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How many Mining Pools migrated to the Bitcoin Market:
Mining pools are groups of cryptocurrency miners who pool their computing resources to increase the chance of validating blocks and, thus, receiving rewards on the blockchain network.
Because mining cryptocurrencies, especially coins like Bitcoin, Ethereum (before the transition to Proof of Stake), and others, requires an immense amount of computing power, these pools allow participants to work together to compete with larger or more efficient miners.
Basic Concept: In the Proof of Work (PoW) system, miners compete to solve complex mathematical problems to validate transactions and add blocks to the blockchain.
This requires considerable processing power (hash power). A solo miner, especially without access to specialized hardware (like ASICs), has little chance of mining blocks regularly.
A mining pool allows miners to pool their resources. When the pool finds a block, the reward is divided among all participants in proportion to the amount of computing power (hashrate) they contributed.
How Mining Pools Work:
Cooperation: Miners connect their equipment to a pool server that coordinates the work. Instead of individually trying to mine blocks, the pool distributes the work among participants.
Pool Fee: Most pools charge a small percentage of the reward as a service fee (usually between 1% and 3%).
Rewards: When the pool solves a block and receives the reward (usually in the form of newly generated cryptocurrencies and transaction fees), this reward is divided among miners in proportion to their hashrate contribution.
Reward Distribution Models - There are different methods for dividing rewards between miners depending on the pool model. The most common are:
PPS (Pay-Per-Share): Miners receive a fixed payment for each "share" submitted, regardless of whether the pool finds a block or not. This model is considered low risk, but generally has higher fees.
PPLNS (Pay-Per-Last N Shares): Rewards are distributed based on the number of shares submitted, but only considering a specific period before the block is found. It is a higher risk model for the miner, but with lower fees.
PROP (Proportional): Rewards are distributed proportionally to the number of shares submitted after the pool finds a block.
FPPS (Full Pay-Per-Share): In addition to the block reward, transaction fees are also distributed among miners.
Advantages of Mining Pools:
More stable rewards: Instead of waiting indefinitely to mine a block on your own, miners in pools receive a regular share of rewards, making earnings more predictable.
Accessibility: Allows small miners, with limited hardware, to participate in mining popular cryptocurrencies.
Greater chance of success: By sharing resources, miners increase the chance of finding blocks.
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