A Mining Pool is a collective of miners who combine their computational resources, or hash power, to mine cryptocurrency blocks more consistently. By working together, they increase their chances of solving the cryptographic puzzle that leads to the mining of a new block.
"Joining a mining pool can help individual miners earn consistent rewards, rather than relying on the luck of mining a block solo."
When a mining pool successfully mines a block, the block reward is shared among the pool members. The distribution is typically proportional to the amount of hash power each miner contributed to the pool.
"If a miner contributes 10% of a pool's total hash power, they would typically receive 10% of the block reward when the pool mines a block."
Different mining pools may use different strategies for mining blocks and distributing rewards. These can include factors like the pool's fee structure, the minimum payout, and the method used to distribute rewards.
"Some mining pools use a 'Pay Per Share' (PPS) system, where miners are paid based on their hash rate, regardless of whether the pool successfully mines a block."
Mining pools play a significant role in the security and decentralization of many blockchain networks. While they can help distribute mining rewards more evenly, they can also concentrate power if a few large pools control a significant portion of the network's total hash power.
"If a single mining pool controls more than 50% of a network's hash power, it could potentially manipulate the blockchain, a situation known as a '51% attack'."
* All terms and definitions may update as the Cryptionary improves.
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