Comparing Lottery Mining & Pool Economics for Hashers | Bitcoin 2026

I'm trying to figure out how to tell my mom that I'm competing against Afroman on the main stage, but I like to say we're headlining this stage. Um, so thanks for sticking around. Okay, so uh we're supposed to talk about solo mining, lottery mining, FPS. Um, I don't pretend to assume everybody knows what that is. So, um, I will invite you guys to explain it. Yan, what the heck is FPS? Give me the TLDDR. >> Yeah. All right. So, uh, let's get straight to it then. Uh, thanks for the question. Um, let's maybe start with one minute about mining pools in general. So, for those of you, most of you probably do know, but for those who don't, um, mining pools are basically serving a critical function in the mining ecosystem. And what they do is they pull uh the hash rate, the computing power of individual miners together in order to increase their chances of mining a block. So, um, nowadays it's very difficult to find a block, as Duncan will say in a second, when you're solo mining. Um, and so what most miners do is they combine that power, they mine together, and when they find the block, um, they we basically distribute the rewards proportionally to the computing power that they've um that they contributed. Um as we talk about FPS uh there is one additional element to it and I think this is the key aspect of modern mining especially at industrial scale. So the FPS model all it's saying is that we as the pool for example as EMCD uh when we pay out our miners we pay out not on what was what was mined but on the expected value of what was mined. So um it doesn't matter if we min 20 blocks today or 30 blocks, our miners will receive basically the same payout which is calculated in a statistical way. So the point is moving out of the payouts for miners to take out the volatility and provide stable cash flows. >> Duncan, what the heck is lottery mining and why is everybody online angry about it or hugely in favor of it? Um, well, hello. I'm Duncan. Um, excuse my raspy voice. I feel like I've eaten a wasp. I've been on a uh I've been on a booth for two day, three days, and I'll try my best to uh to let my beautiful English/ American dril come out. Um, so um, lottery of solo mining is the act of having a Bitcoin miner and pointing it to a node and trying to solo mine that block yourself. um you know without so one thing I want to say you know without bitcoin mining bitcoin ceases to exist. So pools have an absolute place because it allows people to contribute get something back for you know get their their limited amount of sats back based on the size of their mining rig. Um and it's those blocks being solved that move the blockchain on and validate blocks and allows Bitcoin to to do its thing. Sin City, it's all about it's about the gamble. It's about the the doing it yourself. It's it's feeding that that machine. Solo mining is the same thing. When I have a minor like this one or a Bitax or any other small I'm going to I'm going to reference a small home miners. And when they have any small home miner, you have a choice. You can solo mine or pull mine. You can point your solo your your miner, sorry, to a solo node and try and find that block yourself. Really slim chances, but it happens. And ironically, last night we have proof that a nerd QAX, which is just under five, it was five terraash solo miner block. There's a one in 750,000 chance that happens, but it happened. And that was a decentralized block from open- source hardware that happened. That's actual proof. So, it has a place. So if we go long enough, we could describe in detail all the disputes and arguments, but I actually think like what often goes unsaid whenever when we have one of these types of panels at like a mining focused event is like these are different models which are attractive to different types of customers and your profile of what type of minor you are often dictates what which of these models you're going uh you're going to your point towards um so Yan uh who is FPS for typically and like why is it it's it's the dominant pool payout model. Why is that? >> Right. So um as you mentioned uh FPS today is I think the golden standard and I think if you look at the global hash rate um well over 95% uh of the global hash rate is currently connected to an Fbps uh payout model. Um it resonates especially well with I would say industrial players. Um and the reason for that is that as I mentioned the whole point of it is to stabilize cash flow. So, if you're doing solo mining, even if you're really big, um it's very hard to plan your operations at an industrial scale if you don't know if you're going to mine five or 10 or 15 blocks on a given day cuz the difference uh in cash flow is massive and this uh volatility makes it like I said extremely hard to plan around. So uh FPPS typically for the industrial players uh for people who are looking to take out the volatility from the equation and focus on predictability and yet we have kind of a resurgence in the DIY home mining pointing to lottery pools Duncan like this is kind of been