What is Ethereum mining pool?

Home / Ethereum Tutorial / What is Ethereum mining pool?

Ethereum Mining pool is a gathering place for miners working together to minimize fluctuations in profits. Mining poolS are like the diversification of portfolio management, or it can be understood that you can hold 10 stocks in your hand rather than just 1.

When miners try to find a HASH for the right block, they are like participating in a lottery. Assuming 1000 tickets are issued every day and you have only 1 ticket in hand, the probability of winning is 1/1000. But if you have 100 tickets, then the probability of winning is 1/10, obviously the lottery chance will be much higher.

However, if you do not have the capacity to buy 100 tickets but can only buy 10 tickets, join up with 99 other people to form a group and buy 1,000 tickets. So your team will always win, and that profit is divided equally for each person. This means that your cash flow will be lower but run more often, so profit margins will be lower.

Similarly, mining Ethereum or other cryptocurrency is like lottery. If you have a 1TH computer and the total hashpower of Ethereum Network is 1 PetaHash, then you have 1/1000 chance of exploiting the block in every 10 minutes. Surely you do not have more than 10 minutes to mine each block, but if you join other miners in a mining pool, you will create a combination, combine blocks, divide the profits by The percentage of hashpower you contribute, at which point your rate of return will increase dramatically. For example, if you have 10TH in a pool of 100TH, this pool has 25 ETH, you will get 10% of the profit equal to 2.5 ETH.

Ethereum mining pool is a good way to make a steady income, but most mining pools charge a fee on each miner’s profit – typically 1-2%. If you do not want to buy a Ethereum digger, you can outsource it by signing mining contracts, and you have the right to use a certain amount of hashpower over a period of time. This is called Cloud mining.

Leave a Reply

Your email address will not be published. Required fields are marked *