Topic: What are the Pro's/Con's of starting a pool? (Read 2607 times)

I wasn't joking about:
and eleuthria with:
Eleuthria is making a sizeable profit now but that belies just how much investment and work he has and is continually putting into it.

I posted the data here in another thread but thought it might be relevant here. There's a good analysis of the reserves needed for a PPS pool in Meni Rosenfeld's paper on pool payout schemes. Using that formula, at 25BTC per block and 2% fee, allowing for a 1 in 1000 chance of going bankrupt, the pool needs a reserve of 4,300 BTC. If the pool tries to get by with a reserve of 1,000 BTC then it has a 20% chance of going bankrupt. Variance is a killer. There was a website that plotted pool balance variance over time based on fee but I can't locate it at the moment.

Back when the price of bitcoin was $1 or less it was fun running a pool since $4,300 in reserves wasn't too much of a risk. Now it's close to $400,000 so it's less of the 'fun' level. Less risk if you don't go for PPS of course.

I was curious about starting a pool just for fun. This thread changed my mind, it doesn't sound fun at all.

Totally understand, so these ASICs are actually not a problem regarding bandwidth

It depends entirely on the protocol and # of users.  2 TH/s could be 1~2 kbps if it was a single user connecting with a stratum proxy.  It could be 2 gbps if it was a bunch of CPU miners.  BTC Guild servers in total utilize around 150~200 mbps inbound + 150~200 mbps outbound if you add together all stratum and getwork servers.

Can a pool operator tell me roughly the bandwidth used for a avg pool? (2TH/s)

I think this is the only open source pool software:
https://bitcointalksearch.org/topic/ann-eloipool-fast-python3-pool-server-software-gbtstratumdyntargetproxy-61731
https://www.gitorious.org/bitcoin/eloipool

Why people don't do it:
1) Margins are razor thin
2) high liability (a popular pool lost a couple thousand dollars in a few minutes switching from bitcoind 0.7.2 to 0.8.0)
3) high technical know-how barrier to entry
4) existing pools just "work" and have good reputations (low variance, history of payout, low fee, high uptime, etc.)
5) hard to differentiate yourself (only so many ways to pay out...)
6) if you really want your own pool, p2pool "just works." those that want to mine their own pool can set it up themselves and use the --fee command line argument to charge those that mine on your pool a fee (or make it 0 and those that log into you will just get paid, great for a small pool of friends). You need similar hardware to run p2pool as you would your own mining pool, so why bother reinventing the wheel.

I have to think that it can't be that hard. Like you say though, it's about having the information. I wish I didn't already have too many projects that aren't getting attention because I'd like to get more into the Bitcoin infrastructure.

Ok, I'll go ahead and be the one to say it...yes, it would be GREAT right now if there where a few more pools...actually a LOT more pools. Biggest reason why there aren't more pools? Lack of information, plain and simple. This thread is already getting to be almost a full page in size on the most popular bitcoin forum on the net (pretty sure anyway) and still not a single "Here is a great resource... http://bitcoinpoolinfo.kaka". (<--- haha bitcointalk wants to hyperlink it...i'm going to let it cuz its silly )

I've been mining with various pools since July last year. I've been wanting to start a pool of my own since August of last year Have I started yet? Nope...haven't figured out how. Closest I've come to running anything similar to my own pool is setting up my own centralized node with the p2pool setup...which doesn't work all that well because I only have a personal/home internet connection where I really should have at LEAST a business account with a dedicated IP and blah blah blah so I don't have to use Hamachi, sigh. Next best thing besides a personal p2pool node would be a site like Triplemining (quick plug sry ... http://gektek.triplemining.com) who allow you to create your own minipool within their system which entitles you to 1% of the coin being mined by those in your personal pool going to you and the other Triplemining minipool operators (from how I understand it anyway).

That being said, neither of those options are technically your own pool. I have figured out that there is the slush pool code available out there but it even very specifically says that it does not include any of the frontend code as they feel each pool operator should come up with their own 'style' and yadda yadda. So back to square one. Plain and simple there is NO easy way to get into running a pool of your own in any way shape or form what soever period the end.

So...it would be swell if somebody could prove me wrong though...eh? eh? Any takers?

njoy1

edit: oh right...and now here comes the spam cuz that wasn't even the question...HAH...sorry it's early, still waking up and well, it's on my mind and sorta on topic so going to leave it

Con:  Dealing with botnets that screw up your servers by overloading them and then dealing with assholes who DDoS you when you kick them off.

I don't really understand why the risk of bankruptcy is an issue. I know HHTT has burned through a few of his own BTC. I would have through the algo to go with would be when a block gets mined, the BTC get split between the contributors according to whatever method one chooses.

I can see that there might be some reason to offer some join incentive to start paying for mining relatively quickly but once things are going along, why should there be problems?

I knew I did something dumb at some point 

Fees are one benefit. Unfortunately the variance of mining is so extreme that you won't see this benefit for a long time, and in the meantime you'll see such large swings that you'll be wanting a large buffer of your own personal coins to cover it. Thanks to the rising price of bitcoins you can be tens of thousands of dollars down if the short term luck is bad. Or tens of thousands of dollars up if the luck is good of course. And this also depends a lot on the pool payout method. Imagine being 1,000 bitcoins down due to variance, paying PPS, and bitcoins being $50 USD each. Ouch.

More mining pools help the decentralization of the bitcoin network. So by operating a pool you are helping the bitcoin network.

Also I am planning to start my own pool soon.

The benefits? Realistically: many sleepless nights, headaches, heartaches, trolling, frustration, loss of money and the very slim chance of making a profit...

But what are the benefits of owning pool? Do you get a cut from the miners or what.

Thanks for the responses btw.

I wouldn't have said this 6 months ago, but right now I think there is room for more pools with the hashrate jump and the new technical challenges of keeping up with the hardware revolution. That said, the effort required to get up to speed as a meaningful alternative pool is massive and requires a lot of know how of both regular server and networking scalability issues, as well as unique bitcoin mining and its protocol scalability issues.

If mining pools were not around, you would probably see significantly fewer miners.  I don't know many people who would like to burn that much in electricity to play in a lottery.  Without pools (assuming the same network speed) at 1 GH/s, you would on average get paid 25 BTC every ~8 months.  If you have bad luck, that could be 4+ years.  Good luck, maybe in a few minutes.

Pools allow you to avoid that kind of variance (which is terrifying these days given how much hash power is required).   And most pools offer things like email alerts when miners stop working, which means you don't need your own internal monitoring system.  They also mean you don't have to run a full bitcoind node on your LAN in order to generate coins.

Why do people start mining pools? Are there even benefits from owning/running a pool other than taking out fees from mining and transactions?

These questions have been on my mind recently so I just wanted to get them out.