like it's taken the pleb the Bitcoin plebs by storm. Why? Like it's very low chances. Why would they lottery mine? So, it's a two-part answer. I was fortunate enough to discover Bitcoin mining in 2011. And at the time when I was playing with Bitcoin, it was it was accessible at home. GPU rigs then came along. And it was fun. It was so much fun. It then became very industrialized very quickly. You know, my my wife didn't like the idea of an S9 running in our front room, etc., etc. It was it was it was horrendous. But then people like Geckos Science, people like the Bid and Scott from the Bidex project, you know, these small home Bitcoin miners that exist allow a point of entry for anybody to start mining again. So the whole Bitcoin ecosystem beautifully has come full circle. Started with the individual at home, it went industrial because things always do. But then the people have grabbed have stood up and said, "No, this is about us." You know, Bitcoin is Bitcoin is freedom. It's about us taking control and taking responsibility. you know, the work that Geckos have done, the work that Bitax have done and others have allowed Bitcoin mining to come full circle at home. Now, the thing is is that I am I'm I'm the solo mining co. I push solo mining. I'm all about, you know, I'm a firm believer if anyone has any love or care for Bitcoin, they should run a node. They should then have their own hardware, be it close source, open source, it doesn't matter. Point their hardware to their node. Educate yourself, learn, inspire. I'm all about solo mining. However, I I I will I will come close to this. If you have something like this this A2 um Geckos Science A2X or a Bitax and you do mine on a on a pool, yes, you'll get, you know, anywhere between 100 and 600 sats a day. We laugh at that. 2 cents, 3 cents, 6 cents. Like, what's the point? When you look at Bitcoin man who spent his $10,000 on a pizza, we look back now and laugh. Well, feel sorry for him. I hope it was a good pizza. At the time, he was, "Yay, pizza." Now we're like, "Damn, you spent 10,000 on a pizza." This unit here generates 600 sats a day, right? All of you here know about the Bitcoin hing. So in 19 hings, which is about 75 years when we're all long gone, we obviously will have children, grandchildren. In 19 hings, the block reward then is exactly the same quantity of Bitcoin that this generates today. So the small amount of Bitcoin that we can generate with a Bitax, with an 80X, any other small home mining bit of hardware has a place. And in 75 years time, I guarantee every single one of you do your own research will have your grandchildren say you could mine 200 600 sats today and you didn't. You're crazy. So home mining has a place and it's here to stay and it's back. So both of you guys talk to miners in the world. both y'all like you talk to people building industrial scale farms uh plugging in their first Gecko signs or BitAx um and uh so you have your ear to the ground of what the actual operators big and small are doing and I'm kind of curious it seems to me that I see a lot of people just say that you're one or the other but like have you seen folks experimenting with like pointing their large industrial scale farm to a lottery or do you see a growing trend of say pragmatic uh you know home miners wanting to lock in not as much but a consistent revenue like are we seeing curveballs being thrown into this? Um yes um I think at industrial scale the equivalent of what uh you've said is that uh there are definitely miners who are um going the FPS route for the stability and predictability but they do try to expose themselves a little bit to the upside at industrial scale. I would say it doesn't necessarily mean that they are solo mining. it may lean itself into like a ppl model which is sort of like a hybrid between um between solo and um and FPS but uh yes it does happen and I think um a lot of the people that I speak to on a day-to-day basis um as you mentioned Duncan um you know even if they work at an industrial site um they themselves will be running some form of a node whether it's at home um whether it's with um with like a single mining rig or even something smaller like a Vidax. But uh yeah um we're here not just uh for you know the SATs but we're also here for uh for the tech and we enjoy doing that and I actually have uh one small machine running at home as well. So >> yeah. Yeah. Duncan, have you uh It seems to me like everybody on Twitter is always talking about pointing their Vidaxes to a solo pool, but like you just gave a kind of a case for like a a blended or more more reliable payout model. Do you see that happening more than what I see talked about online? So I think what's happening at the moment when people don't have haven't had exposure to mining and they're learning you know the Bitax all the Gecko Science gear you know all these small home miners the point of entry is the easiest thing to do without any user intervention no KYC is turn it on plug it you know put your Bitcoin address in and start solo mining I mean because it's easy it's accessible and that's why