According to this thread on BFL, BFL_Josh says

PPS may be a better bet for you if you don't like variance. However if you are mining for the long haul, DGM will pay out more but your variance will be higher.

If I expect a few weeks of volatile (spiking or increasing difficulty) and I have sufficient Gh/s, what pool method is best suited for

  • A steadily increasing difficulty

  • A fluctuating or rapidly increasing (spiking) difficulty)

  • 1
    Variance isn't because of increasing difficulty - it's because every hash is equally likely to create a block.
    – Nick ODell
    Mar 9 '13 at 0:10
  • @NickODell True, every hash has the same chance of making a block, but that is tangential to my question. I'm talking about which payout methodology is better for X GH/s when difficulty is increasing/decreasing sharply (beta in finance terms). I may not understand Variance, what does it mean to you/Bitcoin? I am interpreting it as the difficulty or target increase every 2 weeks. Sep 26 '13 at 13:35

Mining, by construction, is a stochastic process. A Poisson Process to be precise. This means that even at a constant difficulty the time between a miner finding a block and the next is randomly distributed. As difficulty rose, this meant that you could go months without finding a block and then have a single afternoon where you found 2 in a row. This variance in the time between finding blocks is intrinsic to how mining works and is independent from any change in the difficulty. It's this variance PPS reduces, it is therefore independent from the difficulty changing.

Mining pools basically gather the computational power of multiple users, and should a single user be lucky, everybody gets their share. The way this share is distributed however is different between the two models you cite. The PPS model has the pool operator take on a certain risk, because he pays you for every share you submit. This means that you as a miner get payouts frequently even if the pools as a whole did not find a block. The other model waits for a block to be found and then distribute the reward among the users that participated.

Basically, if you are mining and are not directly reliant on a regular stream of bitcoins coming in, DGM is the way to go. If you are living on a knifes edge, reliant on a regular flow of bitcoins to keep you going PPS might be for you.

As a personal opinion: if you are serious about mining, go for non-PPS as you don't have to pay for the risk of the operator.

  • Good point. I think the only mining pool that still uses PPS is Eclipse. Jan 19 '15 at 0:23

Changes in the difficulty are irrelevant to the choice between DGM and PPS.

However, with DGM you'd want to mine in either a large pool or a combination of pools to minimize your variance.

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