Pool vs. solo mining
Why You Are Here
You are most likely here because you have been asking questions on #bitcoin-mining
What this topic discusses
The purpose of this page is to explain what the differences between pooled mining and solo mining. This Topic will give pros and cons of each, and explain at what point you would want to switch from one to the other.
What is Pooled Mining?
Pooled mining "pools" all of the resources of the clients in that pool to generate the solution to a given block. When the pool solves a block, the 50 BTC generated by that block's solution is split and distributed between the pools participants.
This means that you get "steady" payouts over time (ie 0.01 BTC per block that the pool solves, and the pool solves blocks ~30 min)
What is Solo Mining?
Solo mining means that you pool all of your resources into a private pool. When YOU solve a block YOU get 50 BTC.
This means that you get "unsteady" payouts over time (ie 50 BTC per block that you solve, and you solve blocks ~X days)
Pool mining is basically a collaborative effort towards discovering a block. For every Bitcoin server, not miner, the difficulty is increased. Solo mining can take ages and show no profitability unless you get extremely lucky and happen to discover a block after more than a month of nonstop mining. Solo mining had it's time, but now it just isn't profitable enough to take seriously because the difficulty of mining a block has increased so much. Solo mining defiantly still supports the Bitcoin network, but what would help more is buying some Bitcoins and spending them, or accepting them in exchange for a service.
If you have a machine that outputs at least 5Ghash/s then you will have a chance of discovering blocks whilst soloing more often, and that can be more profitable for you if you are very lucky. However, due to lack of features such as long-polling, you will still often get a larger payout (before fees) from a mining pool.
Pooled mining will generate you a steadier, smaller income while solo mining with adequate power will generate large amounts of money with large amounts of uncertainty.
Most pools take a percentage of the coins it's workers have earned, but there are some that doesn't have any fees whatsoever. Check out Eligius for more information. Support this developing pool and generate a steady income even better than solo mining!
- Why pooled mining An article on the same topic presented with further details.