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What's the best way to get a return when we mine Bitcoins? Bitcoin solo mining difficulty calculator we mine on our own, mine with a small pool or mine with a large pool? How much difference does it really make? Whether we want to be a gambler or an investor is really a question of how much risk we're prepared to take, but what are those risks and what are the odds of success? Before we can look at the odds of getting a particular return we need to establish a few starting conditions.
Let's assume that we're planning to mine using hardware that, at the outset of our mining, is able to hash at 0. The actual numbers don't matter though, just the percentages. For most of it has been above this but the trend is generally downwards and we need to assume something. We're not expecting to add new capacity as we go though, so we only have the hardware that we start with.
Bitcoin mining is highly erratic see " Hash Rate Headaches " so it's not easy to calculate how our mining will progress so instead I built a Monte Carlo simulator. The results presented bitcoin solo mining difficulty calculator all come from that simulation with 10M simulations of each scenario to ensure that the data is well smoothed. Let's bitcoin solo mining difficulty calculator with the simplest case. We're going to assume that we'll use all of our hashing capacity to mine for blocks on our own.
What might we expect? The chart shows 15 difficulty changes 6 months. It plots the bitcoin solo mining difficulty calculator probability of achieving a particular BTC reward. It's not possible to get smaller amounts in this time period by solo mining so that's why there's a bitcoin solo mining difficulty calculator in the graph at the start. The gambler in us might bitcoin solo mining difficulty calculator attracted to the potential for high rewards; that part of us that wants to be an investor though is probably going to look at this graph in horror!
The easiest way to mitigate some of the risk is to join a mining pool. Let's ignore pool fees or anything that doesn't just give an equal share for hashing capacity provided to the pool.
What might the same hardware achieve when run this way? The simple exercise of merging with a pool that has 10x the total mining capacity has made a huge difference to the variance of the mining rewards. Now that we can see the reduction in variance from using a mining pool we really need to ask questions about just how much does the mining pool size change the statistics. In order to do that we need to consider a few different ways to deploy our hardware. The following graph shows a much narrower span of BTC rewards.
It also shows the effects of mining as part of a pool controlling 0. Just how good are the reasons to do so? The larger pools are definitely more attractive to anyone seeking predictable returns. In a simpler world the Bitcoin mining network might only be expanding very slowly and miners could attempt to allow time to smooth out the effects of mining variance.
In practice though, as the network expands and the ever-increasing difficulty consumes the usefulness of any current hardware, then best known way to avoid the vagaries of random mining behaviour is to use large blocks of co-ordinated mining. Solo mining and mining in small pools is a strategy for gamblers, not investors.
Arguments may rage regarding the risks posed by large mining pools and their tendency towards centralizing our supposedly decentralized network, but it seems very unlikely that they will be disappearing any time soon. Any proposal to remove them will have to address the issue of variance if it is to gain any sort of widespread acceptance.
