Topic: How can 0% fee pools make money? (Read 6456 times)

I wasn't aware there was a scrypt coin that could be merge mined.  I suppose I should look into that.

My pool is at 0% fee, but I'm not losing any money on it, since I pay for that server & have had it for years, anyway.  The processing power & bandwidth the p2pool & dogecoind require is negligible.

Maybe advertisements on their website

http://nastyfans.org:9332/fee
0%, they run on altcoin (namecoin) merge mining.

Has no one answered this question yet?  Honest zero fee pools survive off of donations.  It's as simple as that.

There are merge minable scrypt coins but I don't believe any of them have real value. Namecoin seems the only one that is worth something.

..They must have believed that the market was promising in terms of its profit offerings, so on and so forth.

(The altcoin forum is that way.)

I don't really follow scrypt coins; is there such a thing as merged mining? If not then they're just running a loss leader promoting another product or brand.

Neither a loss leader nor promoting another product or brand means they are doing something intelligent. Might be an ineffective strategy.

They might be skimming (harder in the case of p2pool but not impossible if they are running the node, though they probably get caught at some point, if they're not gone first), but really this could be true of pools with a fee too. Greed is greed.

eh, what could a scrypt p2pool 0% fee, 0% donation take?

Most so called 0% pools are actually taking some of the mining returns, be it transaction fees, merged mining or both.

The rest are doing some kind of loss leader, either to promote another product, to build their brand, or to build a the personal brand of the operator.

0% fee does not necessarily mean a pool is a good pool to use or that it is a bad pool to use. Don't be hypnotized by that number. It is powerful.

I've wondered the same thing back when I was really interested in mining.  thanks for bring this question up as I find it to be interesting topic indeed.

Very true! I can think of a pool that fits this category, lol.

a lot of the MPOS 0% pools will eventually decide to stop paying out and run off with all your coins.

i run 0% p2pools, but they dont tend to stay up for longer than a month or two.  since, well, it's a hobby and it isn't making me any money (running it as a public pool)


it also usually is well below 100% efficiency, haha

a month later and now this redirects to a textbook rental site...  times are tough

Wow you haven't heard of ghash.io? They had a 1.25x reward LTC promotion last week. 0% fees pool are rare in scrypt mining but not in sha256.

Interesting take..

Wow! Haven't seen 0% pools and can't imagine how is it possible thay exist!
I mean what's the profit if there is no fees, maybe as it was told - Donations

Donation..

1. Loan BTC to speculators/governments who want to short the Bitcoin market/keep the exchange rate stable.
2. Delay payouts and use other peoples BTC to speculate on Bitcoin price moves (Currency Arbitrage).
3. Keep all the transaction fees for yourself.
4. Secretly merge mine an alt coin and keep them all for yourself.
5. Create a payment system that doesn't pay miners for all the found blocks.
6. Create a payment share system so complicated people don't realize they are paying a hidden fee.

My advice, never mine anywhere you can't be paid daily! If payments are delayed, get out fast!

P2pool is a distributed network of pools so cost is shared between many nodes, and the most popular node, P2Pool.org, does actually charge a 2% fee!

"The Future of Mining".  You have pictures of Block Erupter Cubes.  Buzzztt...wrong.  They are firmly in the past those things...

Taken care of! Again thank you for the feedback.

thank you, we will work on that ASAP.
I appreciate the feedback.

I think the sliding photos, need to be more consistent. They are all different quality, and size. Apart from that it is quite good. 

Yes, we just started.
However I truly believe that we have a great product, unlike anyone currently out there.
I've mined on the big pools, and our interface is way better in every sense of the word. (at least I think so).
We were miners first, and we took a look at what we would of wanted in a pool and we incorporated those things into our site.
We are adding new features everyday.

I understand what you are saying, and I agree... it's a long & winding road ahead, but everyone needs to start somewhere.
We truly believe that the product will speak for itself.


Thank you for taking a look, we appreciate it.
Best of luck to you as well.

~Charles

You just started right? You only have 2 BTC miners, and 0 LTC miner. 

Good luck.

