Mining Pool

A mining pool is a coordination service where many miners combine hash power and share block rewards in proportion to work contributed, converting a lottery-like income into a steady stream. The first pool, Slush Pool, began operating in late 2010. Pools, not individual machines, are what typically appear as block producers, with each block currently paying a 3.125 BTC subsidy plus fees.

Why it matters

Solo mining pays nothing until a block is found, which for a small operation could take years. Pools measure each participant's contribution through submitted shares, which are partial proofs of work, and distribute earnings under schemes such as pay-per-share or pay-per-last-N-shares. This predictability is what allows ordinary operators to finance hardware and electricity.

Pool concentration is Bitcoin's most discussed centralization pressure, since a handful of large pools often assemble the majority of blocks. Mitigations include Stratum V2, which lets individual miners choose their own transactions, and the ease with which hash power can switch pools if one misbehaves.

In the gold vs bitcoin debate

Gold mining consolidated into major corporations decades ago, and gold users rarely worry about it because mining does not control gold's ledger. Bitcoin mining does construct the ledger, so pool concentration is monitored closely. The counterargument is that pools hold delegated, revocable power, while gold's chokepoints sit downstream in refining and vaulting.