Multipool minig is the process of jumping across from crypto to crypto currency and mining the most profitable crypto coin at that moment in time.
They will then mostly sell their mined currency back into Bitcoin depressing the price of the crypto currency they have just mined.
A multi pool will take a particular crypto currency – which lets say has a total mining power of 10GH at present. They will then calculate their hash power, which lets say is 90GH, so they have a 90% probability of mining the block if they jump the hashrate of the crypto currency to 100GH. They then calculate that particular crypto currencies reward per block and conversion rate to their base currency they are operating from.
With mining, it is important to understand the different types of blocks that come with it because of the effect it can have on your expected income. This article provides a comprehensive insight into orphan, uncle & genesis blocks.
Another factor to be taken into account is at what level the difficulty is set and how quickly and to what level it adjusts. Difficulty can be adjusted in a variety of ways, per block using the Kimoto Gravity well, or immediately using digishield.
In the case of Bitcoin itself the block difficulty is adjusted every 2 weeks, or 2016 blocks, with an average block time of 10 minutes – when the crypto currency doesn’t have digishield or block adjustments regularly, and has low network hashing power, multi pool miners can rapidly increase the network hashing power and rapidly take command of a pool and decrease the block time.
So in the case of our hypothetical crypto currency the block time would be increased from 10 minutes to 1 minute until difficulty readjustment takes place, increasing the supply in that time period ten fold.
This means a whole host of that particular crypto currency is created and, if the multi miner decides to sell, is dumped onto the market. This can sometimes not work in the multipool miners favour as too much oversupply can lead to depressed pricing into their base currency.
So in all a multi pool miner can rapidly take control of a security network, increase the block time depending on difficulty readjustment algorithms, and mine a large amount of blocks in a short time. The negative effect for them is that it produces lower prices as more supply is produced.
Digibyte and Dogecoin both implemented Digishield that immediately increases the difficulty when multi pool miners join their network. Other crypto currencies have also adopted measures to reduce the volatility in their block times, difficulty and network hashing power.
See our list of mining pools and multi mining pools!