How Does the Concept of ‘Expected Value’ Apply to Solo versus Pool Mining?
The expected value (EV) of mining is theoretically the same for both solo and pool mining over a very long period, assuming the pool fee is zero. EV is the block reward multiplied by the probability of finding a block.
In reality, a pool's EV is slightly lower due to fees, but the pool offers a distribution of that EV over time, while solo mining offers a single, large, but highly uncertain payout.
Glossar
Pool Mining
Mechanism ⎊ Pool mining is a collaborative mechanism where numerous individual cryptocurrency miners combine their computational power, or hash rate, to increase the probability of collectively discovering a valid block and earning the associated reward.
Expected Value
Probability ⎊ Expected Value represents the long-run average outcome of a stochastic process, calculated as the sum of all possible payoffs multiplied by their respective probabilities of occurrence.