What is a Mining Pool?
A mining pool is a family of cryptocurrency miners who cooperate by merging their solo efforts and computational ability. The merger makes it easier for them to solve cryptographic problems and earn digital currency. Subsequently, the mining pool shares the block rewards among every member of the family. The contribution ratio in the hashing process determines every member’s earnings ratio.
What is the essence of a pool? Due to the costly hardware and software resources needed to mine, coming together of miners makes block generation faster. Before the idea of pools came, it took a very long time for the slow-paced miners to generate a single block. Speeding up the generation would ensure consistent rewards.
How a Mining Pool works
Cryptocurrency mining involves running a transaction input via a hashing algorithm. The algorithm produces an output of a fixed length, given the name hash. A crypto miner going alone has limitations in the number of devices and fewer hash functions in a given period. For instance, bringing together five mining tools, each with a mining capacity of 400 MH/s, boosts the mining power to a cumulative 2 GH/s. The reward’s division among the pool members depends on each member’s contribution to the hashing process by presenting valid proof of work. The profit is generally in the units of the cryptocurrency mined.
What you need before joining a Mining Pool
Before joining a pool of miners, there’s a checklist of requirements that you need to tick.
A wallet is an application that allows blockchain users to keep in one place and transact with their digital funds. The wallet consists of a set of public and private keys. Without the public one, you cannot receive payments since there would be no address to pay to. On the other hand, a private key enables the user to transact funds from that particular address.
Mining Hardware and Software
Bitcoin mining utilizes unique hardware gadgets known as ASICs. On the other hand, Ethereum mining makes use of the GPU miner, running on a Graphics Processing Unit (your graphics card). These provide the most hashing power possible.
Once the mining hardware connects to the blockchain, the software is needed to provide an interface. Some top mining software includes MinerGate, NiceHash, CGMiner, among others.
- Also read: Three Main Methods for Mining Cryptocurrency
Major crypto mining pools in 2020
China seems to control around 80% of the total global mining capacity for Bitcoin and Ether. For Bitcoin, F2Pool is the largest on the globe. It dominates 20% of the cumulative global hash rate. Other major bitcoin mining pools are Poolin, BTC.com, SlushPool, F2Pool and many more. They have grown popularity with new mining pool members.
The major Ethereum mining pools are Ethermine, F2pool and Ethermine are the largest Ether mine pools that mine more than 50% of all ETH.
The concept of a mining pool to boost the hashing power and hence better the probability of mining a block seems to be the only solution to the resource-intensive undertaking: crypto mining. Blocks mining becomes fast and efficient, and hence a constant stream of income. The beautiful part is that the profits’ sharing is on the ratio of the processing power that an individual miner has brought to the pool.