This will be a rundown to show the contrast between solo mining and pool mining.
We’ll show an interesting paradox which you may have noticed: more mining power leads to centralization.
So today’s network hashrate according to blockchain.info is 33,971,919 TH/s (about 34 million).
Mining reward is currently 12.5 BTC per block, and since blocks are mined every 10 minutes on average, we can calculate that the total mining reward yearly is 657,000 BTC/yr. (six hundred fifty seven thousand) Also, for the sake of this calculation, we assume that the price of bitcoin is constant, staying at 10,000 USD Suppose you want to start solo mining today.
First you need to buy your mining hardware, and let’s you’re buying a Antminer S9, which costs 3000 dollars with a hash rate of 14 TH/s.
Your hashrate in relation to the entire network’s hashrate is very small.
If we do the math, you end up having 0.0000004% of the total network hash power.
You expected annual reward in this case would be 2707 dollar per year, and this is just an estimate of your average income.
However, if you are unlucky, you might end up with not finding a block in a very long time.
Taking into account the variance of having such small proportion of the network hash rate, we can see that with our current numbers, we can expect to mine 1 block every 2,426,566 (about 2.4 million) blocks, which translates to a reward of approximately $125,000 once every 46.2 years On the other hand, if you were to mine with a pool, you could expect to have much more regular payouts.
Assuming a pool you choose to join has one sixth of the network hashrate, this means that the pool finds every 6th block, or every hour.
This means that you can expect to early 31 cents every hour.
So, the question is, would you rather have a huge payout every couple decades as a solo miner, or a small but regular payout mining in a pool.
Obviously, pool mining sounds more attractive due to its low variance.
And anyways, your ASICs will probably be really out of date in a couple years, so you can’t realistically afford to have high variance in your mining payout.
So this leads to the paradox that: the more secure Bitcoin gets, with more and more hash power, the greater the appeal is for joining a mining pool, since your individual hash power decreases when more hash power joins the network.