Private Pools Help Instaminers Get The Lion’s Share Of New Coin Loot

In the past month or so the emergence of private mining pools has created a wide gap between the haves and the have-nots of coin launches.

The have-nots are those who wait for an altcoin announcement, set up their mining equipment, and dig for an ‘honest return‘ on a ‘fair launch.’

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The trouble for them is that the coin Dev and his buddies have already configured a private pool and are mining the coin to beat the band long before others get a chance.

Private Pool Parties Are Common

Welcome to the world of ‘fair launches.’ In a community that considers corruption to be an integral part of every day business, those who don’t open their eyes stand to lose money and electrical power in a big way.

In the past month Altcoin Herald examined the launches of many altcoins and we came to the conclusion that private pools are being used in numerous circumstances. The pools are organized via chat rooms on Freenode and QQ.

The coin ‘Dev‘ generally has the pool configured prior to launch and the ‘insiders‘ know about it.

The insiders begin mining prior to the mis-named ‘ninja launch.’ Those watching the ANN thread tend to think that ‘powerful solo miners‘ are the ones doing the damage but that couldn’t be further from the truth.

The ‘little guy‘ is fighting an uphill battle to get blocks from a corrupt launch that couldn’t possibly be labeled ‘fair.’

Other groups are being much more aggressive in their actions and are ‘finding‘ coin source as soon as its available so they can start mining. They can compile a coin daemon and configure a pool faster than most people can say ‘Abracadabra.’

These people are scanning Github and looking for released source code that matches pre-announced coin names. In the time it takes others to locate and download the code, they are already off to the races. Since the initial blocks have low difficulty, they can grab dozens or hundreds of blocks with no competition.

Early Block Rewards Help Pay The Bills

Since Block Rewards tend to be easiest to get at the very beginning of the mining period, being able to respond with quickness can help them earn. These instaminers know that and are organized to exploit whatever opportunities they can.

I think it’s also no secret anymore that pump groups are behind the creation of many new coins. They are involved with the premine and the instamining so they have a huge amount of new coins at launch.

Once the coin is exchange listed they can begin pumping the price so they can cash out. They’re happy. They ‘Dev’ is happy.

The only losers are the last round of bagholders who get caught up in the hype and buy at the high.

Many miners seem genuinely surprised that network hash rate hits high levels, especially before any pools have been officially launched. They’re unaware that pooled ASIC mining is more common than imaginable. In fact, very few new coin launches would be complete without it going on.

New coin launches are profitable for select groups of insiders only. It’s the nature of the game. However, no coin in the can succeed in the long term with poor distribution and quick dumping. That’s why we tend to see the same trend over and over again of new coin launches followed by short lives and unceremonious deaths.

Whether an ecosystem like the one currently going on in altcoins can survive this high level of corruption remains to be seen. It seems unlikely to me that ‘fresh victims‘ can be found to continuously hold the bag on blatant and poorly executed scams. It seems likely that either their funds will run out or their appetite for huge losses will eventually diminish curtailing their involvement in trading alts.

The next few months promise to be very interesting. We’ll either see a contraction in new coin launches or there will be an explosion of them the likes of which we’ve yet to witness.

Thanks for stopping by and reading! If you have any comments, please leave them below.