|
Getting your Trinity Audio player ready...
|
What is solo mining?
Solo mining is an attempt to confirm blocks of transactions on the blockchain alone, as an individual miner. In other words, solo mining is a way of mining cryptocurrencies without pools.
Pools are groups of miners that act as a single miner on the blockchain. By doing that, the miners make sure that they earn rewards steadily. Rewards are distributed among all miners that participate in the same pool.
How does solo mining work?
Solo mining was the first way of mining. Satoshi Nakamoto’s vision was “one CPU, one vote”. To have a vote, you must be an active miner on the blockchain. This means that each miner on the blockchain is running its own full node.
Because the block reward and block time is always the same, and the amount of miners is increased, the number of rewards per miner is lowered in the given time-frame.
Example: Bitcoin’s block time is 10 minutes, and the block reward is 6.25 BTC. If there would be just one miner, he/she would win every block with 6.25 BTC, that is every 10 minutes. Add another miner (with the same hashrate) and he/she would get 6.25 BTC on every second block or every 20 minutes (statistically). Now imagine that there are 1 million miners mining BTC. It would statistically take 1 million blocks or 6944 days to win a block.
As explained in the above example, mining solo on a very competitive blockchain like Bitcoin is very luck-based. That is why pools emerged soon after the Bitcoin launch. The first mining pool was launched in November 2010. It makes more sense for a miner to have a steady stream of income, even though the rewards might be just a fraction of the total block reward. Otherwise he/she is risking paying for operational costs without any balance to cover it.
It is important to note that the above example is only statistically correct in the long run. It can happen that a miner with expected time to win(confirm) a block of 10 years to win a block in just 1 month or even 1 day. But this is very unlikely to happen. On the other hand, it could take 20 years instead of 10 years. It’s a matter of luck or bad luck in this case.
For someone to mine solo, one must first create a full node and communicate directly with the blockchain. This is what mining pools actually do. Mining pool operators will set up a bitcoin node (or any other cryptocurrency’s node) and act as a single miner. Only that this miner will have absurdly high hashing power. Sometimes even more than 25% of the total network (blockchain) hashrate. Controlling more than 51% of blockchain hashrate poses a threat for 51% attacks!
What is the difference between solo mining and pool mining?
A solo miner has his own node, but he/she can still use multiple rigs or devices to mine. For example, Bob has 10 rigs. He creates his own node and connects all of his 10 individual machines to his node. He is now solo mining and is attempting to confirm blocks on the blockchain.
If Bob decides to allow external user connections to his node, he becomes a pool. He will now have to split the earnings based on the number of shares each miner contributed.
With that said, we can conclude that solo mining and pool mining are very similar. The main difference is that at solo mining the miners are individuals that attempt to confirm the blocks with a bit of a gambling problem whereas at pool mining the miners are working together to have a steady and secured stream of earnings.