Ethereum, Ethereum Classic & Expanse: Basics about Mining and Mining Pools

By | 2017/10/13

In advance, I would like to highlight, that this article will focus on the mining of the following 3 Ethash (previously known as Dagger-Hashimoto) algorithm based  cryptocurrencies:

Basics about Mining

Basically each minable cryptocurrency can be mined solo (stand-alone), with GPU and/or CPU power. CPU mining is not to be considered efficient anymore – therefore most of the mining is done with modern graphic cards (GPU power). Dependent on the difficulty, the algorithm, and the GPU power, it takes certain time to get a reward for finding a new block within the blockchain.

The rewards for finding a new block is different based upon the cryptocurrency:

  • Ethereum (also known as ETH), 5 ETH
  • Ethereum Classic (also known as ETC), 5 ETC
  • Expanse (also known as EXP), 8 EXP

Each of the above noted cryptocurrency uses a certain difficulty required for the mining process. The difficulty is adopted frequently in relation with the network hash rate to the according block time. The block time provides the average time between finding new blocks. For Ethereum and Ethereum Classic the targeted blocktime is currently 15seconds, while for Expanse the block time is targeted with 60sec. Therefore, the more miners provide hashing power, the higher the network difficulty is set. This results that with higher network hash rate and a higher difficulty, the time until the first reward on solo mining is earned later.

Taking for example Ethereum, and a recent graphic card with a hashing power of 30MH/s, would currently take around 3,5 years to earn a reward of 5 Ether – statistically of course. To get an actual view of your mining power check out one of the mining profitability calculators [1].

To overcome this and to be rewarded earlier, you can join a mining pool. Depending on the distribution algorithm, you will be rewarded earlier – while of course, with lower rewards.

Choosing the mining pool

First of all you should get clear on what you would like to mine. Of course you can select the cryptocurrency based upon the best profitability  [1], but I would suggest to also investigate on the roadmap and on the projects of the cryptocurrency & their communities. At this point I would specially like to highlight Expanse as there are some interesting points in their roadmap, interesting projects (e.g. Tokenlab ) as well as a great supportive community.

What are the important points on selecting a mining pool:

  • The reward distribution algorithm
  • The fee
  • The minimum payout

The mining pool reward distribution algorithm defines how rewards are distributed among the miners. The most common ones are:

  • PPLNS – Pay Per Last N Shares: Reward is split based upon the proportion of shares on the last N shares.
  • Proportional: The reward is split proportional based upon all shares required to find the new block.

Of course there are far more algorithm available, which can be found under [2].

The fee is defined by the pool operator. Before splitting the reward across the miners, the fee is deducted from the reward. The fee usually varies between 0% and 2%.

The last variable to consider is basically the minimum payout. Once you start mining, rewards are accounted based upon the distribution algorithm. As transactions costs something, a minimum payout is set. The lower the value, the more often the rewards are payed.

Aside to the hard facts, certain other criteria’s should also be taken into account.

  • Security: Does the environment look safe? Has there been any issues before?
  • User Interface: Is the user interface handy? Do I get all information I would like to see?
  • Additional features: Does the pool provide any additional feature?

My personal favorite

Considering all the above mentioned hard- and soft facts I consider the following pools from the same provider, whereby I have to say that I focused on mining Expanse:

All of them have 0% mining fees and rather low minimum payout values.

The operator is very supportive in case of questions. Furthermore the underlying open source pool software [3] has been extended with new features over the time, whereby I love especially the twitter notification service [4], where messages are posted once a new block is found by the pool. Additional features to be noted there:

  • 24h pool hash rate
  • Support for iPhone Mining Pool Monitor App: Asi MPM [5]
  • Integration of Crypto Currency Market value

The pool process – from mining to payment

What I missed on my research was basically a short description of the process on the mining pool itself.

  • First of all you need to download a wallet and create an account – alternativley you can create an account online
  • Following the instruction of the pool you download a miner like etherminer or claymore, set the ports and your wallet address and then you start mining
  • Once a new block is found and shown under “New blocks” (e.g. on EXP.ethertrench), the overall mining process, with the count of shares starts from the beginning
  • After a certain time, the new block is set as “immature” (e.g. on EXP.ethertrench), for the miners the “immature balance” is calculated and assigned (done by the so called unlocker process).
  • Over the time more blocks are processed and after a certain time, the block is considered to be matured – shown finally under “Block” (e.g. EXP.ethertrench)
  • The payment processed is started once the block is matured. Usually the payment process runs on a predefined frequency – e.g. on an hourly basis.

I hope this article provides some information about the basics, about mining and about choosing the right pool.

Happy Mining!

[1] https://www.cryptocompare.com/mining/calculator/

[2] https://en.bitcoin.it/wiki/Comparison_of_mining_pools

[3] https://github.com/sammy007/open-ethereum-pool

[4] https://twitter.com/ethertrench

[5] https://itunes.apple.com/us/app/asi-mining-pool-monitor/id1274075951?mt=8

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