Effect of profit switch pools

[JBardey]

Are profit switch pools causing harm to our alternate crypto currencies?

If you keep an eye on coinwarz, every few minutes you'll see the difficulty of one coin (SPT, GDC typically) rise and rise very quickly (and it's profitability drop). This effect will then swap coin.

Is this being caused by profit switch pools (hasco.ws and middlecoin for example)? Or is something else at play? Middlecoin for example reports 2498 MH\s of power. That's huge. More than the entire networks of some coins.

I feel it practically kills solo mining and even the majority of dedicated pools, as well as potentially making an alt vulnerable to various attacks. Anybody have any thoughts?

[legobanana]

I'm not sure what the long term effect will be, but I suspect profit switch pools will fragment. I don't think profit switch pools will get much larger, simply because there's a huge disadvantage for individual miners. Let's say there's a coin (ExampleCoin) with 200 Mh/s. And let's say the coin is the most profitable. If you're an individual miner, it might be really profitable switching to that coin, not solo mining but mining in an existing pool. Now the pool is hashing at like 201 Mh/s, and you have 1 Mh/s out of that. Not bad.

But if you join a profit switching pool, you'll be switched over with everyone else in your pool. Let's say your pool hashes at 2000 Mh/s. As soon the pool switches over to ExampleCoin, the coin's net hashrate is 2200 Mh/s, and you have a measly 1 Mh/s out of that.

The larger the profit switch pool the less of advantageous it becomes to join the pool. So hopefully this will be self regulating.

What I think might happen is:

1. We'll see a lot of new profit switching pools pop up.

2. There might be new variants of profit switching pools. An alternative to the current model where everyone in a profit switch switch pool mines the same coin would be to distribute the pool's mining power over several coins simultaneously. Then share profits get distributed as if the miners were mining an average of all the coins. One caveat is that miners can't be told what coin they're mining, or else it would be more profitable for the miners to individually mine the most profitable coin. Actually middlecoin might actually be doing this for all I know.

3. Eventually I think profit switching pools will be killed off by a profit switching client. If the mining client could automatically switch you between a bunch of coin-specific pools, that would be the most profitable from an individual miner perspective. The reason this isn't really done right now is because it's a pain to set up pool accounts for every coin.

[prins]

i think trick with those profit switching pools is to abuse the difficulty retargeting which doesnt adapt as fast to such sudden increases and leave again once its difficulty has risen to return later.
Yet in the long run it doesnt seem to work all that well afterall, its more for the lazy cause profit wise you may just aswell mine some of the popular coins and sell at the right prices instead of autoselling.
I used to foolishly just run into the top coin myself, but thats pretty much always shortlived since alot of ppl jump on it, several coins linger in the top half most of the time, pick one of those and long term you earn just as much as jumping from coin to coin all the time.

[digicoin]

Switching pools all the time brings you much less profit because it depends on flawed algorithm

+ It depends on unstable price every minute. The price can be down significantly after you solve a block or receive coins for the share you submit. You lose.
+ It does not take care of luck or possibility to solve a block. It assumes that you will solve blocks at any time you want. Impossible. You may switch to a likely high profitable coin because CoinWarz tells you too but you can not solve a block in 10 minutes, you receive nothing. After that CoinWarz tells you about another most profitable coin. Will you make a switch? You lose
+ Almost pools use PPLNS which maximize your profit when you contribute your share in a long run. If you are a pool hopper, you get less than what you share. You lose.
+ Many coin retargets difficulty every block. Ex: Diamond (DMD). You can solve the first block easily, but after that the diff will be very high, you find yourselves unprofitable if you keep mining. You are forced to switch. After you leave, the diff reduces to make the coin the most profitable one. You lose

--> Losers choose switching pools all the time.