people do it and then it's that thrill of lottery mining have I want a block I need to get another one let's let's expand our hash rate and so on but what I'm finding thing is that what I personally like to do, I'm really active on Twitter. Um, I really like to help and teach. Um, my my other career path as a teenager, I was go was going to go into teaching, but I got sidetracked by shiny tech. But I love I love teaching people. And I find that when I engage with people about actually the nuances and the benefits of pull mining, what I find is a lot of these people move their miners over to start stacking small amounts of SATs. But here in lies what's known as the the miners paradox. So let's say my friend Matt buys a single Bitcoin miner. I've got a minor that's amazing. I'm going to solo mine, but but I think I should pull mine. I don't know where to put it. And then you end up driving yourself crazy getting up at 2 in the morning moving it from A to B and B to A and you end up going mad. So they buy another one based on education. Well, you should do both and so on. So then what happens is that as people learn they then develop their understanding of the Bitcoin ecosystem, how it works, why you should run a node, why you should stack sat, why you should lottery mine, then they start actually getting their head down, learning more about Bitcoin and so on. So it's an educational tools, but they also open up doors for learning and opportunity. And I I'm I'm certain if you took this landscape, all these people 10 years ago, 90% of these businesses wouldn't be here. And I guarantee the majority of these people learned about Bitcoin, a number go up, but b how do I get involved? And their exposure to the Gecko Science gear and the Bitax gear lit that fuse, which then starts companies, and it starts with education. >> Welcome to predict. The world is a market. Everything is a market. Get a 100% cash back up to $100 on your first predict bet if it loses. Predict where everything is a market. Yeah. It's like um you never just buy one Bitax. It's the start. It's kind of like collecting guns or guitars or >> tattoos. >> Tattoos. Yeah, exactly. >> Yeah, it that's a good point. You know, you bring up um you know, this thing may only produce 600 sats, but in a long time it's going to be worth a lot. And those can be nonkyc satoshi's, which there's a value to that. So, in in some ways, like the story of pool economics is also the same story like pool payout models is also the same story as like the development of Bitcoin mining hardware. from the DIY basement GPU era through all the way you know to the emergence of AS6 and now we are full circle this now ground up movement of well let's disrupt the ASIC and chip production market but that also then gives wind to the lottery mining uh movement um where do you guys see pool payout models I'm going to say let's say 10 years from now like right now everybody's have PPS with you know the indie pools being like lottery or solo variants do you think this is still going to be the case 10 years from now what's the trends you see >> I wish I knew um but if I had to make a guess I would say it really depends on um how far uh the competition you know at the industrial level um is going to move from um Bitcoin mining ing to AI and if a lot of the industrial players like in 10 years from now I I find it quite probable that the overall Bitcoin mining difficulty um will be lower than it is today. Um and as that happens, the incentive for um for solo mining um should theoretically increase, right? Because the individual chances are getting somewhat better. Um and and and I think this is I mean FPS isn't going anywhere, I'm sure. um and it is here to stay. But depending on what's the future of the Bitcoin mining difficulty, how many people are um left in this space um I I completely see it continuing to uh grow its market share. >> What about you? Are you bullish on lottery solo mining variants? >> So I have a very um a very kind of particular view on this. I with the the mining hardware that I design I'm of the mindset that bit I will get to your answer but there's a reason on this bit for bit for home mining to succeed it needs to be one of two things it needs to be beautiful or have utility ideally both beautiful being as as my wife says wife approved it needs to look good >> my nerd axe is very beautiful >> thank you very much I had nothing to do with that it's a good looking bit of kit um but my point being the the second part is utility so for utility being heat recovery so there's a lot of products coming to market now that are um they're heaters, the hot tub heaters, they're under floor heating. Um I'm working on a wet radiator system in the UK that replaces a radiator with a Bitcoin miner. So when you've got these people that are now, especially in the UK European market of people running Bitcoin miners to offset their heating bill, these people probably are not going to want to solo mine because they need to pay their bill. So, I think there's going to be there will be a big shift in home miners going back to pole mining to