Mining Pools Explained

Mining pools explained

It might seem that cryptocurrency mining is not that popular anymore. New-born blockchains use Proof-of-Stake (PoS) or other consensus mechanisms rather than Proof-of-Work (PoW). However, the leading and the most popular cryptocurrency, Bitcoin (BTC), still requires mining rigs and other mining attributes. 

Changelly provides you with comprehensive crypto articles and tries to explain sophisticated blockchain basics in a simple and engaging way. What is a mining pool? How does mining pool work? What is the mining reward? We are going to observe the meaning of mining pools from different perspectives. 

Mining Pool Meaning

For a cryptocurrency mining to be smooth and efficient, a miner should obtain proper mining equipment. Powerful mining hardware that enables seamless crypto mining is quite expensive. The cost of a mining rig might reach up to $10,000 and more. It needs to be taken into consideration that powerful mining equipment will consume much electricity and this will inevitably lead to higher electricity bills.  

If you want to mine cryptocurrency (Bitcoin, Monero, Ethereum, and so on), but for some reason, cannot afford expensive mining rigs, you can join a mining pool.

Mining Pools

A mining pool is a united group of miners that share computational resources (hashing power) between other members of a pool in order to discover a block, add it to a blockchain, and get a reward. 

Besides the expensive side of the mining process, there is also a difficulty factor that adds complexity to the mining. When Satoshi Nakamoto introduced Bitcoin (BTC), anyone with a basic PC could mine BTC. Bitcoin has been strengthening its market value during the past ten years and obviously attracting new users and miners. The more people decide to mine BTC, the more difficult will be the process of mining. 

According to the, network difficulty is a measure of how difficult it is to mine a Bitcoin block, or in more technical terms, to find a hash below a given target. A high difficulty means that it will take more computing power to mine the same number of blocks, making the network more secure against attacks. 

Mining Pools Essentials


A miner is a person who uses the computing power of his/her device in order to mine (discover) a block. Miners process cryptocurrency transactions that take place within a blockchain. 

Hash Rate

A hash rate is a speed at which miner’s computer can solve difficult mathematical computations in order to discover the next block. The higher is the hash rate of a computer, the easier it will be for a miner to mine a block.  


A luck score displays how lucky a pool was at finding a block.

Mining Reward

A mining reward is an incentive distributed to a miner for adding new blocks to the blockchain.

Best Mining Pools in 2020

Best Bitcoin (BTC) Mining Pools
Best Bitcoin Cash (BCH) Mining PoolsBest Ravencoin (RVN) Mining Pools 
Best Ethereum (ETH) Mining PoolsBest Zcash (ZEC) Mining Pools Best Dogecoin (DOGE) Mining Pools
Best Monero (XMR) Mining PoolsBest Dash (DASH) Mining PoolsBest Litecoin (LTC) Mining Pools

Read also: Cryptocurrency Hashing Algorithms Explained

How Do Mining Pools Work?

Once the Bitcoin price increased considerably, solo mining became less common as discovering for block required powerful and expensive mining rigs. It was reasonable to create services that would unite solo miners who wanted to mine cryptocurrency but didn’t have enough computing power. 

In its core, a mining pool coordinates the pool members. It manages the pool members’ computational power (hash rate) to gain success in block finding and to eliminate the situation when several miners discover the same block. A mining pool is responsible for payouts. Once the block is discovered, a mining pool spreads the mining reward among members of a pool (between those who participated in a particular mining process). 

A mining pool also records the work of all pool members to share the reward equally between all miners and in proportion to the delivered work. 

How Do Mining Pools Share Rewards?

bitcoin mining

Each mining pool follows its own reward payment scheme. Some mining pools might offer several ways of a mining reward. The most common ones are:

  • PPS or Pay per Share. A miner receives a fixed amount of reward according to a provided share. 
  • FPPS or Full Pay Per Share. A miner is rewarded according to each solved share and a mining pool also covers transaction fees.
  • Proportional. A miner gets a reward according to a number of valid shares provided during the round. 
  • PPLNS or Pay Per Last (N)umber of Shares. PPLNS payment scheme looks at the last number of valid shares before the block was found regardless of the block boundaries. This is called a time window. When the block is discovered, the system checks for the last N of valid shares provided during a time window. Those miners who provided a valid number of shares during a time window, get a reward.

Read more: Mining Pool Rewards Explained  

Please pay close attention to the mining pool’s commission fees. Most of the time, mining pools charge 1-3% of the pool’s fees. 

Bottom Line

Mining pools will be a perfect solution for those who want to try crypto mining and save a fortune at the same time. Before diving into a particular mining pool, do not forget to check it out closely. Do your own research and examine the mining pool share reward.

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