In normal times, mining pools are good ways for small-scale crypto miners to earn a predictable return on their expensive mining rigs. Unfortunately, these are not normal times.
Bitcoin Cash’s competing camps released alternate versions of the cryptocurrency’s blockchain, sending prices plummeting. As a result, anyone mining either version of Bitcoin Cash spent a lot of money and got even less money back.
Assuming a “winning” protocol takes on the Bitcoin Cash mantle and BCH pricing recovers, joining a Bitcoin Cash mining pool will once again let you earn a profit.
What’s Up With The Bitcoin Cash Hard Fork?
A debate has raged among the Bitcoin developer community over what the cryptocurrency’s true role should be. For outsiders, the arguments can seem arcane. What it comes down to, however, is whether a bitcoin should be a functional currency like cash or whether it should be a speculative store of value like gold.
Last year, the two sides of the debate couldn’t, or wouldn’t, compromise. So, the advocates of Bitcoin as cash created a “new” Bitcoin by hard forking the Bitcoin blockchain. In the eyes of its supporters, Bitcoin Cash would restore Nakamoto’s original vision and become the crypto version of cash.
Three forks in the road
Unfortunately, that vision never came true. The general public still thought of the original Bitcoin when they thought about cryptocurrency. And the crypto community shifted its focus to Ethereum and other blockchains that support smart contracts.
Over the past year, the same group of people who drove the Bitcoin Cash schism fractured into rival camps. Each one backed a different vision of Bitcoin Cash’s future.
One group backed a set of protocols called Bitcoin ABC. Among other upgrades, Bitcoin ABC would let Bitcoin Cash to handle smart contracts.
Another group wanted nothing to do with smart contracts, preferring to focus on making Bitcoin Cash even better suited for use as a digital currency. They called their version Bitcoin SV, for Satoshi’s Vision.
Some bit players proposed their own alternatives, but most of the Bitcoin Cash community backed either the ABC or the SV protocols
Making crypto look bad
The schismatics on each side of the Bitcoin Cash holy war saw no reason to compromise. Neither believed the other side’s protocols were the “true” Bitcoin Cash.
The launch of Shark Pool shows how far people were willing to go. CashPay Solutions founder Ari Kuqi created the mining pool to attack the Bitcoin apostates. His miners would undermine cryptocurrencies they didn’t agree with for their “acts of war against Bitcoin.” CCN speculated that Shark Pool’s ultimate targets in the hard fork battle were Bitcoin ABC and Bitcoin Unlimited, since Kuqi had publicly supported Bitcoin SV.
On November 16, the rival camps of miners began processing transactions onto the Bitcoin Cash blockchain with the different protocols. Within hours, the blockchain had forked into separate versions of Bitcoin Cash. The price of both coins plummeted and pulled the rest of the crypto market down with it.
What is Bitcoin Cash Mining?
Satoshi Nakamoto based the Bitcoin blockchain on a concept called proof-of-work (PoW). “Miners” race each other to calculate complicated algorithms on powerful computers. At first, miners used standard desktop computers. Now all mining of PoW blockchains runs on specialized devices that use custom-designed computer chips called ASICs.
Even with their own ASIC rigs, individual miners will always be outclassed by well-financed corporations. These companies build warehouses holding thousands of mining rigs, making them more likely to earn block rewards.
By joining a mining pool, small-scale miners can form larger operations that compete effectively against the corporate miners.
But joining a mining pool has a cost. Mining pool members must share their rewards. Even here, size matters because people who own many mining rigs get a larger share of the rewards.
How do mining pools pay?
Hashrates are the way mining pools measure members’ contributions. This is the rate at which ASIC-based mining rigs perform the blockchain’s hashing calculations. Some of the most common rate structures at mining pools include Pay-Per-Last-N-Shares (PPLNS), Pay-Per-Share (PPS) and SOLO.
PPLNS calculates the payment for a reward based on your share of the total hashrate. However, the PPLNS system rotates miners through shifts over the course of the block-writing cycle. The payment rate can vary quite a bit, but the chances of getting a lucky assignment make it an appealing choice.
PPS simply divides the reward proportionally based on the hashrates members contribute to the hashpool during the time it takes to successfully add a block. A variant of PPS, called PPS+, also adds a share of the network transaction fees to the payment.
SOLO rate structures, unsurprisingly, are for members who don’t fully connect to the mining pool. These are usually larger organizations that want to leverage the mining pool’s infrastructure. They get to keep all of the rewards and transaction fees their mining earns in exchange for paying the mining pool a flat fee.
Cloud mining is an alternative for people who don’t want to invest in dedicated mining rigs. In effect, you rent a company’s mining rigs. Often charging by the terahash per second (TH/sec), these cloud-based services can often be more expensive over the long term. On the other hand, the earnings are consistent and you don’t have to maintain a server farm.
Losing money mining during the fork
There is one catch when it comes to mining cryptocurrency — especially during a hard fork battle in the middle of a bear market. The return on investment depends on mining rewards being higher than mining costs.
Rewards for mining were actually lower than mining costs in the hours and days after the Bitcoin Cash hard fork. The price of Bitcoin ABC plummeted below $300. At the same time, the price of Bitcoin SV collapsed below $100.
The market analysts at crypto future exchange BitMex analyzed the situation and found that both sides were losing money with every coin they mined. The two camps had spent more than $1.4 million on Bitcoin Cash mining. In exchange, they only received a little more than $805,000.
