What Is a ‘Mining Pool’ and Why Are They Necessary?
A mining pool is a collaborative group of miners who combine their computational resources (hashrate) to increase their collective probability of finding a block and earning the reward. They are necessary because, as the network difficulty increases, individual miners with limited hashrate would rarely find a block, making their revenue highly sporadic.
Pools allow for more frequent, smaller, and predictable payouts.
Glossar
Mining Pool Fee
Commission ⎊ The Mining Pool Fee represents the Commission charged by a pool operator to its participating miners in exchange for coordinating the collective hashing effort and managing the complex process of reward distribution.
Mining Pool Luck Variance
Deviation ⎊ Mining Pool Luck Variance quantifies the stochastic deviation between the actual number of blocks a pool finds and the mathematically expected number based on its proportional share of the network's total hash rate.
Pool versus Solo Mining
Variance ⎊ Pool versus solo mining represents fundamentally different risk-reward profiles within the cryptocurrency network consensus mechanism, impacting capital efficiency and potential revenue streams for participants.
Mining Pool Collusion Danger
Danger ⎊ Mining pool collusion danger refers to the systemic risk where a small number of dominant mining pools coordinate their actions to exert undue influence over the blockchain network, potentially leading to malicious behavior.
Predicting Necessary Fees
Prediction ⎊ Predicting necessary fees is the critical task of forecasting the minimum competitive transaction fee required to ensure a cryptocurrency transaction is included in a block within a specific, commercially acceptable timeframe.
Mining Pool Revenue
Source ⎊ Mining Pool Revenue is the aggregate financial inflow generated by the collective computational effort of the pool's participants, primarily sourced from two distinct components: the newly minted cryptocurrency block subsidy and the accumulated transaction fees contained within the discovered block.
Mining Pool Decentralization
Architecture ⎊ Mining pool decentralization represents a shift from centralized mining operations, historically dominated by large entities, toward distributed network control over hash rate allocation and block production rewards.
Cryptographic Security
Cryptography ⎊ Cryptographic security, within the context of cryptocurrency, options trading, and financial derivatives, fundamentally underpins trust and integrity within these complex systems.
Paying Mining Pool Members
Distribution ⎊ Paying mining pool members refers to the systematic distribution of block rewards, comprising the block subsidy and accumulated transaction fees, to individual participants based on their proportional contribution of hash power.
Mining Pool Work Division
Allocation ⎊ Mining Pool Work Division represents the dynamic partitioning of computational effort among participants contributing resources to a cryptocurrency network, fundamentally impacting block production probability.