining and at least one ethereum account. This account is used to send the mining rewards to and is often referred to as coinbase or etherbase. Ensure your blockchain is fully synchronised with the main chain before starting to mine, otherwise you will not be mining on the main chain. This is no longer profitable, since GPU miners are roughly two orders of magnitude more efficient.

You can also start and stop CPU mining at runtime using the console. This etherbase defaults to your primary account. Note that your etherbase does not need to be an address of a local account, just an existing one. By convention this is interpreted as a unicode string, so you can set your short vanity tag. Note that it will happen often that you find a block yet it never makes it to the canonical chain. This means when you locally include your mined block, the current state will show the mining reward credited to your account, however, after a while, the better chain is discovered and we switch to a chain in which your block is not included and therefore no mining reward is credited. The algorithm is memory hard and in order to fit the DAG into memory, it needs 1-2GB of RAM on each GPU.

ASICs and FPGAs are relatively inefficient and therefore discouraged. For this quick guide, you’ll need Ubuntu 14. 04 and the fglrx graphics drivers. Unfortunately, for some of you this will not work due to a known bug in Ubuntu 14. 02 preventing you from switching to the proprietary graphics drivers required to GPU mine.

Whatever you do, if you are on 14. 02 do not alter the drivers or the drivers configuration once set. If you accidentally alter their configuration, you’ll need to de-install the drivers, reboot, reinstall the drivers and reboot. Ethminer will find geth on any port.

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Setting the ports is necessary if you want several instances mining on the same computer, although this is somewhat pointless. If you are testing on a private chain, we recommend you use CPU mining instead. CPU mining on TOP of GPU mining. Let’s not get spammed by messages.

Set the coinbase, where the mining rewards will go to. The above address is just an example. This argument is really important, make sure to not make a mistake in your wallet address or you will receive no ether payout. Request a high amount of peers.

Helps with finding peers in the beginning. Mining with multiple GPUs and eth is very similar to mining with geth and multiple GPUs. Additionally we removed the mining related arguments since ethminer will now do the mining for us. OpenCL can detect, with also some additional information per device. DAG of the next epoch ahead of time. Although this is not recommended since you’ll have a mining interruption every time when there’s an epoch transition. Mining power tends to scale with memory bandwidth.

Our implementation is written in OpenCL, which is typically supported better by AMD GPUs over NVidia. Empirical evidence confirms that AMD GPUs offer a better mining performance in terms of price than their NVidia counterparts. To start mining on Windows, first download the geth windows binary. Use cd to navigate to the location of the Geth data folder. As soon as you enter this, the Ethereum blockchain will start downloading.

Now make sure geth has finished syncing the blockchain. At this point some problems may appear. GPU does not have enough memory to mine ether. Mining pools are cooperatives that aim to smooth out expected revenue by pooling the mining power of participating miners. The mining pool submits blocks with proof of work from a central account and redistributes the reward to participants in proportion to their contributed mining power. Most mining pools involve third party, central components which means they are not trustless. In other words, pool operators can run away with your earnings.

JanS November 13, 2015 (12:26 am)

There are a number of trustless, decentralised pools with open source codebase. Mining pools only outsource proof of work calculation, they do not validate blocks or run the VM to check state transitions brought about by executing the transactions. Predictable solo mining, unconventional payout scheme, affiliated with etherchain. Built with Sphinx using a theme provided by Read the Docs. So, you want to be a Cryptominer!

In that case, you would want to read this article thoroughly to sought out which is best for you ASIC Mining Vs GPU Mining ? As you all know, Crypto-mining or Mining is one of the ways to actually earn Cryptocurrencies, be it Bitcoin or any Altcoin, besides other methods like trading or buying Crypto coins for fiat currency. Your graphic card or ASIC Rig will be on their way to finding new blockchain blocks while you will be making money by practically doing nothing. By mining you can add more amount to your existing coin assets and thus more profit. This also makes you unafraid of the market fluctuations as in a way you will always get more coins if you incur losses. Best GPU For Mining in 2018? What is Crypto Mining in Layman Terms?

ASIC Mining : Everything you should know5. Should you invest in ASIC Mining? GPU Mining : Everything you should know6. Should you invest in GPU Mining?

Conclusion : Best Way to Go? If you don’t have time to read this post in detail then here’s a brief summary of this post. This table explains in short what is the main difference between ASIC Mining Vs GPU Mining. So before we start with our main article let’s first understand What is Cryptocurrency Mining? Unlike trading or simply buying, Mining is a different process where specialized computers are used to find blocks by solving extremely complex math problems. By solving the problem, the miners receive the right to add a new Block to the existing Block-chain which in turn legitimizes the transactions.

This confirmation of a transaction is needed to prevent problems like double spending etc. For this work done, you as a miner get the particular coin as a reward or incentive for your effort and hardware used. The mining difficulty becomes harder and harder as the number of miners increase. For some coins like Bitcoin, the block reward is halved after fixed intervals. The next halving of Bitcoin block reward will happen in the mid-2020.

In short, Mining becomes more difficult and less rewarding with time due to more miners joining and finite amount of coins left for mining, much like mining resources in the real world. So basically, Miners are nodes in a large peer to peer network whose sole aim is to solve a PoW Problem so that the transaction is processed effectively. This in turn earns the miner a reward in the form of coins. Now that you know about mining Let’s hop on to the very motive of this article and talk about the different types of mining based on Hardware used. In the initial years of Bitcoin’s launch, mining could be easily done via any computer component that had processing power and memory. As of today, you can still mine using older methods but the fact is there will be non-significant profitability and hence useless effort.

