What are Bitcoin Mining Pools?

Mining pool can refer to the combining of resources by miners who have joined their processing power over a network, to split the reward equally, according to the amount of work they contributed to the probability of finding a block.

A “share” is awarded to members of the mining pool who present a valid partial proof-of-work. Mining in pools began when the difficulty for mining increased to the point where it could take centuries for slower miners to generate a block. The solution to this problem was for miners to pool their resources so they could generate blocks more quickly and therefore receive a portion of the block reward on a consistent basis, rather than randomly once every few years.

Since the appearance of the first mining pools in Bitcoin, the fraction of blocks generated by solo miners has steadily declined and is negligible today.

The rising competition among mining pools has been shown to motivate adversarial strategies, such as denial-of-service attacks.

The first Bitcoin mining pool

The first mining pool that was created is called SlushPool. It was presented in the forum Bitcointalk on November 27, 2010 by the user Slush. This user is currently CEO and co-founder of Safe deposit. SlushPool was implemented in Europe, specifically in Poland, the country of origin of Slush itself. The intention of its creator was to unite the forces of the underpowered miners.

Large mining pools today

Since the appearance of the first mining pool, these spaces have expanded. New mining pools appeared and at the same time diversified their options. At first, pools were dedicated to Bitcoin only, but then other cryptocurrency pools began to appear. Currently, practically all major cryptocurrencies have mining pools. The reason behind this is very simple: they facilitate mining and ensure the proper functioning of the network in general.

But of all mining pool services, some stand out for many reasons. Among them the most important are: AntPool, Nanopool, F2Pool.

Advantages and disadvantages of a mining pool

Advantages of pooled mining:

• More predictable payouts – pools usually pay you on a more regular schedule – be it once you reach a certain threshold, daily or the like. Solo mining only pays you when you find a block, which can take a few days, years, or never.
• Extra features – Pools usually let you quickly check the status of your miners from anywhere, notify you of payouts and the like, which would take you a lot of extra setup time on your own.
• Less space – If you are solo mining, you need to keep your own copy of the blockchain. Pools handle all that by themselves.
• It is easier – There is a low less setup required to do pooled mining, especially when we are talking about merged mining and so forth.

Disadvantages of pooled mining:

• Smaller expected earnings – pools usually charge a fee and sometimes use a reward system (like Pay Per Share) that can give you a lower payout.
• Having to rely on third party system to earn your money – websites go down, and when they do, your miners can be idling.
• Trust – you have to trust the pool owner not to swindle money from you, either by creating fake miners in the pool that do no work but still receive rewards or otherwise. Similarly, the pool owner can have an agenda of their own that they wish to further
• Giving power to the pool owner – some important decisions regarding Bitcoin future are made by people voting with their blocks. By giving their computing powers to the pools, the miners essentially give their votes to pool owners to vote as they chose.