A mining pool forms when group of miners work together to mine a block.
The pool manager receives the coinbase transaction if the block is successfully mined, which is then responsible for distributing the reward to the group of miners who invested resources to mine the block.
How Miners Collaborate to Earn Consistent Rewards
This is profitable as compared to solo mining, where only one sole miner is trying to solve the partial hash inversion function (hash puzzle) because, in mining pools, the reward is paid to each member of the pool regardless of whether they (more specifically, their individual node) solved the puzzle or not.
There are various models that a mining pool manager can use to pay to the miners, such as the Pay Per Share (PPS) model and the proportional model.
In the PPS model, the mining pool manager pays a flat fee to all miners who participated in the mining exercise, whereas in the proportional model, the share is calculated based on the amount of computing resources spent to solve the hash puzzle.
Many commercial pools now exist and provide mining service contracts via the cloud and easy-to-use web interfaces.
The most commonly used ones are AntPool ( ), BTC ( ), and BTC https://www.antpool.com https://btc.com TOP ( ).
A comparison of hashing power for all major mining pools is shown in the following http://www.btc.top diagram: Mining pools and their hashing power (hash rate) as of 28/10/2017 Source: https://blockchain.info/pools Mining centralization can occur if a pool manages to control more than 51% of the network by generating more than 51% hash rate of the Bitcoin network.
Why This Matters for Blockchain Technology
As discussed earlier in the introduction section, a 51% attack can result in successful double-spending attacks, and it can impact consensus and in fact impose another version of transaction history on the Bitcoin network.
Key Points to Remember
- Mining pools A mining pool forms when group of miners work together to mine a block.
- The pool manager receives the coinbase transaction if the block is successfully mined, which is then responsible for distributing the reward to the group of miners who invested resources to mine the block.
- There are various models that a mining pool manager can use to pay to the miners, such as the Pay Per Share (PPS) model and the proportional model.
- In the PPS model, the mining pool manager pays a flat fee to all miners who participated in the mining exercise, whereas in the proportional model, the share is calculated based on the amount of computing resources spent to solve the hash puzzle.
Conclusion
Mining pools represents one of the many innovative layers that make blockchain technology so powerful and transformative. As distributed systems continue to evolve, a solid understanding of these core concepts becomes increasingly valuable — not just for developers, but for anyone building, investing in, or working alongside blockchain-powered systems.
Whether you are just starting your blockchain journey or deepening existing expertise, mastering these fundamentals gives you the tools to think clearly about decentralized systems and make smarter decisions in this rapidly evolving space.