What is a Crypto Mining Pool?

3 min readOct 7, 2022


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Put simply, cryptocurrency mining is the process of creating new digital coins. That’s where the simplicity ends, though, since the process of creating these coins mandates solving complex puzzles, validating transactions on a blockchain network and adding them to a distributed ledger. The faster you do that, the more rewards you can claim. Today, we’ll discuss crypto mining pools, a method of making this complex process plausible and accessible.

In the early days of crypto, despite the complex process, people could perform it from the comfort of their laptop and Internet connection. With the network and number of miners growing, the mining rewards became harder to obtain, requiring more and more computational power to perform. The process of mining became almost impossible to do for one person. Miners are migrating from using personal computers or CPU mining to entirely custom-built rigs using hundreds of application-specific integrated circuits (ASICs).

That’s where the idea of a crypto-mining pool comes into play.

Remember the saying, ‘teamwork makes dreamwork’? That’s precisely what a crypto mining pool is all about. The idea is pretty simple: individual miners combine their computational resources to improve their chances of mining a block and share the rewards received.

For example, if mining a crypto coin were an apartment building, each miner would be responsible for building a specific room for a specific flat, getting the appropriate compensation.

How do crypto mining pools work?

As mentioned above, the idea of mining pools is simple, and so is the execution. People join forces and computational resources to be able to consistently mine crypto and claim the relevant rewards. The pool is run by an operator who manages proceedings such as

  • the work produced by each pool member
  • assigning rewards
  • resolving any issues that may arise

As you’d imagine, that comes with a mining pool fee that is deducted from the rewards distributed to each member.

Types of crypto mining pools

The primary working mechanism is similar across all crypto-mining pools, but there are differences in how miners get rewarded. Let’s see some of the most common pool formats currently available.

Proportional mining pool
In this scenario, miners get shares that reflect the computational power they have sued in mining a block. Once the block is successfully mined, they exchange their shares for proportional rewards.

Pay-per-share pool
In this use case, we have the same principles as the pay-per-share pool scenario, only this time, each member can cash in their shares daily, irrespective of whether the pool has successfully mined a block.

P2P cryptocurrency mining pools
There are considered to be more advanced versions. The entire pool activity is integrated as a separate blockchain enabling decentralized payout pooling. Doing that eliminates the risk of theft by pool operators.

Advantages of crypto mining pools
Mining pools are a simple solution to a complex problem, helping miners worldwide while solving it. Here are some of their most prominent advantages:

  • makes mining accessible to everyone
  • you don’t need to invest exorbitant amounts of money in a dedicated mining rig
  • real-time visibility of the rewards
  • consistent payouts
  • no mining management worries

Closing remarks

Crypto mining is still in its infancy, trying to find the best way possible to do such a laborious task. A few decades into the future, we might look back and laugh at the ‘primitive’ way we’re currently mining crypto. With that said, we can’t skip steps or phases and crypto mining pools are the best way we currently have to do this.

What does the future hold for them? We’ll be here to observe, analyse, and, most importantly, share with you.

About Polkastarter
Polkastarter is the leading decentralized fundraising platform enabling crypto’s most innovative projects to kick-start their journey and grow their communities. Polkastarter allows its users to make research-based decisions to participate in high-potential IDOs, NFT sales, and Gaming projects.

Polkastarter aims to be a multi-chain platform and currently, users can participate in IDOs and NFT sales on Ethereum, BNB Chain, Polygon, Celo, and Avalanche, with many more to come.Website | Twitter | Discord | Telegram | Instagram | Newsletter | YouTube | Poolside

Originally published at https://blog.polkastarter.com on October 7, 2022.




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