Trending 10 posts in crypto tags | 20-08-2024
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Group Mining and Benefit to Miners.
lhorgic
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2024-07-23 15:54:33
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Hi friends! how are you doing? Welcome to my blog, it's super good to be back in your faces. I trust you got value from my last post. I bring to you another interesting content one that I believe you would find interesting as usual. In my last post, we explored the topic "Investor and Greed", you can check out my blog to read through if you haven't.
Today, we would be looking at **Group Mining and it Benefits**... it's actually another topic I think those who would love to explore the Blockchain space as miners would love to digest...it would also be useful for intending miners. Let's get into discuss guys.
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Mining is a very profitable activity when successfully done, it takes a whole lot to actually mine successfully though, but come to think of it, why do you think people still engage in it despite it overwhelming cost? Well your guess is as good as mine, it quite profitable.
A successfully mined block will definitely put a big grin on the face of the miner. For example, anyone who successfully mines on the Bitcoin network is in for a lot of goodies, because he would be reward handsomely for the work done.
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Now, I want us to shift our focus from the reward at this point and look at the cost of mining successfully. It takes a whole lot to do that. You need a very sophisticated computer(s) specially designed for that purpose, a steady supply of power and a lot of energy to mine.
Sometimes this is usually something a single individual cannot afford on his own hence the need to team up and this leads us to the topic we want to explore today. What is Group Mining and how beneficial is it to those involved...
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I will start by explaining what mining is. Mining simply means a process whereby one puts his resources together to solve complex mathematical problems on a blockchain network in order to get rewarded after a successful attempt. A very good example of a Blockchain network where mining is carried out is the Bitcoin Network.
Now, group Mining simply means the coming together of two of more miners who pool their resources together to mine (solve complex mathematical problem) on a blockchain in order to earn a reward after a successful attempt. The goal has always been to mine successfully so it doesn't really matter how it is achieved...smiles.
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I know at this point you want to ask the question above and that the same reason why I decided to help your curiosity. The truth is the resources needed for mining is usually huge and sometimes it actually far from the reach of an average person who is really interesting in mining.
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Some folks have part of the resources and computational power for mining, once these kind of people can identify themselves and observe that they have the same goal, they could team up to mine on a blockchain network and then get rewarded. By so doing they have democratize the mining process by allowing everyone contribute his or her quota.
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Since it's not a solo kind of mining which involves just an individual, the reward gotten would be shared by the group and it going to be based on their agreement. Usually reward is shared based on the level of resources that's was put in by each miner. They could share reward based on the computational power of each miner. Simply put reward is based on individual's investment.
I still think this is fair enough because in the first place one do not stand a chance to go solo with the mining process but the coming together accommodated the individual even with his fractional mining resources. However, compared to a solo miner, the reward structure will be deemed little.
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Group Mining are actually carried out in a mining pool and every cryptocurrency has their own pool, while entry into such pool looks seamless and less demanding, there are some disadvantages to this mining method.
• The first been that fees are deducted for using a mining pool service and this fee also impact on the reward. It means a fraction of your reward would also drop even after a successful mining and that because of the fee for using a mining pool.
• Another concern is that the rewards are not fairly distributed, there used to be some discrepancies in the reward sharing formula which leaves largers miners with bigger rewards than smaller miners even in cases where the smaller miners contributed more to the success of the mining. This is because of the bias of the mining pool system.
• Lastly, group Mining can metamorphose into network centralization which negates what a typical network should look like... because when miners start teaming up to mine, they begin to run with one vision ang goal, gradually creating a centralized system.
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I believe by now we understand what group Mining is coupled with it benefits and downsides. So if you're looking to become a miner but do not have the requirements, you could team up. You have to also take the downsides into consideration. Personally, I think going solo is the best. What do you think?
As my usual custom is, I would always encourage that you DYOR to be sure of every financial step you would want to take as I won't be liable for any form of loss encountered by you.
Feel free to share with me your thoughts in the comment section. Thanks for your time once again. Gracias!
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**Disclaimer: This post is made as an education and not investment advice. Digital asset prices are subject to change. All forms of crypto investment have a high risk. I am not a financial advisor, before jumping to any conclusions in this matter please do your own research and consult a financial advisor.**
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Regards
@lhorgic♥️
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