Why Mining pools are popular

As the number of miners increases and the mining power continues to grow. A single miner or miners with a small amount of computing power likely won’t get mine block rewards. At this time, the concept of mining pools has been proposed and realized. The emergence of mining pools broke the geographical restrictions, and the scattered miners and mining farms have come together to be ready for operations. The mining pool is accountable for information integration, and the mining machines in the mining pool are responsible for competing for mining rewards. Since the computing power of many miners is integrated, the greater the mining pool’s computing power, the higher probability of mining block rewards.

In this mechanism, the block rewards generated by the general mining pool will be distributed according to the proportion of the computing power contributed by each miner. Compared with single mining, joining a mining pool can help obtain a more stable income. Simply put, the mining pool is a fully automated mining platform; that is, the mining machine is connected to the mining pool, it provides the computing power for the mining pool, and it obtains the income (block reward).

for example:

Take the lottery as an example; suppose the probability of winning is 1/100,000. Then, you buy a lottery ticket, the likelihood of winning is 1/100,000. If you buy 100 tickets, it is 1/1,000. However, not everyone has unlimited funds to buy more lottery tickets. Even if you buy 500 tickets, the chance of winning is still minimal (5/1,000). If you can find another 9 people to raise funds to buy 500 tickets each and the total is 5,000 lottery tickets, the chance of winning increases to 5/100. If you can find more friends to buy tickets, then the opportunity to win the lottery is higher. The profit can be divided according to the proportion of the number of lottery tickets provided by each person.

Pros and cons of mining pools

The existence of mining pools reduces the difficulty of mining cryptocurrencies such as bitcoin, lowers the mining threshold, and truly achieves the concept of bitcoin mining, where everyone can participate in. But its drawbacks are also undeniable because the computing power is connected to the mining pool. As a mining pool, it will have a tremendous computing power resource. In the bitcoin world, computing power represents the right to bookkeeping, and computing power is everything. Suppose a particular mining pool has a computing power of more than 50%. In that case, it will be able to easily launch a 51% attack on bitcoin for double-spending attacks, which will have the opportunity to directly destroy the entire bitcoin ecosystem.