Abstract: A series of calculation methods were established in order to calculate the nuclear heating and gain factor accurately, which are two important parameters of hydrogen circulation for the cold neutron source(CNS) in China Advanced Research Reactor (CARR). The verification with reference reactor demonstrates that these methods are correct and effective. Many factors, such as moderator, material of moderator cell, the shape of cell and so on, which would affect the nuclear heating and gain factor, were calculated and optimized for the CNS in CARR. The results show that better gain factor can be gotten with relatively low nuclear heating.