NiceHash has been around for over 10 years, yet many still mistakenly believe it is a mining pool. In reality, NiceHash is more than a mining pool!

Definition of a mining pool

A mining pool is an aggregation service that allows individual miners to combine their hashrate to increase competitiveness. The mining pool prepares block templates and distributes work among its miners. If a miner finds the correct solution, the mining pool is recorded as the entity that confirmed the block—not the individual miner.

From the blockchain’s perspective, a mining pool is a single, large miner. To interact with the network, mining pools must run a Bitcoin node.

Think of a mining pool like a PPA (Power Purchase Agreement) aggregator: it pools energy buyers to secure stable prices and supply, ensuring steady and predictable returns.

Hashrate Proxy vs. Hashrate Liquidator

Many services that receive hashrate are called "mining pools," but there are actually two distinct categories. Hashrate proxies and Hashrate liquidators.

As the names suggest, one is simply proxying the hashrate, while the other is liquidating it - confirming the blocks on the blockchain.

Hashrate Proxy

The majority of smaller “pools”, normally the ones under 10% of network hashrate, are hashrate proxies. From user perspective, they act as any other mining pool that pays out the reward based on the amount of hashrate contributed, but these proxies are not liquidating hashrate, hashrate is being forwarded from proxies to hashrate liquidators. They normally aren’t the ones that interact with the Bitcoin network directly.

The companies that run hashrate proxies decide where the hashrate will go.

Hashrate Liquidator

A hashrate liquidator is a true mining pool that interacts with the Bitcoin network. There are just a few of such pools on the Bitcoin network. The hashrate sent to these pools is not proxied to another destination but it is liquidated in return for block reward - of course, if the block is confirmed.

Hashrate Liquidator pools must run a node to interact with the blockchain, while hashrate proxies don’t necessarily have to run a node to operate.

The miner user experience is similar on both hashrate proxies and hashrate liquidators and miners normally do not recognize the difference between them. It is only possible to recognize the difference by analyzing Bitcoin payout flows and block templates.

What sets NiceHash apart from mining pools?

At first glance, NiceHash appears similar to a mining pool: miners connect their ASICs using a NiceHash URL, set their worker names, and receive Bitcoin payouts for their work. However, the key difference is how NiceHash handles hashrate.

NiceHash operates as a hashrate marketplace, where miners sell hashrate to buyers who then forward it to mining pools of their choice. Unlike traditional hashrate proxies, NiceHash does not dictate where hashrate is sent—buyers make that decision. NiceHash is simply a platform facilitating the transaction between buyers and sellers.

NiceHash is more than a mining pool

Since NiceHash is an open, on-demand, and deliverable hashrate marketplace, it can offer a few benefits that other hashrate proxies or liquidators cannot:

1. Record breaking payrates

FPPS mining pools normally calculate the hashprice once per day and this can cause lower rewards since within a single day blocks can have different fee rewards. If the pool confirms a high-reward-block, the miners will normally not benefit from it since the top percent of the block rewards are normally excluded from the calculations.

NiceHash, on the other hand, calculates the payrates based on what the buyers are paying for hashrate. The buyers will constantly bid for the hashrate and even outbid each other. The payrate on NiceHash is recalculated every few seconds or minutes! This allows a fair and transparent payrates for all miners all the time. Sometimes even high spikes of payrates that are double than the FPPS pool payrates.

2. No pool luck - No risk of defaulting

Mining pools rely on payouts from the blockchain. A mining pool must confirm a block to receive funds in order to pay the miners.

On NiceHash, buyers are the ones that take all the risk of getting a block reward or not. The buyers must deposit Bitcoin to NiceHash before buying the hashrate. Once the funds are already on NiceHash, then the buyers can place a hashrate order and lock in the funds for the hashrate. If the buyer runs out of funds, the second buyer in the order book will receive the hashrate. Even if the pool does not pay the NiceHash buyer, the NiceHash buyer already paid for the hashrate, hence there is no risk for the seller of hashrate if a 3rd party pool defaults due to bad pool luck.

This way, a miner/seller of hashrate has zero risk of not getting paid on NiceHash.

3. Market-driven and automated coin switching

NiceHash as a company, opposite to hashrate proxies, does not decide where the hashrate will go. Buyers of hashrate decide where they will send the hashrate and these buyers buy the hashrate to make profit.

This creates an open commodity market.

The buyers are profit oriented and will always find ways to optimize profits and liquidation of hashrate. A reseller of a commodity will always find a buyer that is willing to pay the most for the commodity. That way the hashrate of a miner on NiceHash is used in the most efficient way.

The miner (seller of hashrate) gets the best of both worlds. Potentially higher payrates and no hassle finding the most profitable coin to mine.

4. NiceHash offers all the tools and features that a mining pool offers and more

As a miner on NiceHash, you have a full range of software support and even more than you can expect on most pools.

• NiceHash Firmware - Custom ASIC firmware for Bitcoin, Scrypt and Kaspa miners, powered by Marathon
• ASIC Manager - A software you can install on your site that will report temperatures, fan speeds, and additional local ASIC information on the NiceHash Rig Manager. Free to use!
• NiceHash Rig Manager - A unique dashboard that offers a simple and effective overview of your machines.
• Detailed Statistics - Due to the nature of our service, we are the only ones that can offer such detailed statistics on a worker level. For each worker, you can not only track accepted rates and rejected rates, but also the type of rejected and thus simplifying troubleshooting.
• Watcher Link - Share view-only of the dashboard
• Payout Splitting - Split the mining earnings automatically on each payout via blockchain transaction, Lightning Network, or between sub-organizations inside the NiceHash ecosystem.
• Custom Payout Thresholds - Set when you want to get paid.
• Sub-Organizations - Create sub-organizations, personal or business entities, to keep track of different locations or clients. Each sub-organization has its own mining address and accounting.
• Custom Fees - Default 2% fee is applied to all miners with negotiable deals for big clients. Contact us at farm@nicehash.com for custom deals.
• Based in Switzerland & Trusted by institutional clients - NiceHash is based in Switzerland with one of the highest compliance and hardest regulatory frameworks in the industry.

Those are just a few of the features that NiceHash platform offers and you can benefit from. If you want to learn more about features, feel free to contact us at farm@nicehash.com and we can schedule a meeting.