Mining Pool

1 min read

Pronunciation

[mīn-ing pül]

Analogy

Think of a mining pool as a lottery syndicate: individuals pool their tickets (hash power) to increase their chance of winning, then split the prize based on how many tickets each person contributed.

Definition

A collective of who combine their computational resources to improve the probability of finding a and share the rewards proportionally to contributed work.

Key Points Intro

pools coordinate individual through these mechanisms:

Key Points

Shared hash power: Aggregates computational resources to solve blocks faster.

Proportional rewards: Distributes block rewards based on each miner’s contributed shares.

Fee structure: Pool operator typically charges a small percentage of rewards.

Payout schemes: Common methods include PPS, PPLNS, and proportional.

Example

A solo miner with 100 MH/s joins a pool with total 10 GH/s. When the pool finds a , the miner receives 1% of the reward, reflecting their 1% contribution of power.

Technical Deep Dive

submit “shares”—partial proofs of work meeting a lower —to the pool server as proof of effort. The pool aggregates shares, constructs full candidate templates, and dispatches them to . When a valid is found, the pool broadcasts it, collects the 12.5 BTC reward, deducts , and issues payouts via on‑chain transactions.

Security Warning

Trusting a pool operator introduces centralization risk; a malicious operator could withhold blocks or refuse payouts—choose pools with transparent, on‑chain payout records.

Caveat

Large pools can approach 51% of network , risking centralization; diversifying across pools mitigates this.

Related Terms

Block Reward

Hash Rate

Solo Mining

Blockchain & Cryptocurrency Glossary

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