What is a mining pool?

Good hardware only takes you so far. You could be running several high-powered ASICs, and you’d still be just a drop in the Bitcoin mining ocean. The chances of you actually mining a block are pretty slim, even though you’ve spent a lot of money on your hardware and the electricity required to run it.

You don’t have a guarantee on when you’ll get paid with a block reward, or even if you’ll get paid at all. If consistent revenue is what you’re after, you’ll have much greater luck in a mining pool.

Let’s say that you and nine other participants own 0.1% of the network’s total hashing power each. That means that, on average, you would expect to find one in every thousand blocks. With an estimated 144 blocks mined a day, you’d probably find one block a week. Depending on your cash flow and investment into hardware and electricity, this “solo mining” approach could be a feasible strategy.

However, what if this revenue won’t be enough to turn a profit? Well, you could join forces with the other nine participants we mentioned. If all of you combine your hashing power, you’d have 1% of the network’s hash rate. This means you’d find one in every hundred blocks on average, which works out at one to two blocks a day. Then, you could just split up the reward and share it amongst all the involved miners.