Mining Pool Payouts Compared: FPPS, PPLNS, PPS+, and the Economics of Each Model

A mining pool aggregates hashrate from thousands of participants. But the method it uses to distribute block rewards determines who absorbs the variance risk, how transaction fees flow, and what miners actually earn. The dominant mining pool payout models today are FPPS, PPLNS, PPS+, and OCEAN's TIDES. Each one makes a different tradeoff between predictability and raw expected value, and the choice matters more than most miners realize.

As of mid-2026, four pools control over 70% of Bitcoin's hashrate, and the vast majority of that hashrate runs on FPPS. Understanding why requires understanding what each model actually pays, and what it quietly withholds.

Why Payout Models Matter

Bitcoin mining is a probabilistic process. A single Antminer S21 XP running at 270 TH/s against a network of over 900 EH/s would find a block roughly once every 67 years on average. Pools solve this by combining hashrate, finding blocks more frequently, and splitting the block subsidy (currently 3.125 BTC) plus transaction fees among contributors. The payout model governs exactly how that split works.

The core question is risk allocation. When a pool goes several hours without finding a block, who absorbs the cost? When a block contains unusually high fees, who captures the upside? Different payout methods answer these questions differently, creating distinct economic profiles that affect miner revenue, pool sustainability, and even censorship resistance at the network level.

Pay Per Share (PPS)

PPS is the simplest model. The pool calculates the expected value of each valid share submitted by a miner based on the current network difficulty and the block subsidy, then pays that amount immediately. Miners receive income for every share regardless of whether the pool actually finds a block.

Under pure PPS, transaction fees are excluded from the per-share calculation. The pool keeps all fee revenue. This made PPS straightforward to implement but increasingly unfavorable for miners as transaction fees became a meaningful component of block value.

The pool bears all block-finding variance. If the pool goes 12 hours without a block, it still pays miners for every share submitted during that window. This makes PPS expensive for pool operators, who must maintain significant reserves to cover unlucky streaks. Most major pools have phased out pure PPS in favor of FPPS or PPS+.

Full Pay Per Share (FPPS)

FPPS extends PPS by incorporating estimated transaction fees into the per-share payment. The pool calculates a rolling average of transaction fees per block over a recent window (typically 24 to 72 hours), then folds that estimate into the fixed payment each miner receives per share.

This gives miners exposure to both the block subsidy and a smoothed version of fee revenue in every payout. The pool absorbs all variance: both the risk of not finding blocks and the risk that actual fees deviate from the rolling estimate. When actual fees spike above the estimate during congestion events, the pool keeps the excess. When fees drop below the estimate, the pool covers the shortfall.

Why FPPS dominates: FPPS accounts for the majority of Bitcoin hashrate in 2026. Miners prefer it because it delivers the most predictable revenue stream. Pool operators accept the variance burden because the fee premium (typically 2-4%) and the statistical edge from smoothing fees across many blocks make it profitable at scale.

The opacity problem

FPPS calculations are difficult to verify externally. Miners must trust that the pool's rolling fee estimate is accurate. A pool could use a shorter averaging window that understates fees, or apply opaque adjustments to the estimate. Unlike PPLNS or TIDES, where payouts are directly tied to observable block rewards, FPPS relies on the pool's internal accounting. Some pools, notably Foundry USA, do not publish a simple flat fee percentage, instead embedding costs in the FPPS rate calculation itself.

Pay Per Last N Shares (PPLNS)

PPLNS only pays miners when the pool actually finds a block. Rewards distribute proportionally among shares submitted within a recent window (the “last N shares”) leading up to block discovery. Miners who contributed more work during that window receive a larger share of the full block reward, including all transaction fees.

The miner bears the block-finding variance. If the pool goes hours without finding a block, miners earn nothing during that stretch. But when blocks are found, miners capture the complete reward: subsidy plus actual transaction fees. Over long time horizons with consistent uptime, PPLNS can match or exceed FPPS earnings because there is no risk premium embedded in the pool fee.

Pool-hopping vulnerability

A strategic miner can “pool-hop” by mining on a PPLNS pool only when the pool is statistically due to find a block, then switching to an FPPS pool during dry spells. The size of the N window and how shares are weighted determine how resistant a pool is to this behavior. Smaller N values make pool-hopping more profitable. Larger windows dilute the hopper's share but also delay payouts for legitimate miners.

Uptime sensitivity

PPLNS penalizes downtime. If a miner's machines go offline for maintenance, their shares age out of the reward window while other participants' shares continue accumulating. A miner needs 95%+ uptime to make PPLNS economically competitive with FPPS. For large operations with professional maintenance schedules, this is achievable. For smaller miners with less reliable infrastructure, FPPS provides better risk-adjusted returns.

