What Is A Mining Pool And How Does It Work?
A mining pool is a collaboration between multiple crypto miners in which they combine their computing power to find new blocks faster in the mining process and earn rewards together. Mining pools were created because over the years it became increasingly difficult for individuals to successfully mine a block. The rewards earned by mining pools are distributed based on the hashrate contributed by miners.
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đź•’ 7:40 PM
đź“… Nov 28, 2025
✍️ By chrison2
đź“ŤKey Takeaways
•A mining pool is a collaboration of miners who combine their computing power to find blocks faster and earn rewards.
•Mining pools were created because mining individually became nearly impossible due to increasing difficulty and higher costs.
•Miners submit “shares” as proof of their computational work and receive rewards based on their contribution.
•Total hashrate and mining difficulty determine how often a pool finds a block and how profitable mining is.
•There are various pool structures and payout schemes such as PPS, FPPS, and PPLNS, each with their own advantages and disadvantages.
đź“ŤHow does a mining pool work?
A mining pool distributes work among all connected miners. Each miner sends their “shares” to the pool, which prove how many computational attempts they have performed. The shares represent how much work each miner completed while searching for a correct hash.
If a mining pool finds a valid block, the reward is distributed to each miner based on the number of shares they submitted. Counting shares and distributing rewards to the miners’ crypto wallets is fully automated by the pool software. Additionally, the mining pool usually charges a small fee between 1% and 2% for maintenance.
đź“ŤAdvantages of mining pools
°Accessible: Many more miners can participate and do not need massive amounts of hardware to have a chance at rewards.
°Regular rewards: By working together, miners create stable and predictable income.
°Cost savings: Distributed effort helps hardware and energy costs be recovered more effectively.
°Network security: A higher total hashrate makes the network more secure against attacks and manipulation.