Mining Pool - what is it?

Mining Pool is a collective community in which the computing power of all participants is combined to increase the efficiency and speed of cryptocurrency mining.

Mining is one of the ways to earn money in the cryptocurrency system. Anyone can join this type of activity. Initially, this required purchasing equipment whose characteristics meet the current requirements for computing power and operational stability. However, in every cryptocurrency system, including the first one - Bitcoin, there is such a thing as halving. This is a cyclical increase in the complexity of cryptocurrency mining, so miners need to modernize and update their system regularly so that earnings are relevant to all costs. In the last few years, implementing this alone has been difficult, especially considering the high competition in the form of large companies that launch large-scale industrial mining farms and have large capitalization and potential. The optimal solution to solve this problem is to connect to a mining pool.

How to work in a mining pool?

A mining pool is a separate community to which individual miners connect. They combine the computing power of their equipment, thereby significantly increasing the chances of quickly mining a new block and receiving a reward. Payment for each new block is distributed as a percentage based on how much computing power was spent by someone and the activity of a particular participant in all processes.

To connect to the pool, a miner must not only register on the platform but also install special software, through which it will interface with the equipment of other miners, and all collective processes of mining selected crypto coins will take place.

Advantages of mining pools and their disadvantages

This way of working is by far the most promising, compared to solo mining and the cloud method of mining cryptocurrencies by renting computing power from reputable companies. The main advantages are:

  • increasing profitability;
  • increasing the speed of mining new blocks;
  • reducing equipment costs;
  • reducing the influence of competition from large-scale corporations that create industrial mining farms.

However, it is important to consider that a commission is usually charged to each miner for using the service in any pool. Its size differs according to the conditions of different platforms. In addition, among the disadvantages, there is such a thing as fake and fraudulent pools, which only imitate the process of mining cryptocurrencies and ultimately do not pay profit to the miners. Therefore, when choosing a suitable platform, you must conduct a very careful analysis to choose a truly proven and reliable pool for collective work.