Bitcoin mining pools are groups of cooperating miners who agree to share block rewards in proportion to their contributed mining hash power. While Bitcoin mining pools are desirable to the average miner as they smooth out rewards and make them more predictable, they unfortunately concentrate power to the mining pool’s owner. Miners can, however, choose to redirect their hashing power to a different mining pool at anytime.
Mining pools are crucial
A few years ago, miners could mine effectively on their own. Today, however, mining power is so distributed that no one has enough computing power to make much of a profit from their own computer. Even if you have free electricity, your monthly utility bill might be higher than any potential bitcoin earnings.
Profitability depends on the pool
There are several different types of pools, and their size (and profitability) depends on which type you join. There are PPS pools that pay for your contribution in full plus a share of transaction fees. Then there are DGM pools where you can earn more by guessing wrong and get less by getting it right—but, overall, these pools have lower payout thresholds than PPS pools.
Bigger isn’t always better
With a total computational power of 1.24 petahashes per second, AntPool is arguably a lot larger than its competitors. However, several smaller pools are much faster and more responsive than AntPool (meaning they find more blocks), making them better options for those who don’t want to wait hours for their next payout. There are many other mining pools available to users around the world; these five have been operating successfully since 2012 and collectively have an enormous amount of computing power at their disposal.
To prevent one pool from gaining too much hashing power—and, thus, ultimate control over what is included in a block and what isn’t—individual mining pools are created. A mining pool combines tens or hundreds of thousands of processors into a single network to increase that pool’s hashing power. The most prominent bitcoin mining pools include Foundry USA, AntPool, Slush Pool and more.
And much more…
Mining pools are a way for bitcoin miners to pool their resources together and share their hashing power while splitting the reward equally according to how much work they contributed to solving a block. It’s comparable to a lottery syndicate that makes money by purchasing large blocks of tickets and then selling individual tickets in smaller quantities.