Bitcoin Mining pools

Key points

  • Mining Pools
  • Payment Methods

Bitcoin mining is the method implemented by miners to earn Bitcoins. Miners implement brute force, in the form of computing power, to solve the difficult math puzzles, required to be solved for validation of transactions. Every time a miner can solve the problem, he earns Bitcoins in exchange for his efforts.   

In earlier days, when solving math puzzles were easy and there was not much competition, miners use their personnel computers. With the implementation of Bitcoin mining software, in 2013, the entire landscape changed. Personal computers were replaced by big machines that require huge computational power. Individual mining became very difficult and unproductive. Large organizations with capital established mining mega centers and individual miners joined forces to form mining pools. 

Mining Pools

Mining pools were created by individual miners to compete against mining mega centers. In mining pools, individuals work together as one and share their rewards. Forming mining pools, help in increasing the overall computational speed and increases the probability of solving the puzzle and getting rewards. With an increase in the difficulty and cost associated with mining, more and more individual miners are looking to join mining pools. Even though in mining pools the overall reward decreases, the probability of winning a reward increases a lot.       

Payment Methods

The payments methods that are commonly used in the Bitcoin mining pools are:

Proportional Mining: In this payout method, the miners are awarded proportionally for the efforts that they have put in finding a block. A payout will only be given if the block is found by the pool and in a situation, where no block is found, no payout is given. The profit made by the miners is maximum when multiple blocks are found by the miners and at times when the prices of Bitcoin are on the rise.   

Pay-per-share method: It is opposite to the proportional payment method. In this method, the money is distributed based on the mining power of the pool. Irrespective of whether the block was found or not, miners will be given a reward. The reward is distributed equally among the miners. This payment method is best suited at times when the value of Bitcoin is low, as during lean times this offers continuous income to miners.    


Disclaimer: The article is just to provide information and shouldn’t be considered as any financial advice. It is advisable to conduct thorough research before investing in any cryptocurrency. 

Photo by – vjkombajn on Pixabay