Connect To Your Bitcoin Mining Pool of Choice: How VBit Technologies Increases Your Options

May 21, 2020 - Crypto News, Expert Commentary

Bitcoin Mining Pool

The Bitcoin halving event of May 11 brought the logistics of Bitcoin mining to the fore.

Not only has mining got more competitive but it has also become less viable for solo miners. With Bitcoin block rewards slashed in half, small miners using older equipment have been shutting down their operations in droves. 

Such a period leaves institutional miners with the infrastructure and logistical means to adjust to the changes in a better position than miners without the ability to manage power costs or purchase more powerful ASIC chips.

So, while the Bitcoin halving is catastrophic to some, it leaves others with a more consolidated position in mining. Indeed, the proof is in the pudding. Miners who did not have the means to cope with the reduced rewards had to get out of the trade. Soon after the Bitcoin halving on May 11, 2020, mining difficulty went down because of all the miners who had to close shop. Particularly affected were small-scale miners using older mining rigs.

Who are the beneficiaries?

Commercialized mining operations have the advantage over solo miners. Miners with low power costs and newer ASIC rigs are definitely on the forefront.  It just happens that a good number of these entities are Bitcoin mining pools. Mining pools are professional outfits that funnel hash rate from miners with a profit sharing agreement from their mining operations proportional to their investment. These entities are in stiff competition to make their investors the most amount of money. 

New Entrants Making a Foray in Pool Mining

Bitcoin mining pools are sophisticated and diverse in their investment models.  As Bitcoin mining grows increasingly exclusive, its importance is only set to grow. One of the largest crypto exchanges in the world, Binance, recently made a foray into this sector to fight for a slice of the pie. Binance will compete with Chinese exchanges like Huobi and OKEx which already have Bitcoin mining pool operations.

Binance is a significant player in cryptocurrency circles. Already, the effect of their entrance is being felt as Huobi has lost a few points in its share of the global hash rate. Binance enters this field with a lot of Bitcoin in reserve and can have a level of flexibility most other mining pools don’t have. The entrance into mining is also a way to attract customers, as other exchanges have used this activity for.

Established players like F2 pool, Antpool, and Poolin still have a significant lead in the pool mining scene with a combined share of over 45 percent of the global Bitcoin mining hash rate. F2 pool is notable as it received the last 12.5 BTC reward before halving took effect.

Another notable entrant in this field is Lubian  . Lubian has also been operational for a short while but already has 4.18 percent of the total hash rate from figures at press time. Lubian obviously does not enjoy the name recognition that Binance has, so their hash rate is all the more intriguing. The little known entity has already mined over 150 blocks in its month of operation. Lubian has little footprint online and more about this mining pool will emerge in due course.

China Is Still a World Leader in Mining

China is the world leader in terms of Bitcoin mining. Binance will, therefore, have to compete with and dislodge a lot of local mining entities. In its month of operation the Binance pool has gained about 3.3 percent of the Bitcoin mining hash rate. Binance is not only trying to be king in Bitcoin trading but also going after the source.  

The majority of Bitcoin pool mining computing power is within China. Therefore, Binance is making a strategic play to also get a greater share of the local market. The competition will be stiff but the fact that Binance has tens of thousands of Bitcoins in its vault bodes well for the giant exchange in competing with its rivals.

The Entrance of New Players Is a Good Thing

Theoretically, the more miners in the game, the better.  The more Bitcoin computing power is spread out, the more secure the entire network is. Binance has the advantage of financial muscle and can use it to compete with the big boys in the pool mining scene. How Binance will decide to play its hand remains to be seen. 

The possibility of them offering very low fees to investors probably has other pool miners shaking in their boots. With the financial strength of miners, they can turn this into a short-term scorched-earth battle of how low the competition can take fees to. 

That said, some of the prominent mining pools have a robust involvement in the Bitcoin landscape. F2Pool was an active participant in the SegWit 2x debates, and arguably came out on the right side of history. Similarly, Slushpool has spent its resources developing proposals useful in the Bitcoin community.

As effective as low fees are, Binance will probably consider investing in other aspects of Bitcoin protocol improvement to boost its profile. Such activities to improve its blueprint are just as vital in improving its standing among miners. To use a real-life analogy, soft power is just useful as raw power. Either way, the market will ultimately decide how to respond to these developments. 

The Place for VBit Technologies

The entry of new ambitious players like the Binance pool is an exciting development even for VBit customers. Binance and Lubian will likely cause an overall fall in fees among established pools. This will give you, our clients an opportunity to take part in securing the Bitcoin network. The more the players in the mining pool sector there are, the better. Therefore, the two entrants will likely have a positive impact on miners everywhere.

VBit can help you connect with reliable mining pools. Besides the few mentioned in this article, you can check a number of others from pool trackers. VBit can help you play a role in securing the Bitcoin network.

To be clear, VBit is not a mining pool.

See, a typical mining pool mines Bitcoin, and the Bitcoin goes to the server, which then calculates the amount of work your hardware contributed.

Instead, VBit is a hardware-hosting company that simply manages and maintains your equipment while you enjoy the proceeds of the hardware exclusively. With cheap renewable energy and limited overhead, clients can increase their chances of remaining profitable. Our data centers in the USA are strategically located to ensure they make the most of renewable power. 

Ultimately, access to cheap power and miners are cited as barriers to Bitcoin mining. Whoever manages to have the lowest power cost will emerge on the profitable side of Bitcoin mining. This works alongside modern equipment like the Antminer s17, of course. VBit enjoys a direct line to Bitmain, the world’s premier ASIC manufacturer and you are sure that we will always have state-of-the-art equipment in our data centers.

Sign up today and profitably mine Bitcoin with VBit Technologies!

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