In our last quarterly satisfaction survey, many of you have expressed your desire to get mining payments in other cryptocurrencies (currently you can get mining payments only in Bitcoin). In this article, we are going to explain why is NiceHash paying miners only in Bitcoin and why this will not change for the foreseeable future.

Mining on a pool vs. mining with NiceHash

There is a fundamental difference in mining on a pool vs. mining with NiceHash. It is really hard to explain the difference if you don’t have a good understanding of how PoW (proof-of-work) blockchains work. If you have a gaming PC or a mining rig with powerful graphics cards or any other specialized hardware (FPGA, ASIC), you can use it to support “proof-of-work” blockchains and get something in return (coins that have value).

In this article, we won’t go into too many details but one such example is the Bitcoin blockchain that requires a lot of computing power to solve special mathematical equations where new entries to the ledger are created. Essentially, computers on the network do the calculations where transactions are confirmed and sorted into blocks of transactions. The network then decides on the validity of those blocks and with every new block that is added to the blockchain, new Bitcoins (currently 6.25 BTC with every new block) are created and rewarded to the node that has “found” a new block. The Bitcoin blockchain is the oldest implementation of the PoW (proof-of-work) blockchain and although it was originally designed as a “one CPU one vote” system, individuals with one CPU or one GPU don’t have any chance of being rewarded these days. That is why individuals have to work together and “pool” their computing resources. This is how a pool gets created and a mining pool is nothing more than a joint effort by many people to increase their chance of getting a reward when supporting a particular PoW blockchain.

For example, you decide you want to earn some money while your PC is idle. You can connect it to a mining pool that supports the Ethereum blockchain. This means that the computing power of your PC will be used to support the workings of the Ethereum blockchain. In return, you will be awarded some ether (ETH coins). But what happens when you would like to get some other cryptocurrency in return for your computing efforts, Monero or Grin for example? You will have to connect your computer to some other pool that supports Monero or Grin. And then you will get some Monero or Grin coins in return.

Now you must be thinking what happens if I connect my computer to NiceHash? For providing your computing power, NiceHash will pay you in Bitcoins. Does this mean that you are supporting the Bitcoin blockchain? No. Here is where the difference between a pool and NiceHash is hidden.

NiceHash is a hash-power broker marketplace. This means that there is a supply-side and a demand side of the marketplace. On one side (demand) there are people who would like to earn money with computing power but they don’t have their own computers or mining equipment. They come to NiceHash to rent computing power for the purpose of using this computing power to support various PoW blockchains. But who provides the computing power (supply)? You, the miners of NiceHash :)

If you connect your computer to NiceHash as a miner (supply-side) you are essentially offering your computing power on a big open marketplace. Buyers (demand side) will bid for your computing power and have to place an order to mine a particular coin. For this service, they have to pay with Bitcoins. In the process, the buyer also has to decide which pool his rented computing power will be directed to.

At this point, you can start to understand the difference between mining on a pool and mining with NiceHash

• MINING ON A POOL:
• ONLY SUPPLY-SIDE: you provide your own computing power and connect your computer directly to the pool
• MINING WITH NICEHASH:
• SUPPLY-SIDE: you rent out your computing power to an open marketplace where buyers bid each other and pay you in bitcoins
• DEMAND SIDE: you rent computing power from other people and direct it to the pool via NiceHash (computing power is provided by end-users)

From here on the process is very straightforward. Miners start working on the order and the results of computing called “hashes” are sent to the pool. The pool then pays out the reward to the buyer.

So why do miners who represent the supply side at NiceHash get paid only in Bitcoins?

Miners at NiceHash get paid in Bitcoins because buyers place orders in Bitcoins. This is a direct transfer from the buyer to the seller (miner). Here is a very simple animation of the entire process. Follow the path of the BTC (green line 1 & 2) and you will understand how buyers pay the miners:

This is also the reason why profits depend solely on the demand side of the marketplace. Since NiceHash is an open marketplace and buyers bid for hash power they maximize the profits for miners and NiceHash does not have any control over mining profitability. Miners also get a very convenient and easiest way to earn money with their computing power. They only connect their machines to NiceHash and the system will take care of everything else. If you want to learn more about how to start mining with NiceHash watch this video.

Currently, we don’t have any plans to open a marketplace where buyers could buy hash-power with any other cryptocurrency besides Bitcoin. This also means that miners will get paid only in Bitcoin for their mining efforts. Still, everyone can use the NiceHash integrated exchange to trade Bitcoin to other cryptocurrencies. More trading pairs are coming soon!