How to mine bitcoins? (For beginners)

There are several different pool mining methods currently in practice to avoid cheating; shares will be divided according to your effort. Shares will be divided between the clients who produce the proof of work. Click here to learn more about proof of work(https://en.bitcoin.it/wiki/Proof_of_work).

Pooled mining approaches

The slush approach

The puddinpop approach

The Pay-per-Share approach

Luke-Jr's approach ("Eligius")

The Triplemining approach

P2Pool approach

Pooled mining

Pooled mining is described in detail with step by step tutorials in next section, you can more details about pooled mining here: https://en.bitcoin.it/wiki/Why_pooled_mining

Reward types and explanation:PPS – Pay Per Share. Each submitted share is worth certain amount of BTC. Since finding a block requires shares on average, a PPS method with 0% fee would be 50 BTC divided by . It is risky for pool operators, hence the fee is highest.

SMPPS – Shared Maximum Pay Per Share. Like Pay Per Share, but never pays more than the pool earns.

ESMPPS – Equalized Shared Maximum Pay Per Share. Like SMPPS, but equalizes payments fairly among all those who are owed.

Prop. – Proportional. When block is found, the reward is distributed among all workers proportionally to how much shares each of them has found.

PPLNS – Pay Per Last N Shares. Similar to proportional, but instead of looking at the number of shares in the round, instead looks at the last N shares, regardless of round boundaries.

Score – Score based system: a proportional reward, but weighed by time submitted. Each submitted share is worth more in the function of time t since start of current round. For each share score is updated by: score += exp(t/C). This makes later shares worth much more than earlier shares, thus the miner’s score quickly diminishes when they stop mining on the pool. Rewards are calculated proportionally to scores (and not to shares). (at slush’s pool C=300 seconds, and every hour scores are normalized)

See details here: https://en.bitcoin.it/wiki/Comparison_of_mining_pools