Popular Bitcoin Cash Mining Pools
Bitmain’s Antpool and BTC
Chinese mining hardware manufacturer Bitmain owns both the Antpool and BTC mining pools. The company’s main product, the Antminer, is an ASIC-based machine dedicated to mining proof-of-work cryptocurrencies. Antminers designed for Bitcoin Cash can process anywhere from 10.5 TH/sec up to 28 TH/sec — at prices ranging from $151 to $1475.
As you can probably guess, both Antpool and the BTC mining pool only accept incoming connections from Antminer devices.
Antpool supported Bitcoin ABC as the next protocol upgrade to Bitcoin Cash ahead of the hard fork. Antpool offers several ways to earn mining rewards. The payment methods and fee schedules vary depending on how tightly you integrate your mining operation with Antpool.
The Antpool PPLNS rate structure calculates across 2.5 difficulty cycles while its PPS+ rate structure calculates across one difficulty cycle. In the PPLNS option, Antpool keeps the transaction fees. In the PPS+ option, Antpool charges 4% of the reward payout and 2% of the transaction fee payout.
The SOLO option charges a 1% fee on any block rewards and transaction fees you earn.
Antpool offers mobile apps for remote monitoring of mining resources. Larger mining operations can use one of several desktop apps to optimize mining performance. A simple online calculator will estimate your earnings based on hashrate.
Antpool created a page dedicated to comparing revenues its Bitcoin and Bitcoin Cash miners could earn. Because of the collapse of BCH prices during the hard fork, mining BTC generated 110% more earnings than mining BCH.
BTC mining pool
In advance of the Bitcoin Cash hard fork, BTC announced its support for Bitcoin ABC as the protocol upgrade for Bitcoin Cash. BTC uses a Full Pay-per-Share rate structure. The company adds a standard transaction fee amount to the block reward and then calculates your payment based on your total share of the hashing volume for that cycle. BTC claims this approach increases earnings by 10-20%. However, BTC does not publish its fee schedule to non-members.
BTC provides several tools to members of its pool. A simple online profit calculator gives you a quick estimate of your mining profits. A more sophisticated version lets you factor in your mining rig’s actual performance and electricity consumption for a more accurate prediction. Mobile apps send notifications and let you monitor your mining activity in real time. Large-scale miners can use the BTC Agent (Windows or Linux) to make communications between their mining facilities and the mining pool more efficient.
CoinGeek and SVPool
Acquired by Bitcoin Cash advocate Calvin Ayres last year, CoinGeek tries to be a cryptocurrency hub in the same vein as Roger Ver’s Bitcoin website. CoinGeek has its own mining pool operation, which you must request an invitation to join. In late October, however, CoinGeek announced the creation of SVPool in partnership with Bitcoin SV creator Craig Wright.
CoinGeek Mining CEO Taras Kulyk said, “CoinGeek stands behind Craig Wright, Bitcoin SV, and SVPool in the knowledge that BCH is the only true Bitcoin that fulfills the Satoshi Vision.”
SVPool launched with no fees and a PPLNS rate structure. An upgrade in November will add a PPS rate structure. Payouts are made every 24 hours with a minimum 0.001 Bitcoin SV payout.
Roger Ver acquired the Bitcoin.com domain in 2014 and began turning it into a central hub for all things cryptocurrency, including crypto mining.
Its Bitcoin mining pool offers both ASIC-based and cloud-based mining options for either BTC or BCH. As would be expected, Roger Ver’s mining pool uses the Bitcoin ABC protocol.
The Bitcoin mining pool uses a PPS rate structure and claims its 98% payment rate is “the highest” in the world.
The cloud mining service is available in 3-month, 6-month, 1-year and 3-year subscription plans. Rates vary from $29 per TH/sec on the 3-year plan to $34 per TH/sec on the 3-month plan to $120 per TH/sec on the 1-year plan.
Founded in 2016 by Chinese crypto investor Haipo Yang, the ViaBTC mining pool added Bitcoin Cash in mid-2017. An announcement in early November did not explicitly state which protocol ViaBTC supported, but all of its hashing capacity went to Bitcoin ABC.
Members of the ViaBTC mining pool can choose between PPLNS, PPS+ and SOLO rate structures. Rewards are paid hourly in PPS+ mode with a 4% fee on the rewards. A 2% fee applies to payments of the mining transaction fees and is calculated on a PPLNS basis across 5 difficulty rounds.
In PPLNS mode, ViaBTC charges a 2% fee on reward payments which are calculated across 5 difficulty rounds.
ViaBTC applies a 1% fee to SOLO mode payments.
Among the tools ViaBTC provides, there is a mobile app that combines digital wallet functions with mining pool monitoring. The company’s online profit calculator provides a simple estimate without factoring in electricity costs or fees.
Other Bitcoin Cash mining pools
The pools listed above accounted for 90% of pre-fork Bitcoin Cash mining activity. However, many small mining pools also served the Bitcoin Cash community. Over the past week, they faded into the background as the giants fought. Once things settle down, you may want to look at the following options:
- Northern Bitcoin
- Genesis Mining
- MyCoin Cloud
For the true believers on either side of the Bitcoin Cash wars, the choice of which pool to join was made long ago. If you’re wondering whether to join a Bitcoin Cash mining pool now, however, you may want to wait for the dust to settle. Low rewards don’t justify the cost of competing, even in a mining pool. For the time being, you will be better off dedicating your hardware to mining the Bitcoin blockchain. Prices of BTC are still high enough to generate a return on your investment.