to recover revenue that they're spending on electricity on these these miners that have utility. But there will always be I know they will there will always be the gamblers, the solo miners and so on. That's my opinion on that. At what point is there a is there a crossover where the solo miners cease to become gamblers? like where you become a certain size because I'm I'm intrigued by this idea of a solo hasher of sufficient size who just I mean look at look at how marathon structures them it's all their own proprietary hash rates so they are effectively like a ppl just but but themselves but I think this is a really interesting you know thing to imagine if we if we game out the nation state game theory of like bitcoin mining at scale you know in 10 years when whole countries have have embedded mining into the the actual fabric of the economy, then like the the economics of pools change. I didn't prep you guys for this question. Do you think nation state Bitcoin mining changes any of the economics for the existing pools or hashers? It could. I honestly yeah I probably have to give this a second of more thought but my intuition is that yeah I mean if we ever get to that stage where um where nations are big players in the mining space which I'm not I'm not fully convinced we're going to see it at scale but of course then um there could be political incentives and uh other incentives to focus more on the solo aspect right or at least have um certain structure structures, for example, similar to Marathon, right? Where um a country, for example, that has 20 exahash of power. Um it could be absolutely viable for them to to uh go into, for example, a solo mining model and not depend on anybody else. Um that's that's my initial take. >> Do you have a take on this? >> Um it's a curveball topic. >> I threw it out because at the end of the day and I was like, why why not throw it out? So, one thing I would like to say on this about nation states, um, you know, I'm I don't follow American politics as much as I probably should. I mean, I have an American passport, but I have I struggle with Britain. Like, anyway, um, but my point being is that I I learned last night that a bill is being put forward to Congress, I think that's what you call it. Um, about Mind in America. Have you heard of that? >> Yeah, there's been chatter of it. >> So, it it's something's been put forward. Uh so mind in America as far as I'm aware like please read it. This is what I've learned through hearsay um that by 2030 the mining gear in all the mining gear in the USA that the government want to use and see needs to be manufactured in America. Now that to me if that's not bullish I don't know what is. So that then lights a fuse under manufacturing in the US for Bitcoin mining. Whether it's Paul lottery I don't know like from a state point of view but that's huge. So, I have another curveball topic. I was sidebarring with Yan. I'm gonna I Yeah, sorry. That's all good. Cash rate rentals are really interesting dynamic and I feel are under discussed online cuz it's in my experience. I've seen a large consumer of hash rate rental marketplaces are like various types of speculation or gray market activity. Yan, how do you see hash rate rental markets in the context of like the broader pool payout system? >> Um, so it's a very hot topic um at the moment even though it's not being talked about very openly, but there is a huge market at the moment for uh hash rate rental contracts. And to just say a couple of words on what they are, it's uh essentially being able to buy hash rate for a limited amount of time, anywhere between uh a couple of weeks and a few months. Um and you buy it basically like on the spot market. You lock it down for a specific period of time often paying a premium versus the current hash price in the market. So um the benefits of that are to me extremely clear. Uh so um it allows people to gain hash rate exposure which they can use then for uh whatever purposes they need without having to deploy um machines without having uh this long runup time uh and deployment time. In fact um it allows people a lot of flexibility to choose the right conditions when they want to enter the market and use their hash rate to mine bitcoin. So um it's very hot topic and we actually get approached quite a lot um as EMCD with requests hey can you uh people coming and say hey we need 3x a hash of power for 3 months or something like that can you help us out um and I think it's a really interesting topic with um um because the question is um who who what do you need this for right and I think actually most of the time um This goes a little bit beyond Bitcoin, but um as far as I know, because nobody is going to pay you over hash price if they're just going to be mining Bitcoin. It it doesn't make sense. So, they need to have an alternate use. Um they need to have most often an alternate use or some other reason why they need uh this hash rate. Yeah. And they don't want to deploy it like that. And actually a lot of the time this hash rate is used for solo mining but not bitcoin for example bitcoin