Bitcoin Miner Riot is switching mining pools after falling short in November
Riot Blockchain (RIOT), one of the world’s largest publicly traded bitcoin miners, is switching mining pools to ensure “more predictable results” for its operations, the company said after failing to produce expected monthly bitcoins.
Riot said it achieved record hash rate capacity in November with computing power reaching 7.7 exahashes per second (EH/s), 12% higher than October’s 6.9 EH/si, according to a statement. However, the miner produced 521 bitcoins in November, lower than the 660 it expected to mine, due to a payment discrepancy in the mining pool it was using.
Riot mined just 2% more bitcoin in November than the previous month. Meanwhile, it mined 43% more bitcoins in October compared to September.
“Variance in a mining pool can affect results, and while this variance should balance out over time, it can be volatile in the short term,” Riot CEO Jason Les said in the statement. “This variance led to lower-than-expected bitcoin production in November, relative to our hashrate,” he added.
A mining pool is like a lottery syndicate, where multiple miners “pool” their computing power to get a steady stream of bitcoin rewards. Joining a pool of other miners greatly improves the odds of solving a block and winning a reward, even if the payout is shared among all members.
Read more: What are Bitcoin Mining Pools?
Public miners are usually secretive about the mining pool they use. However, a person familiar with the matter told CoinDesk that Riot previously used Braiins, formerly known as Slush Pool, for its mining pool.
Most mining pools use multiple payout methods that offer consistent rewards to pool members. Most pools use a method called Full-Pay-Per-Share (FPPS).
Braiins is one of only a few mining pools that use a mechanism called Pay-Per-Last-N-Shares (PPLNS), which introduces significant variation in members’ rewards. That variation likely contributed to Riot’s lower number of bitcoin rewards, according to the person.
Other payment methods usually ensure that miners are always paid, even if the pool does not find a block. However, PPLNS only pays miners after a block is found by the pool, and then the pool goes back to check for valid shares contributed by each miner before winning a block. The miners are then paid in bitcoin rewards, based on the valid shares that each miner has contributed during that time.
To avoid such variations, Riot decided to switch mining pools, which “offers a more consistent reward mechanism so that Riot will fully benefit from our rapidly growing hash rate capacity as we work toward our goal of reaching 12.5 EH/si the first quarter of 2023,” said Les. Riot did not specify which pool it will be moved to.
Braiins declined to comment for the story.
Miners are already facing a tough crypto winter as bitcoin’s falling price and higher energy costs have eroded profit margins, prompting a few miners to file for bankruptcy protection. Predictable and consistent mining rewards, which are miners’ main source of income, are of utmost importance. The margin of error has become increasingly narrow this year amid today’s tough conditions.
Riot shares fell around 7% on Monday, while its peer Marathon Digital ( MARA ) was down more than 12%. Bitcoin recently fell around 1.2% in price.
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