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Say I have a moderate amount of hashing power and I want to maximize my profit by using the pool that would give the best rewards for mining with them, what should I look at when choosing a pool?
How to choose the most profitable pool?
Answers
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Mining is a zero sum game so pool size has no effect other than to reduce variance not average payout. Your goal would be to acheive 100% of fair value per share.
Some factors:
- Inclusion of block fees. While small pools which keep block fees result in lower payout than solo mining.
- Merged mining. Currently adds a roughly 5% bonus relative to BTC only mining.
- Hop proof reward algorithm. Proportional pools are vulnerable to pool hopping. As mining is a zero sum game anything pool hopper's gain 24/7 miners lose.
- Pool fees. Any fee paid to pool reduces revenue per share relative to solo mining.
- Pool efficiency. This one is tough because pool source code is often closed source. If pool has a bug which results in extra 1% stale shares then that in effect is a 1% hidden fee.
- Pool uptime. A pool with 0.5% downtime is in effect costing you a 0.5% fee. This can be partially mitigated by using miner which supports backup server.
- Pool latency. The slower communication is between you and pool server the greater percentage of shares which will be lost as stale in a block change. Part of this is due to server resource limitations but some of this also comes from geo-location. If your miners are located in China a pool which only has a server on East Coast US ISP is going to have a longer than average latency.
So the most efficient pool would be one that includes transactions fee, charges no pool fee, has low latency connection to your miners, offers merged mining, has high uptime, and has no hidden back end bugs which reduce efficiency of shares.
It would be helpful if you linked "reward algorithm" to here: http://bitcoin.stackexchange.com/a/375/5851
4Maybe it goes without saying, but "no losses from pool-hopping" should be on the list. – Meni Rosenfeld – 2011-11-14T18:54:45.123
@MeniRosenfeld Good point. – DeathAndTaxes – 2011-11-14T19:34:39.197
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As Meni said in the comments above, "you can drastically increase your profit by pool-hopping," which has a very different pool selection criteria.
However, this is a much less reputable method than sticking with a single pool, and requires much more math (not to mention the existence of naively vulnerable pools) in order to be successful.
1 The majority of pools use one of the hopping-proof schemes. Meni wrote a paper about it, actually.
4You can drastically increase your profit by pool-hopping, is that within the scope of the question? – Meni Rosenfeld – 2011-11-14T18:50:02.263
1Since profits are random, you can't "maximize your profits", you can maximize some combination of expectation, variance, maturity time, etc. If you don't care much about variance and maturity time you should focus on the expectation. – Meni Rosenfeld – 2011-11-14T18:53:57.683
I`d prefer some normal comparison of pools, rather than how to pool-hop, as it is considered "cheating".
By profit I mean maximizing expectation, while leaving the other two at reasonable range (for example, solo mining would not be considered a good option, as it has a very big variance). – ThePiachu – 2011-11-14T19:32:38.197
1This question is very localized in time. Things such as fees and support for various features will change very often so I feel like closing this question. Thoughts? – D.H. - bitcoin.se – 2011-11-14T22:00:19.327
1@D.H. Maybe the question should be edited to "how to choose the most profitable pool?". Any specific recommendations are likely to be subjective anyway. – Meni Rosenfeld – 2011-11-15T06:11:05.577
Okay, edited my question. – ThePiachu – 2011-11-15T06:48:36.190