Mastering Blockchain - Second Edition

Mining pools

A mining pool forms when group of miners work together to mine a block. The pool manager receives the coinbase transaction if the block is successfully mined, which is then responsible for distributing the reward to the group of miners who invested resources to mine the block. This is profitable as compared to solo mining, where only one sole miner is trying to solve the partial hash inversion function (hash puzzle) because, in mining pools, the reward is paid to each member of the pool regardless of whether they (more specifically, their individual node) solved the puzzle or not.

There are various models that a mining pool manager can use to pay to the miners, such as the Pay Per Share (PPS) model and the proportional model. ...