cash. And so um there is um it it maybe doesn't necessarily impact massively uh the the payout systems for uh for Bitcoin but there is definitely a reallocation of FPS hash rate um that that we receive for example or that that is out there and moving it into short-term opportunities uh beyond Bitcoin itself. So, it's a really interesting topic. Could go on and on. >> We could uh Duncan, your your uh sweet spot is like the A is it the A6 the home miners. And um I've been noticing a trend the with with Bitax. They start out small with a small B something something something chip, a single chip, and then you have two chips and they're both more powerful. And now some of these Nerdax Q++ whatevers, they've got like six chips in them. At what point are we just like >> going to build a whole aircooled shoe box as >> I made an S21. Woo. >> Yeah. >> Um, so people are driven by curiosity and pushing stuff to the limit. So >> sorry. >> Hold it closer to your mouth. >> Sorry. Is that better? >> Yeah. >> I'm so tired. So, so um you know the the Bitax project like with the Bidex project, the Bidex project is really unique in that you know they were taking S20 and S19s S whatever it is the S17s ripping the chips off putting them onto a board open sourcing it going and the thing is with the open source movement with Bitex particularly there's so many people that are developing and contributing and forks and branches and all this sort of stuff that's happening on GitHub that you'll get a team of people that go oh let's make a a two chip. Let's make a four chip. But what it's doing is that it's just lit that fuse for people to innovate. And you know, without things like the Geckos Science ecosystem, without things like the Bitax ecosystem, this innovation couldn't flourish. So the reason why we have a 1 2 4 8 and I know there's a 12 coming chip variant of the Bitax is because people like tinkering. And you're right, you know, if we keep going, it's like, yeah, we've made I've got a 168 chip thing and we're back to square one. >> There's three boards now. >> Yeah. it weighs is three and a half thousand watt. Um, but it's a it's a it's a beautiful thing because it's allowing people to expand the industry which otherwise is closed source and it's driven by financial gain. When you have a project that is driven by enthusiasm, it's limitless in terms of growth. So, we managed to get through the whole panel because I didn't want to I don't want to start a fight because whenever people talk about solar mining FPS, it's gets very heated. But now I'll invite you cuz we can close this out. Um, do you guys believe that pool payout models are uh do you think that they that FPS or solo mining uh is core to Bitcoin succeeding? If the ecosystem bends too hard in one way or the other, do you think that this can create adverse incentives to centralization, gambling or whatever? I'm I'm happy to take that. Um, no, I don't because you know the more people that become exposed to mining, the more hash rate comes online. And yes, you will get big states, big companies that throw tons of hash rate in, but that doesn't matter because at the end of the day, it doesn't matter. So, forget the the theory of a 51% attack for a minute. It doesn't matter if one person is just mining, mining, mining. That's still validating blocks. It's still moving the blockchain on. So it doesn't matter if people are solo mining or pool mining. It's about solving blocks if that makes any sense. >> I fully agree. Um there is a debate of course uh does uh does this centralization and mining pools does it lead to like f centralization and does it go against the core principles of um of uh bitcoin mining? I I don't think so. uh I mean it's a natural evolution of any industry where the where the market cap is growing which is growing it it has to become industrialized at some point there may be use cases in the future where that centralization is actually critical because we need the hash rate to agree I don't know for example on a fork to a quantum resistant computer or something but there may be quantum resistant yeah um blockchain so there may be cases where it's even a a boon yeah that it has that it's there so I'm I'm not too worried about it. >> And there you go. I think we hit a few topics. Comparing lottery mining pool economics for hashers. Duncan Yan, thank you so much for joining me up here. And I hope you all enjoyed your conference. >> Give it up. Thanks, guys. Um, and also, so we're we're both on booths over there. I'm on Bitcoin merch and you are on EMC. >> Any questions? I'm more than happy to talk to them until I'm blue in the face about Bitcoin mining. And if you don't know anything, just keep asking. >> Yep. Same goes for us. We're right next to each other. >> Thank you for coming to our TED talk. >> Bitcoin energy stage. Let's let him hear it. >> Every year this community comes together to celebrate, to debate, to build what comes next. And every year the stage gets bigger. Sound money center stage. So where do you go to celebrate the next chapter in Bitcoin history? You come home. Nashville, July 2027.