PPS+ (PPS Plus)

PPS+ is a hybrid. The block subsidy portion (3.125 BTC) is paid as fixed-rate PPS: predictable, per-share, independent of whether the pool finds a block. Transaction fees, however, are distributed PPLNS-style: only when blocks are found, proportional to recent shares.

This gives miners subsidy certainty while preserving exposure to actual fee upside. During periods of elevated fee activity, such as Runes or inscription surges, PPS+ miners receive the actual elevated fees rather than the rolling average that FPPS would compute. During quiet fee markets, PPS+ and FPPS converge because fees represent a small portion of total block value.

The tradeoff is moderate variance. Miners absorb fee variance but not subsidy variance, placing PPS+ between FPPS and PPLNS on the risk-reward spectrum.

OCEAN's TIDES

TIDES (Transparent Index of Distinct Extended Shares) is OCEAN's payout model, designed to address specific shortcomings in both FPPS and traditional PPLNS implementations. OCEAN, co-founded by Luke Dashjr, holds less than 2% of network hashrate but has attracted attention for its approach to transparency and miner sovereignty.

How TIDES works

TIDES maintains a rolling share log containing the latest 8 difficulty adjustments' worth of work at the current network difficulty. Each valid share is tracked individually rather than aggregated into shifts or batches. When the pool mines a block, rewards distribute proportionally:

Miner Reward = (Miner Shares in Window / Total Shares in Window) × Block Reward × (1 - Pool Fee)

The 8-block window means each share gets paid on average 8 times across multiple blocks. According to OCEAN's documentation, this gives all submitted shares a 99.97% chance of being rewarded at least once, dramatically reducing the variance that plagues traditional PPLNS.

Non-custodial payouts

TIDES payouts are written directly into the coinbase transaction of each block OCEAN mines. Bitcoin flows from the protocol to the miner's address without OCEAN ever holding funds in custody. This eliminates counterparty risk: miners never need to trust that the pool will release their balance.

DATUM: miner-constructed block templates

OCEAN pairs TIDES with DATUM (Decentralized Alternative Templates for Universal Mining), a protocol that lets miners build their own block templates. Under DATUM, miners run their own Bitcoin node, select which transactions to include, and submit the resulting template to the pool. The pool is cryptographically blinded to template contents, making transaction censorship architecturally impossible rather than merely a policy choice. Miners using DATUM receive a 50% fee discount (1% instead of 2%).

Template sovereignty matters: Under standard Stratum V1, pool operators construct every block template. This means a small number of entities decide which transactions get included in blocks. In 2023, F2Pool was found to be filtering certain transactions, demonstrating that template centralization creates real censorship risk. Both DATUM and Stratum V2 aim to return template construction to miners.

Payout Model Comparison

The following table summarizes how risk, fees, and revenue characteristics differ across the five major payout models.

Which Pools Use Which Models

The market has consolidated around FPPS, with a few notable exceptions. The following table reflects pool payout models and approximate hashrate share as of mid-2026.

Notable trend: Braiins Pool offers 0% fees on both its Braiins OS firmware bundle and PPLNS mode, using hardware sales and firmware as the revenue model instead of pool fees. AntPool similarly offers 0% PPLNS, leveraging its parent company Bitmain's ASIC hardware business.

Transaction Fees and MEV-Like Dynamics

Transaction fees as a share of miner revenue have fallen to roughly 1% in mid-2026, near decade-long lows. The current fee rate for next-block inclusion hovers around 2 sat/vB, translating to roughly $1,000 in fees per block against a $200,000+ subsidy. At these levels, the difference between payout models is marginal in absolute terms.

But fees are cyclical. During the Ordinals and Runes surges of 2023-2024, transaction fees spiked to 20-75% of total block value. In those conditions, the payout model becomes the difference between capturing windfall revenue (PPLNS, PPS+, TIDES) and receiving a lagging average that understates reality (FPPS). Pools running FPPS kept substantial excess fee revenue during those events.

Block template economics

Under the dominant Stratum V1 protocol, pool operators construct every block template: choosing which transactions to include and in what order. This creates dynamics analogous to MEV on Ethereum, though the structural differences are significant. Pool operators could theoretically extract value through transaction ordering, accept out-of-band payments for transaction inclusion, or censor specific transactions.

The centralization of template construction is why initiatives like Stratum V2 and OCEAN's DATUM matter beyond pool selection. In May 2026, seven major pools representing roughly 75% of hashrate joined the Stratum V2 Working Group, including AntPool, F2Pool, Foundry, and SpiderPool. Two pools (Braiins Pool and DEMAND Pool) already run Stratum V2 in production, with DEMAND having mined the first known Stratum V2 block in late 2025.