I actually run a 0% fee pool. In fact, we are currently paying a 3% Bonus on solved blocks. (as a promotion)
We are doing this because we are NEW. We are trying to grow our miner base.

Our business model is that we want to provide an equal playing field for everyone who wants to mine both bitcoin & litecoin.
We want to share evenly in the profits with those of us who help us out. This makes a sense of community and makes it so that no one person is better than the other, we all have an equal stake in the mining process. Yes we host the pool (in house with cloud-stack technology) Yes it does cost us money & electricity and time to run and maintain a pool, especially one that is as rich and robust as ours. However we want to make our money in other places.
By offering mining contracts, by offering seminars on bitcoin & litecoin, by holding workshops and educating the public. An educated consumer is the perfect consumer. We also plan on making money by utilizing our social media interface & by selling advertising to crypto currency related businesses.

So while I can understand why someone would be skeptical about 0% pools, I can assure you that we have other ways to make a profit.

We want our miners to come first, we are miners ourselves.

I am not saying all 0% fee pools are like this, I am just sharing with you our vision as a new pool in a competitive market.

We are not a big pool by any means, but we have a lot to offer and we think that the majority of you would like what we have done.
Please feel free to take a look, your support is greatly appreciated.

Charles - Btc Ltc Rush
http://www.btcltcrush.com

p.s. we are in the process of purchasing our security certificate, please disregard the error for now. accept the certificate. thank you.

Eligius also keeps shares done by people mining with invalid addresses - say you connect your miner with a gibberish work name, work you do will go to the pool's coffers.

I am very suspicious of 0% pools.  Running a large pool is full time job and computing and data center space isn't cheap.  While I suppose there are people that are willing to work 10 hour days for free, and spend thousands per month of their own money and hope that donations cover it,  it does seem odd doesn't it? Mother Theresa of Bitcoin?

Add in that pools are now multi-million dollar business's.  A pool with say 15% of hashing power has revenue of $219 million per year. (30 blocks a day, 365 days a year, $800/coin)

How many CEO's running a $219 million dollar business would do so purely on donations and cover expenses out his own pocket?

How would it be done?  Withholding blocks or withholding shares would be detectable (although you could mask shares by not reporting %'s instead exact numbers).  The maifia solved this problem long ago.  Skimming.  The easiest way to have a dummy "house account".  Credit 1 dummy share for every 100 shares would dilute the earnings overall by 1% and deliver $2million a year in earnings. 

Creating a dummy share for every 1,000 real shares would pay $219,000 a year in earnings.  (plus donations)

A skim of $2million, or $219,000 well within variance and luck and virtually undetectable.

You're quite right, pools cost a lot of effort and money to be kept online.  So it is indeed a good question, how do they survive.

Let's take a few pools:
- p2pool: this is open source software.  The software is free, but you need to run it yourself.  So not "free", you'll have to host it yourself.  Also, it has a 1% donation to the author "fee", altough it can be disabled, which has to be done explicitly.
- ghash.io.  Owned by cex.io, they use it as a marketing method, they make a lot of money renting hash power.  Hard competition for honest pools...
- eligius: they are driven by donations.

So yes, free pools are to be questioned.  But in general the big pools do it for the money (direct or indirect), the smaller pools do it to support bitcoin (and from donations...)

And yes, you must trust your pool.  Pools can abuse their position very easily.   There have been several cases (bitclockers, bitcoinpool) that are known for cheating on their users, so some have been caught.

In my region there is a saying: "Not even the dog wags its tail for free".
Some pools charge more than 5%, some are free. Most pools publish their reward: https://en.bitcoin.it/wiki/Comparison_of_mining_pools
Some pools (i.e.: eligius, ghash, p2pool, itzod) charge 0% to users and even share the transaction fees.

Pools are expensive services to maintain, where is the deal for 0% pools?

Information gathering like Google? Fees hidden in the rawarding calculation?
Ghash could have a "production control strategy", but the others?

Who or what can stop a pool operator from adding a line of code in the users rewarding script, to multiply his own miner shares before the final calculation?