What Is Mining Pool?
Also known as: Crypto Mining Pool, Bitcoin Mining Pool
In short
A mining pool is a shared arrangement in which miners combine their computing power to increase their chances of finding blocks and split the block rewards in proportion to their contributions, providing steadier income than solo mining.
On networks such as Bitcoin, a single miner's chance of finding a block is very low compared with the network's total hash power; someone working alone may go a long time without receiving any reward. Pools reduce this uncertainty. The pool operator gives miners a target easier than the network's target; solutions that meet this target (shares) count as proof of work done, and rewards are distributed according to these shares.
Different methods are used to distribute rewards. In the PPS (Pay Per Share) model, the miner receives a fixed payment for each valid share whether or not the pool finds a block; in the PPLNS (Pay Per Last N Shares) model, payment is made based on the last N shares when the pool finds a block. Pools usually take a small commission for this service.
The spread of pools brings centralization concerns. When a few large pools control a significant share of the network's hash power, decisions such as which transactions are included in a block become concentrated in a limited number of operators. A structure that controls a majority of the network theoretically increases the risk of a 51% attack; for this reason, the distribution of hash power among pools is closely monitored.
Last updated: · This content is for information purposes only and is not investment advice.