How to Choose a Payout Model

The right payout model depends on a miner's operational profile, risk tolerance, and values. Here are the key considerations:

Predictability vs. expected value

FPPS maximizes predictability. Revenue is smooth and calculable in advance. PPLNS and TIDES offer higher expected value over long horizons because the pool fees are lower and miners capture actual transaction fees, but day-to-day variance is higher. The principle is straightforward: more predictability for the miner means a higher implicit cost through the risk premium the pool charges.

Operation size and uptime

Large operations with professional-grade infrastructure and 95%+ uptime benefit most from PPLNS or TIDES, where lower fees compound over months. A 2% fee difference on a 100 PH/s operation at $31.72 per PH/day translates to over $23,000 per year. Smaller or less reliable operations are better served by FPPS, where downtime does not cause shares to age out of a reward window.

Transparency and sovereignty

Miners who prioritize verifiable payouts and the ability to construct their own block templates should consider TIDES with DATUM or pools supporting Stratum V2. These options sacrifice some convenience for auditability and resistance to censorship: properties that matter for Bitcoin's long-term censorship resistance.

Fee market conditions

In low-fee environments like mid-2026, the practical difference between models is small. During fee spikes, the gap widens significantly. Miners who anticipate fee volatility from protocol events (new token standards, covenant activations) may prefer PPS+ or PPLNS to capture upside, while miners who want steady revenue regardless of market conditions should stay with FPPS.

Pool Centralization and Network Security

The Nakamoto coefficient for Bitcoin mining hit 3 in H1 2026: only three pools are needed to exceed 50% of block production. Four pools (Foundry, AntPool, ViaBTC, F2Pool) collectively control over 70% of hashrate. This concentration creates systemic risk regardless of payout model.

Payout models influence centralization dynamics. FPPS requires pools to maintain large reserves to cover variance, creating economies of scale that favor larger operators. PPLNS and TIDES have lower capital requirements (pools only distribute what they earn), potentially lowering barriers for smaller pool operators. OCEAN's non-custodial approach eliminates pool reserve requirements entirely.

The trend toward miner-constructed block templates through Stratum V2 and DATUM could partially decouple hashrate concentration from template centralization. Even if hashrate remains concentrated in a few pools, individual miners choosing their own transactions would distribute block-construction authority more broadly.

Implications for Bitcoin's Security Model

Mining pool payout structures may seem like an operational detail, but they affect the incentive alignment that underpins Bitcoin's proof-of-work security. The block subsidy halves roughly every four years, making transaction fees an increasingly important component of miner revenue over time. How pools distribute those fees shapes whether miners are incentivized to include all valid transactions or engage in selective ordering.

For protocols that settle on Bitcoin's base layer, miner incentive alignment directly affects settlement guarantees. Spark, for example, anchors its off-chain transfers to Bitcoin L1 through on-chain transactions that miners must include in blocks. If mining pool economics create incentives for transaction censorship or reordering, the security assumptions of Layer 2 protocols degrade. This is one reason why the push toward Stratum V2 and transparent payout models matters beyond mining operations: it preserves the neutral, censorship-resistant base layer that higher-level protocols depend on.

For a deeper analysis of how halving economics and fee market dynamics affect mining operations, see our research on Bitcoin mining economics in 2026. For context on how pool centralization affects block production, see mining centralization and pool risks.

Looking Ahead

Several developments could reshape the payout model landscape. The Stratum V2 Working Group projects V2 as the default for new ASIC firmware by end of 2026, potentially reaching 40-60% of hashrate. If realized, miner-constructed templates would become the norm rather than the exception, reducing the information asymmetry that makes FPPS opaque.

The ongoing decline in transaction fees relative to block subsidies also compresses the difference between models in absolute terms. But this is likely temporary: as Bitcoin's subsidy continues declining through future halvings, the fee component will grow in importance. When fees represent 10% or more of block value consistently, the gap between FPPS's smoothed estimates and PPLNS/TIDES' actual distribution will widen. Miners who build operational familiarity with variance-tolerant models now will be better positioned for that transition.

To explore Spark's approach to building on Bitcoin's security layer, visit the Spark developer documentation. For a broader view of how Bitcoin's layered architecture works, see our research on Bitcoin Layer 2 comparison.

This article is for educational purposes only. It does not constitute financial or investment advice. Bitcoin and Layer 2 protocols involve technical and financial risk. Always do your own research and understand the tradeoffs before using any protocol.