What are Mining Pools?

 

Mining pools allow small miners to receive more frequent mining payouts. By joining with other miners in a group, a pool allows miners to find blocks more frequently. But, there are some problems with mining pools as we’ll discuss.

 

As with GPU and ASIC mining, Satoshi apparently failed to anticipate the emergence of mining pools.

Pools are groups of cooperating miners who agree to share block rewards in proportion to their contributed mining power.

 

While pools are desirable to the average miner as they smooth out rewards and make them more predictable, they unfortunately concentrate power to the mining pool’s owner.