There was a time when home desktops were more than enough for Bitcoin Mining. With time people switched to GPU’s for more hashrate and desktop PC’s became obsolete for mining. As of now we have specially designed hardware available for Mining known as ASIC’s. Some coins are ASIC resistant and can be mined using GPU’s only.

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So, let’s classify the ways you can still mine at present. So, these were the various ways we can do crypto mining at present and for each type the Algorithm of a coin decides which type of mining is apt for it. As of this date the two most common and competitive ways of mining are the GPU Mining and ASIC Mining. These both are also the most profitable in terms of prominent coins that support them. So, in this post we will go in detail about ASIC Mining Vs GPU Mining and help you understand Which is the best for you?

Always Check the Developer Team behind the coins before mining or Trading. Not every coin is there to stay and some are just scams. Also check their volume so that you know it’s popular enough. If you think coin is profitable to mine but doesn’t have a promising future then dump it immediately after mining. Coin Mining Algorithms determine what ASIC can mine and what GPU’s can mine. You will have to join one or other Mining Pool so that you can collectively act as a very powerful machine. The rewards can be then divided depending on the input you gave in terms of hash power.

This will enable you to start your own pool. ASIC stands for Application-Specific Integrated Circuit which is basically a machine specially built for the sole purpose of mining a certain Cryptocoin only. A Bitcoin ASIC machine solves complex algorithms and receives an incentive in the form of a small fraction of bitcoin. Though there are ASIC’s that can mine more than one algorithms but mostly they are specific to one or other coins. ASIC miners are designed specifically for mining particular targeted coins and hence they have a smaller and compact form factor as compared to GPU Mining Rigs which takes up space.

Mining Pools and How They Work

Instead of a full computer setup, they are compact devices ready to be used out of the box. Gigantic Hash Power : Being an Application Specific Device the ASIC Mining machines have evolved very abruptly in Hash Power and are way faster than GPU’s. ASIC’s are already pre-built complete setups with no setup hassles. Instead ASIC is the nearest to what we can call Plug and Play. As of today if the relative basic cost of ASIC is compared to GPU mining rigs then ASIC tends to be cheaper as GPU Mining rigs usually need a whole setup with a bunch of GPU’s to perform optimally which in turn makes them costlier. ASIC on the other hand is a single device which is not really cheap but relatively cheaper if you mange to pre-order one.

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If you buy the latest ASIC available then you will get a High Return of Investment just way better than GPU’s. This is basically due to the fact that ASIC machine are mostly made for major coins that are in the market and the fact they have a significantly high hash power. If a coin can be mined using both GPU and ASIC then the ASIC will easily overpower the GPU. In-fact, ASIC destroys the GPU’s profitability completely because of the above mentioned advantages. GPU miners have to resort to ASIC resistant coins as winning in competition with an ASIC on the same ground is impractical. ASIC’s are coin specific machines and hence once they become obsolete they cannot be used for any other computational purposes. Due to this, they cannot be re-sold or re-used and end up becoming Electronic Junk.

Mining Pools and How They Work

As the name suggests ASIC miners are specifically built for specific coins or algorithms only. In addition to this whenever an ASIC miner gets an upgrade that is a new version is released the older one becomes obsolete. This in turn kills the profitability of the old miner. ASIC machines are very difficult to get hands on due to their limited availability.

The ones that are commercially available are mass produced only in China and due to the high demand and low supply, they are usually on pre-orders. ASIC takes around anywhere from 2-3 months to actually ship back to you! If you want it delivered instantly then you may have to easily pay three times the original amount. ASIC works at a very high hashrate and hence the power consumption and thermals also shoot the sky. Better but noisier fans are used to keep the temperature at bay. 7 hence the noise problem is something to be considered.

In Fact, it is advisable to not set up an ASIC mining Rig at home instead try warehouses or garages etc. In short it’s not Home friendly. ASIC miners come with an Official Warranty of either 3 or 6 months depending on the model you choose. This in comparison to the 3 or 5 Year warranty of a GPU seems minuscule.

China or ship it to and fro from China. Yes, if you get the miner at the actual price. 2000 but if you want it instantly you can get it from Amazon. If you can have separate dedicated room for mining. You can’t live on the same room due to ASIC heat and noise. Bitcoin is the next Bubble or still under valued. If the Bubble pops out then you are left with zero value as it happened in 2013 due to Mt.

Many Bitcoin Mining farms were shutdown that time as Bitcoin Prices plundered by 80 percent. ASIC Mining is for a person  who wants to run mining like a business as professionally as possible. ASIC that you purchased will have zero value. So manage it methodically as there will be a sure shot rapid influx of mining whenever a new ASIC is released. You will have to get your ROI back as soon as possible before this point.

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Hope this detailed info about ASIC Mining helps but before you decide let’s have a look at GPU mining too! GPU stands for Graphics Processing Unit and yes it’s the same thing that gaming enthusiasts crave for. Similar to the above thing, In GPU Mining also, a complex Proof of Work Problem is solved to legitimize a transaction and add a new block to the original Block chain, only this time it’s done using GPU’s. Again similar to ASIC Mining you will get a reward in the form of the current crypto currency that your GPU Rig is mining.

Mining Pools and How They Work

There are many different types of GPU mining currencies. Some of the popular ones are listed in the below table along with their algorithms. GPU mining rigs unlike ASIC ones can mine multiple coins and are not dedicated solo miners. It’s flexible to the extent that GPU rigs can even mine several coins at once. So if in case due to market fluctuation if one coin incurs loss then you will always have several options to choose from. GPU’s are manufactured by mainstream companies like Nvidia and AMD and hence easily available, that too at good reasonable prices. Because you are basically making a super powerful computer hence all the parts needed to make a GPU Mining Rig is easily and widely available.