Bitcoin: PPLNS vs PPS
There are many ways to turn your computing power on the Bitcoin network into payments to your wallet. Using pools is one of the easier options to make money fast with low investment. The Pool I recommend is BTCguild which makes up the largest pool on the network right now. There are 2 payment methods in this pool, 2 different calculations that determine how you get paid and you can choose which you want to use.
What is PPLNS
PPLNS is a way of determining how many Bitcoins you get for your shares completed. Pay Per Last N Shares is what PPLNS stands for. This method of calculating payouts includes a "luck" factor. Using PPLNS your payout per share will have a large range (30% more or less on your payouts), but on average, PPLNS earns more than PPS (by 5% or so) in the long run (a month or more).
- PPLNS Formula
((Block Value + Transaction Fees) / 10) - Pool Fee (3%)
BTCguild explanation of PPLNS
Pay Per Last N Shares groups shares submitted by all users into a "shift." A shift is currently defined as ~250 million shares. Once a shift is completed, it is considered an "Open Shift". After 10 new shifts have completed, the oldest open shift is closed.
While a shift is open, any blocks the pool finds are paid out to all open shifts (10% of the block per shift). This means that you will continue receiving payments on completed (open) shifts even if you stop mining.
What is PPS
PPS is also known as Pay Per Share. It is a more direct method where you get a standard payout rate for each share completed. This method eliminates the "luck" in your payout, but can decrease your total income per share by around 5%. Using PPS you get a set number of Bitcoins per share of work you have solved. It has no luck involved so the payouts do not fluxuate.
- PPS Formula
(1 / Network Difficulty * 25) - Pool Fee (7.5%)
BTCguild Explanation of PPS
In simple terms, this means each share is valued at the average expected value at current network difficulty. A 7.5% fee is deducted from this rate because you are paid regardless of whether or not the pool solves blocks. The pool is absorbing the chance of "bad luck" or general variance, and offering you a flat rate.
The current PPS rate can always be seen in the top right corner of our website. Is is updated immediately whenever the difficulty changes (every 2 weeks). A log of your BTC earned is available under the 'Payments' section, which breaks down shares submitted per difficulty.
Which Bitcoin Payout should I use?
If you are looking to make money off of the bitcoin network, you want to use PPLNS due to its higher payout. PPLNS will give you wide fluxuations in your 24 hour payout, but for hardcore Bitcoin miners, the law of large numbers states you will earn more this way. This is for people trying to mine as fast as possible.
PPS is for people who want to have statistics to base calculations off of for upsizing their Bitcoin mining power. If you have a USB Block Erupter for example, and want to know how much you can make off a Butterfly Labs 5GH/s you should use the PPS method to calculate this. PPS is not recommended for simple mining because the payout is less in the long run.
- BTCguild - How am I paid?