Bitcoin Mining Pool, What Is It?

Bitcoin mining is quickly gaining popularity.  The process allows transactions to be verified, added to the block chain, and for new bitcoin to be released. Anyone can participate in bitcoin mining, but the process can be computationally difficult.  There is a payoff to solving the puzzle, namely the ability to claim the block reward, transaction fees, and then the ability to place the next block on the chain.  The possibility of reward has made bitcoin mining highly competitive. 

Pool Mining

A recent barrier to miners is the increasing number of hashrate.  Hashrate has become so abundant it is hard for individual miners to gather enough to solve a block competitively.  To circumvent this issue, many miners are turning to pool mining.

Mining pools are groups of miners who join together in an attempt to pool resources.  The pools can be public or private and typically accept miners regardless of geographical location.   The miners share their hashrate, increasing their collective chance of processing a block first. Since the miners generate a block jointly, the proceeds are split among the miners.  The amount of each miner’s payout is proportional to their individual contribution per the rules of the pool.

How Payouts Are Calculated

The biggest question from those considering pool mining is how payment is calculated.  The systems for determining payouts vary.  It is important to pick a pool that utilizes a system you understand and will be comfortable with.

Pay Per Share

Pay per share is often referred to as PPS.  PPS payouts are generally instantaneous.  They are a relatively low risk.  There is also no need for the block to be solved for a miner to receive payment.

The pool has a pre-existing balance that payouts are issued from immediately.  The risk is completely by the operator, thus the payouts to the miners are typically set to jointly fall under the expected worth of the block reward.

Pay Per Last N Shares

Pay per last N shares, also known as PPLNS can fluctuate greatly.  This payout type is desirable to miners who are comfortable with taking risk for a chance at a higher payout.  Payouts are generally within 24 hours.

It is important to consider that hashrate is global.  When picking a pool it is not necessarily better to go with the one with the most hashrate.  Rather by choosing a smaller pool the hashrate remains safe from monopoly and is decentralized.  That is a longterm benefit to every miner.

Also, consider where the pools nodes are located.   Although mining is a global activity, investing your hashtag locally is a safer bet. The closer the nodes are to you and the other miners, the less the risk of impact from lost shares and lower latency.  

Mining is becoming increasingly difficult outside of mining pools.  That said, bitcoin mining can still yield results quickly when you join a pool.   They are a way to quickly navigate and profit from the current mining climate. offers bitcoin-related resources that cater to every kind of miner.  Sign up today for our ten-day email and increase your profitability.