What is the ore pool? What are the advantages and disadvantages of using ore pool mining?
- By bitcoincasts
- November 09, 2022
Shared by Xiaobian, what is the ore pool? Ore pool is a joint group of cryptocurrency miners. They combine their computing resources through the network to enhance the probability of finding blocks or mining cryptocurrency successfully in other ways. Cryptocurrency ore pool is a group of miners sharing their computing resources. The ore pool uses these combined resources to enhance the probability of finding blocks or successfully mining cryptocurrencies. If the mine pool succeeds and gets a reward, the reward is distributed among the participants in the pool. What are the advantages and disadvantages of the ore pool? This is the content to be discussed today.
1、 What is a mine pool?
Personally, the participants in the ore pool contribute their processing capacity to the search for blocks. If the mines succeed in these efforts, they will be rewarded, usually in the form of the relevant cryptocurrency. Rewards are usually distributed among individuals who make contributions according to the processing ability of each person or the proportion of the work to the whole team. In some cases, individual miners must show proof of work to be paid.
Incentives are usually distributed among miners according to agreed terms and their respective contributions to mining activities. Anyone who wants to make profits by mining with cryptocurrency can choose to use their own special equipment alone or join a mining pool in which multiple miners and their equipment are combined to enhance their hash output. For example, by connecting six mining equipment, each of which provides 335 megabytes of hashes (MH/s) per second, it can generate a cumulative mining capacity of 2 billion hashes, thus speeding up the processing of hash functions.
In addition, not all cryptocurrency pools operate in the same way. However, there are many common protocols governing many of the most popular mines.
Mining ponds are the most common. In this type of pool, the miners who contribute to the processing capacity of the pool receive the share until the pool successfully finds the block. Thereafter, the miners will be rewarded in proportion to the number of shares held.
The per share payment pool operates in a somewhat similar way, i.e. each miner receives shares for his contribution. However, these pools provide immediate payment whenever blocks are discovered. Miners who contribute to this type of mine can exchange shares for a certain percentage of dividends at any time.
Point to point ore pools are designed to prevent the pool structure from becoming centralized. Therefore, they have integrated an independent blockchain related to the swimming pool itself, aiming to prevent cheating by the swimming pool operators and the failure of the swimming pool itself due to a single center problem.
2、 Advantages and disadvantages of ore pool
Benefits of Ore Pool
Although the success of a single mining grant full ownership of the award, due to high power and resource demand, the probability of success is very low. For individuals, mining is usually not a profitable business. After all, many cryptocurrencies have become increasingly difficult to mine in recent years. These digital currencies are becoming increasingly popular, and the costs associated with the expensive hardware and electricity needed to become competitive miners often exceed the potential returns.
The ore pool has lower requirements for each participant in terms of hardware and power costs, and increases the profit opportunities. Although there is little chance for a single miner to successfully find the ore block and obtain mining rewards, cooperation with others can significantly improve the success rate.
Disadvantages of ore pool
To participate in the mining pool, individual miners need to give up some autonomy in the mining process. They are usually subject to the terms set by the resource pool itself, which may dictate how the mining process is carried out. They are also required to split any potential returns, which means that the profit share of individuals participating in the mine pool is low. A few mining pools, such as Ant Pool, Pool and F2Pool, dominate the bitcoin mining process.
To sum up, what is the ore pool? What are the advantages and disadvantages of the ore pool? The answer to these two questions. In addition, there are indeed many mining pools trying to decentralize, but these groups have consolidated most of the power to manage the Bitcoin protocol. For some supporters of cryptocurrency, the existence of a small number of powerful mining pools violates the inherent decentralized structure of Bitcoin and other currencies.