How profitable is it to operate a mining pool?

[forbun]

At BTC Guild, "Pay-per-Share (PPS) provides miners with the lowest variance of any pool payment system, at a 7.5% fee, and Pay-per-Last-N-Shares (PPLNS), at a 3% fee, which has some variance, but also includes block transaction fees."

So BTC Guild keeps this fee, right? How much money do they make?

[1714153318]

1714153318

[1714153318]

1714153318

[1714153318]

1714153318

[1714153318]

1714153318

[Rluner]

A lot.

[zvs]

A lot.

only  for some

like btcguild for example started out with a 0% fee and just took transaction fees, back in 2011.

i have no clue when/how they changed their fee structure, but they probably bumped it to 1% first before going to 2% or 3% or whatever.  this way, people won't change pools

why?  some really have no clue as to what's going on regardless (probably the majority of these never mined before ASICs), some would rather give btcguild 3% then waste time reconfiguring everything, and some seem to think that since btcguild solves more blocks, that means they make more than some 0-1% fee pool that solves 1/2 as many.

i lose money running my p2pool, i haven't mined on it seriously for about 4 months & it consumes resources on that server (to the extent that I've picked up a second server for encoding video, and, well, torrenting).  i assume it also may be the reason i've been null routed from ddos attacks a few times in the last 6 months... or that could have been the "hub node" list on blockchain.info & people actually thinking it'd reduce the network hashrate or something.   i don't have blockchain on my addnode list and they don't connect to me anymore, so that's not a problem at least.

i recall having some discussions with drharibo about it, but i'm pretty sure bitminter was essentially break even or so until he increased his fee from 0 to 1%.   not a whole lot of people donate willingly

(err, forgot to add, but, yeah, these places that take 2-3% or more... quite a bit, if they're active)

[eleuthria]

A lot.

only  for some

like btcguild for example started out with a 0% fee and just took transaction fees, back in 2011.

i have no clue when/how they changed their fee structure, but they probably bumped it to 1% first before going to 2% or 3% or whatever.  this way, people won't change pool

BTC Guild was 0% Fee donation based proportional for May 2011 to late October 2011.  Pool hopping became a big problem (it was basically automated for those who wanted to do it), and as a result BTC Guild changed from donation based proportional to 5% Pay per Share only.

BTC Guild made a *little* money early on, but donations aren't a sustainable way to run a pool.  The larger the pool became, the lower the average donation % became.  This was a big problem back then because getwork was extremely poor at scaling, and the pool had to run many servers to keep up.

In late 2012, BTC Guild added 3% PPLNS, plus txfees, plus orphan blocks.  In April 2013, when BTC Guild was becoming a 51% threat, it made PPLNS the default payout method, and increased the PPS fee in order to encourage users to voluntarily leave the pool (if they wanted to stay on PPS).  There was never a gradual fee bump.


BTC Guild makes quite a large profit these days.  It has been my full time job since May 2012.  However, it wasn't that profitable until mid-2013.  I actually went back to work from December 2012 to February 2013 because the price of BTC and size of BTC Guild wasn't enough for me to feel safe depending on it as my only source of income.  Since then, it is a very different world now.  BTC price has gone up ~20x since that time, and BTC Guild has also increased it's share of the network from ~15% to ~30%.

[miner49er]

curious about some of the history; Answer if, or as you will any of the following:

would you comment on how much of the pool's hash rate is your own personal miners? How does BTCGuild's position as one of the top pools affect attacks? Are you confident the major pools out there are relatively secure (Re: 50BTC's recent tragedy)?

right around the 51% issue BTCGuild was facing, when the Avalon ASICS first appeared,  I noticed there was a user ASICMiner on your pool. then shortly after the ASICminer pool started showing up on the block origin rankings. was there any connection between ASICminer and BTCGuild? Were you involved in helping them set up their pool? Or was that 2 separate entities?

 

[eleuthria]

curious about some of the history; Answer if, or as you will any of the following:

would you comment on how much of the pool's hash rate is your own personal miners? How does BTCGuild's position as one of the top pools affect attacks? Are you confident the major pools out there are relatively secure (Re: 50BTC's recent tragedy)?

right around the 51% issue BTCGuild was facing, when the Avalon ASICS first appeared,  I noticed there was a user ASICMiner on your pool. then shortly after the ASICminer pool started showing up on the block origin rankings. was there any connection between ASICminer and BTCGuild? Were you involved in helping them set up their pool? Or was that 2 separate entities?

 

ASICMINER is a private mining company that developed the first mass production ASICs.  They used BTC Guild as their pool during initial deployment for stability.  I did not know who they were (that they were actually ASICMINER) until after the fact.  A similar situation happend with the "100TH" mining group.  They were using BTC Guild during initial testing/deployment.  Eventually those large companies have gone solo mining, which is expected when you're controlling a fairly large hashing power (although at this time I wouldn't be surprised if 100TH ends up joining a pool again due to how fast the network is growing).

My personal mining power is between 0 and 10 GH/s at the moment.  I've recently turned off my Avalon (batch 2) due to the profit over electricity being very low, just not worth the constant noise if generates while I'm working all day.

[zvs]

curious about some of the history; Answer if, or as you will any of the following:

would you comment on how much of the pool's hash rate is your own personal miners? How does BTCGuild's position as one of the top pools affect attacks? Are you confident the major pools out there are relatively secure (Re: 50BTC's recent tragedy)?

right around the 51% issue BTCGuild was facing, when the Avalon ASICS first appeared,  I noticed there was a user ASICMiner on your pool. then shortly after the ASICminer pool started showing up on the block origin rankings. was there any connection between ASICminer and BTCGuild? Were you involved in helping them set up their pool? Or was that 2 separate entities?

 

ASICMINER is a private mining company that developed the first mass production ASICs.  They used BTC Guild as their pool during initial deployment for stability.  I did not know who they were (that they were actually ASICMINER) until after the fact.  A similar situation happend with the "100TH" mining group.  They were using BTC Guild during initial testing/deployment.  Eventually those large companies have gone solo mining, which is expected when you're controlling a fairly large hashing power (although at this time I wouldn't be surprised if 100TH ends up joining a pool again due to how fast the network is growing).

My personal mining power is between 0 and 10 GH/s at the moment.  I've recently turned off my Avalon (batch 2) due to the profit over electricity being very low, just not worth the constant noise if generates while I'm working all day.

Sell it while people will still pay way too much for it 

[Trongersoll]

Although running a pool may be profitable for the existing pools, I suspect that it is almost impossible to start a sucessful pool at this time ( not including pools formed to take advantage of existing hashing power ). Just like every new miner brought on line dilutes the other miners, every new pool dilutes the existing pools. The variance on really small pools would be so great that it would mimic solo mining. Also, a new pool would have to offer something that the existing pools didn't and do it sustainably.

Then there is the infrastructure that is needed. I suspect that to be a viable public pool one would need hardware beyond one's own home computer or home network. Also, one would need the know how to setup and maintain the pool. At some point other pool owners will tell you that you are on your own.

I can probably be done, but success isn't likely. 90% of all small businesses fail in the first year.

This is off topic, i suspect that i am addressing the underlying purpose for this question. If not, Oh well.