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The True Cost of FPPS: Bitcoin Mechanic's Variance Argument
Ocean's Bitcoin Mechanic argues FPPS payouts are an expensive insurance product, and cites a 40-miner test where Ocean earned 30% more.
How many miners have ever checked where their profit calculator number comes from? Bitcoin Mechanic of the mining pool Ocean put that question to a room of about 70 people at Mining Disrupt Fort Lauderdale, March 25 to 27, 2025. By his count, about three had done the maths themselves, and those three were mining on Ocean. His target is FPPS, full pay per share, the payout model almost every large pool uses.
In his words: "But, really, what FPPS is, it's an insurance product, and it's a very expensive insurance product." The reasoning goes like this. Blocks do not arrive every ten minutes on the dot, and since the halvings cut the block subsidy from 50 bitcoin to three and an eighth, random transaction fees make up a larger share of what each block pays. An FPPS pool smooths all of that out and pays miners consistently whether or not it finds blocks. Bitcoin Mechanic compared it to a company guaranteeing drinking water through a six-month drought.
Whoever sells that promise charges a lot for it. And bitcoin, he said, cannot be created out of thin air. If it is not mined, it does not exist. Ocean, which launched in November 2023, pays miners only when the pool finds a block.
That is harder to live with, he said, but it lets miners keep the variance that FPPS pools keep for themselves. His evidence was a test by Bob Burnett, a Bitcoiner known as Boomer BTC and a former CTO of Gateway Computers. Burnett pointed ten identical miners at Ocean and ten at each of three well-known FPPS pools, all in the same container on the same power. After the first year, Burnett earned 30% more on Ocean than on the next best pool, and 35% more than on the worst.
Bitcoin Mechanic added that Ocean's payout model, called TIDES, lifted first-year returns somewhat above a long-run level, but not by much. "Volatility is your friend," he told the room. A miner who can wait two hours for a block and then see five in ten minutes, he argued, collects revenue that a pool would otherwise keep. This is a pool operator making the case for his own pool, built on one miner's study.
When he spoke, bitcoin traded at $87,393. Today it is $81,514. The full story is on Mining Disrupt at miningdisrupt dot com, and many more like it play around the clock on Bitcoin Radio.