First of all, apologies for the delay in writing this article. I’ve had a busy few days with some real life stuff that had to be taken care of, but today is my writing day, so expect some more good stuff to come during the day. It’s time to continue our Mining Lingo 101 series with the next part, discussing Mining Pools.

First off there are two types of mining pools: pushpool and p2pool. We will take a look at both of these, to discuss their differences. Please note that it’s hard to judge which pool system works better for you. You’ll have to do those calculations for yourself.

-Pushpool: I quote this from the official Bitcoin pushpool thread: “When a block or tx arrives, it is preferable to begin working immediately on the new work. From the server’s perspective, this is a classic data-broadcast problem, where the server wants to broadcast N different pieces of work to N miners. Hence, “push mining” where the server pushes new work pro-actively to the miner clients.

Okay, sounds great, but what does this mean for us miners, exactly? As soon as new block on the network is discovered, the pushpool script will force all miners to immediately switch over to mining the new block together. This will automatically make shares that are submitted too late, invalid. In your mining software, this may show up as ‘prevhash-stale’…

Pushpool is just a way to ensure that the new block’s data get sent out to all miners at the same time, to reduce the number of invalid shares and wasted mining efforts.

-P2Pool: P2Pool shares form a “sharechain” with each share referencing the previous share’s hash. The chain continuously regulates its target to keep generation around one share every thirty seconds.

That may sound like a bunch of gibberish to you, but I’ll try to make it understandable. P2Pool offers variable mining difficulty, thus allowing both big miners, and small miners, to mine effectively on a P2Pool server. This has it’s advantages as well as disadvantages.

As more people start mining on the P2Pool server, it will become harder for small time miners to find shares before a new block is detected on the network. Finding less shares also means smaller payouts.

The advantage, however, comes from the ability to finding more blocks when more miners join the P2Pool server. More hashing power usually results in more blocks in a shorter span of time. This allows several small payments to add up rather fast, giving you the same result as receiving one bigger payment after a longer period of time.

Source: majesti.co