The reality of mining pools.
News has just come out, concerning the fact that the mining pool “MineXMR”, on the Monero blockchain now holds over 50% of the hash-rate. This circumstance is extremely dangerous for the security and integrity of blockchains, especially privacy oriented ones like Monero.
Now that we understand what the headlines mean, let’s quickly go through the pros and cons of mining pools.
- Makes mining more profitable overall.
- Miners can rely on fairly consistent payouts, usually making the network more stable.
- Makes mining easier for entry level users.
- One party having a significant percentage of the hash-rate severely decreasing the decentralization, and can cause high latency, and even malicious attacks.
- A potential 51% attack. In Monero’s case because of the way XMR is designed an attack of this type is not possible, but on other networks it is certainly possible.
Now that the disadvantages of mining pools are obvious, let’s go through what you can do, even if you want to mine with a pool.
- Mine with a smaller pool, the smaller and the more pools there are, the more decentralized and resilient the network will be.
- If you are delegating your coins on a PoStake chain, it would be very beneficial for the network for you to delegate you coins to a smaller, yet reliable validator.
- The best solution for miners is, just mining by yourself. This strategy could potentially cause you to lose some profits, but at least, you can sleep easy at night knowing you are using the blockchain as Satoshi intended.
Regarding the situation happening with XMR right now, a lot of FUD is being spread in the community (just check the subreddit).
From what I have read, the XMR core team are aware and understand the potential risks of this situation, they are taking action and raising awareness. You must be careful though, do not let your emotions control your trades. Remember to always do your own research on topics like these, and again, nothing here or anything I write is financial advice.