The mining pool combines the computational resources over a network to strengthen the probability of finding a block or otherwise successfully mining for cryptocurrency, breaking through the geographical restrictions, and providing sustainable income for the miners around the globe. It is fair to say that in the rapid development of the cryptocurrency business represented by Bitcoin, the mining pool takes a large part of the credit.
However, in the early years of Bitcoin, all the miners conducted digital mining alone. Under the SOLO mode, as long as the blocks were generated, they would receive all the benefits, and no such thing as “mining pools” was needed.
However, the Bitcoin network will automatically adjust the mining difficulty per two weeks to ensure that only 2,016 blocks will appear over 14 days, with an average of one block every ten minutes. As Bitcoin mining became more and more popular, many more users have joined the lucrative business, and the total processing power in the whole network skyrocketed, making it less and less likely for independent miners to find blocks. Till now, the odds of generating a block by oneself are like that of winning the lottery. Responding to that, some proposed to combine the hashrates of all miners so that the probability of mining the block is greatly improved, whereas the mining reward is distributed according to the share of each miner. Thus, a prototype of the mining pool took shape.
So, how does the mining pool work? A mining pool contains hundreds or thousands of miners via specialized protocols, who connect their mining rigs to the designated domain names and ports through software. Then, different mining rigs work synchronously, and their solutions collide with those of the Bitcoin network. When a miner finds a block, the block reward is added to the private wallet address of the pool, which will later distribute the reward to the miners according to “shares”: Each time, the miners will be assigned tasks of varying difficulty, and when the task is completed, a share is submitted to the pool. After the mining pool verifies that the share is valid, they will accept the share and count it into the total amount. And according to the number of shares submitted by miners, the income is proportionally distributed. However, a miner’s reward also depends on the payment method adopted by the pool, usually according to five miner reward systems — PPS, PPLNS, PPS+, FPPS, and SOLO. The currencies and settlement methods supported by each mining pool may be different. Therefore, when choosing from the mining pools, users can refer to the official websites for detailed instruction.
However, most mining pools charge withdrawal fees, so that only when the miners’ accumulative rewards exceed the minimum withdrawal amount, can they withdraw profits from the account. Taking ViaBTC as an example, at present, its mining pool supports four withdrawal methods, including Auto Withdraw, Normal Transfer, Inter-user Transfer, and Transfer to CoinEx. When auto withdrawal is enabled, the system will automatically send the mining yield to the user’s current withdrawal address once a day, if the account balance reached the minimum payout manually set by the user. And if the account balance is below the minimum payout, the mining yield will temporally remain in the user’s asset. It’s also the top-recommended withdrawal method. As for the normal transfer, users can withdraw from the account at any time but needs to pay a certain amount of miner fees, whereas zero fees are required for withdrawals made using Inter-user Transfer and Transfer to ViaBTC. The latter two are also recommended.
Although Bitcoin originated from the western world, many insightful Chinese investors have seized the opportunity brought by the rapid development of digital mining, making the scale of the domestic mining pools far surpass that of foreign countries. Currently, on the Bitcoin mining pool rankings, the top pools are all from China.
In general, the mining pool solves the problem that with the increase of mining difficulty, the individual miners’ hashrates are insufficient to stabilize the block generation, and also reduces the difficulty for users to obtain cryptocurrencies such as Bitcoin, which truly makes Bitcoin mining accessible to everyone.