What is a Mining Pool
A mining pool is a group of miners who combine their computational power to mine cryptocurrency together.
Instead of each miner trying to solve complex mathematical problems on their own to add a new block to the blockchain, pool participants work together, increasing their chances of successfully solving the problem and earning a reward.
How does a mining pool work?
🔵 Each participant in the pool contributes their share of computational power. The more power the pool has in total, the higher the chances of finding a new block and earning a reward.
🔵 When the pool successfully mines a new block, the reward is distributed among the participants proportionally to their contribution to the overall computational resource. Typically, more power means more income, but all participants receive a share.
🔵 Participating in a mining pool reduces the risk for miners, as they receive a more stable, albeit smaller, income compared to solo mining, where they might not receive any reward at all.
Disadvantages of mining pools:
🔵 Most mining pools charge a fee for their services, which reduces the overall income of the participants.
🔵 The success of large mining pools can lead to the centralization of cryptocurrency mining, which goes against the idea of a decentralized network.
🔵 If a mining pool ceases operations or encounters technical problems, it can temporarily halt payments to participants.
