newbie question about solo mining

[rajachanger]

so am i newbie here, want to know more about mining and pool, any guarantee that site and command was safe ?
thanks before

[toptek]

also try this one , i use eligius.st as my main pool if you want a instant payout then eligius.st is not the one you want and i use Slushes as my back up or investment pool as i call it .  at slushes you can set and take any payout you want . no limit other then there is a fee if it's below 0.01 btc it pays out every hour .

https://mining.bitcoin.cz  aka slushes   pool .


 here is a start up link for it etc  https://mining.bitcoin.cz/help/#!/get-started/mining_beginners



it is the very first BTC mining pool ever started, if the POP is telling us right, i trust him and believe him .

[yun9999]

Now I'm interested in solo mining.  Switching my Antminer 3 to play the casino.  Saw 1 guy hit a block after 2months.

[tl121]

Measuring your expected winnings, in an ideal world you would have the same chance solo mining as in a pool (neglecting pool fees).  If you are a small miner, however, your variance could be extreme and you might run out of money to pay for your mining hardware and electricity bills before winning a block. This can be modeled mathematically as the "gambler's ruin problem". It is also a psychological issue, with fear and greed applying, especially for those who over extend their resources.

In the real world, there are a few problems in addition to the above.  First, if you solo mine your node is likely to have limited bandwidth to the mining nodes.  You may be slow to learn of a new block and waste your resources mining uselessly on an older block.  It may cost a lot of money to purchase the necessary Internet bandwidth and computers, some of which will almost certainly have to be located in expensive rental space in strategically located data centers.  If you fail to do this when you find your block it may be orphaned and you will get nothing.  In addition, there is potentially a far worse problem.  Your software or networking configuration may be defective and your hardware may find an incorrect block which may get lost due to a local problem.  If you are a large miner finding blocks every few days you will notice that you have a problem.  But if you are a small miner you may go months burning money without ever knowing that you were screwing up.  The solution to both of these problems is to use a solo mining pool, such as solo.ckpool.org

Second, if you solo mine your variance will be large.  If you are spending $1000 a month on mining at present prices and difficulty and you are efficient you might be profitable, getting back more than $1000 on average each month.  But if a block is worth $10,000 on the average you may have to wait for ten months before a payoff.  In reality, it may take well more than a year.  If you run out of money before you score a block then you will be out of luck and broke, a ruined gambler.

Doing pool mining has its own risks.  There are various opportunities for the pool operators to cheat you.  In addition they can have computer and network performance problems and lose blocks due to orphans and there will be less for you to share.  In addition, you will be paying fees to them (or if not you should be wondering how you can possibly be getting bandwidth and processing for nothing).  If you don't mind the fees, then you can get a (more or less) steady stream of income from pool mining.

But wait, there's more.  It is possible for miners to cheat the pools they use by using block withholding attacks. They can run special software that sends normal shares to the pool so they get their cut, but they withhold winning shares that score a block.  If a dishonest miner is a small fraction of the pool hash rate the block withholder will lose only a small amount by this strategy.  The loss will come out of the pool if the miners share in the pool's profits or out of the pool itself it is Pay Per Share (PPS). In the PPS case, if many people do this the pool will end up bankrupt and some miners will be left holding the bag.

You might wonder why a miner might want to withhold winning blocks.  There can be perfectly good reasons for such a strategy, for example if one is renting out one's hashing hardware one will get paid regardless of successful blocks, but there will be an overall reduction of network hash rate from people following this strategy, which means there will be a net benefit for the owner of the hashing hardware which will retain its value longer due to slower increase of difficulty.  (I make no comment whether this cheating is moral or immoral or legal or illegal, just that it is possible.)

My personal belief is that pool mining is a poor investment because of the risk of block withholding, except when it is done by groups of people who enjoy mutual trust.  I am prepared to accept the variance of solo mining but have limited network bandwidth.  I am presently using a solo mining pool, after giving up on several conventional pools following extended periods of bad luck, for whatever reasons.  (I have also been luck and scored a block last summer in solo.ckpool.org in six weeks using two Antminer S3's.)