Why is Bitcoin Pooled Mining (BPM) growing so fast, and can it continue?
BPM is responsible for a larger and larger share of Bitcoin''s total network hashing strength. Currently BPM represents about 20% of the hashing total. That is a level nearly triple the rate from earlier this month – a huge move! Who are these miners jumping into the pool?
One explanation for this move is that as Bitcoin’s difficulty continues to ascend rapidly, cannibalization is happening. Those without the strongest GPUs are no longer seeing rewards frequently when mining for themselves.
Just like Vegas learned, operant conditioning will dictate which developments become successful. BPM is like the slot machine where it maintains interest with a frequent payout.
While some GPU miners are just now considering switching to the pool, another group of miners, the CPU miners, might end up leaving the pool and stop mining entirely. While mining on higher-end CPUs such as the AMD Opterons might still be marginally profitable, those mining with anything less powerful might not even produce enough to sustain continued effort. For some, not only aren’t the bitcoin shares paying for the electricity consumed, they essentially become rounding errors.
As a result, the pooled mining’s makeup will likely shift. In addition to being the last stop for CPU mining, it is now becoming the last stop for low-end GPU mining as well. Because hundreds of millions of these GPUs were sold annually, that doesn’t mean pooled mining cannot continue this growth
Written on 29 Jan 2011.