Mining pools have real advantages but every mining pool is a bit different – including in the way in which it rewards its participants. It is worth choosing the mining pool that meets your needs best, but making this decision can be tricky. It’s not about fees and pool size, the way payouts are made and the type of reward you receive also matter.

People new to cryptocurrency mining will probably think that the phrases used to describe mining pool technology is pretty complicated. This article will help you understand mining pool rewards better, in particular the difference between PPS and PPLNS.

It doesn’t matter which cryptocurrency you are mining – BTC or ETH – the pool you use will have its own way of paying which is established by the person who set up the pool. However, there are a number of commonly used reward structures:

• PROP which is bog-standard proportional structure
• PPS is simple too – pay per share
• PPS+ is a tweak to PPS called PPS “plus”
• FPPS which stands for full pay per share
• SMPPS which is “shared” maximum PPS
• ESMPPS that tweaks SMPPS, it stands for “equalized” SMPPS
• CPPSRB is another variation, it means “capped” PPS with “recent backpay”
• PPLNS is pay per “last N share”

Even though there is a wide range of mining rewards models you will find that the two most commonly used models for mining pools are PPS and PPLNS. Let’s talk a little bit more about mining pools before we have a close look at PPS and PPLNS.

How does a mining pool work?

Mining pools are groups of cryptocurrency miners who decide to collaborate and pool their computing power so that they can solve the cryptography puzzles that generate new cryptocurrency blocks faster than they otherwise could. Reward is usually split in the ratio in which members contributed the computing power that made it possible to find a block.

Even in the early days of Bitcoin mining solo mining already became very difficult for many individual miners, and this is why mining pools were established. Participants with very powerful hardware will mine a bigger share and get paid more. The people who set up the mining pool will decide how this payment scheme works – but like we said the most popular ways to do it is either pay per share (PPS) or pay per last N share (PPLNS).

The practical difference between PPS and PPLNS

It’s worth understanding the difference between PPS and PPLNS because either method might suite your personal preferences and goals better than the other.

Understanding PPLNS

OK, so we know PPLNS is short for pay per last N share, where “last” is sometimes replaced with “luck”. In this method your payment is calculated by the number of shares that you submitted during a mining shift. Pools operate differently so your pool might be very consistent in finding blocks, or there might be times of “overtime” where your pool find blocks much more quickly. This will affect how frequently you are paid.

So some people would say the PPLNS involves a degree of chance and that you cannot expect consistent payouts on any given day. However if you maintain the way you mine in a pool you should see relatively consistent payouts, with these payouts changing only when miners join the pool or when a miner leaves the pool.

Understanding PPS

PPS then is simply pay per share. PPS takes a simple average of how much you contributed to the mining pool as it tried to find a new block. In essence PPS payouts will pay solid rates and generally tend to remove chance from the payout equation, some people think PPS is more direct in the way it pays out.

So with PPS it doesn’t matter how quickly a pool finds blocks, you will get paid every day. The reason this happens is because PPS pools will set a specific payout for every miner every day based on the hash power contributed by that miner. It makes it easy for you to calculate your earnings for a day’s mining work, whereas it is more difficult to do so with PPLNS.

Choosing between PPS and PPLNS mining pool rewards

New miners looking for mining rewards often ask which is the best option – PPS or PPLNS. There are pros and cons for both but it boils down to how often you switch pools. People who stick to the same mining pool will find that PPLNS will reward them for this loyalty. But let’s take a closer look.

Why you’d want to use PPS

Choose PPS if you primary goal is to make sure you get a steady, reliable payment every single day. You might want to make sure you consistently sell your rewards and PPS gives you this daily consistently. Pay per share is a good choice for big mining pools that have the data to be able to accurately understand its mining power.

That said the people who own mining pools can find that PPS is not the best option for them because PPS forces pool owners to make a payment irrespective of whether the pool has actually done enough work to solve a full block. That’s why you may find that many mining pools have switched to PPLNS. PPLNS also protects mining pools against people who constantly change pools.

When to choose PPLNS

For maximum mining profitability you might wan to think about PPLNS. In general you can expect to get higher rewards under PPLNS than under PPS while at the same time experiencing more regular payouts than with PPS.

Nonetheless like we said earlier you can find it difficult to calculate your mining income if you choose to use PPLNS because of the erratic payouts. Yet PPLNS is still good for people who have a bit of experience with mining, while PPLNS is also the better choice if you are the owner of the mining pool.

Because the payouts are based on when blocks are found you will find that with a bit of luck you will get a lot of payments, but the opposite could be true. Miners usually look for big pools with a lot of hash power to ensure that under PPLNS they get paid regularly.

Checking whether a pool is PPS or PPLNS

Always check which payment method your pool uses before you settle down and choose a pool you want to use – it makes a huge difference. Check the payouts section of the pool’s website or look through the FAQ on the website. Contact the support team if you still can’t find out whether your pool of choice is PPS or PPLNS – it’s always worth checking.