mining pool
A mining pool is a group of proof-of-work miners who combine their hashing power and split the rewards, so that each member earns a small, steady income instead of a rare, enormous jackpot. Solo mining is a lottery: with a few machines you might find a Bitcoin block once a decade, or never. By pooling, thousands of miners collectively find blocks regularly and divide each reward in proportion to the work each contributed — trading a tiny chance of a big prize for a reliable trickle.
The accounting trick that makes this fair is the 'share.' The pool sets an easier target than the real network difficulty and asks each miner to submit hashes that beat this easier target. Such a share proves the miner is genuinely working, even though almost no share is good enough to be a real block. The pool counts everyone's shares; when one miner's hash happens to also beat the real difficulty, the pool wins the actual block reward and distributes it according to everyone's share counts. A share is worthless to anyone but the pool, so miners cannot steal the reward.
Payout schemes differ in how they balance risk between pool and miner. Under PPS (pay-per-share) the pool pays a fixed amount per share immediately and absorbs all the luck/variance itself; under PPLNS (pay-per-last-N-shares) miners are paid only when the pool finds a block, weighted by their recent shares, which discourages pool-hopping but passes variance to miners. FPPS and proportional schemes sit in between. Pools also take a small operator fee.
Pools are the main centralizing force in proof-of-work. Although the hash power is spread across many individual miners, the pool operator typically chooses which transactions go into the block template and which chain to extend, so a handful of large pools can collectively control most of a network's block construction — a concentration that worries security researchers and has at times approached the dangerous 51% threshold. There are also pool-specific attacks, such as block withholding (a miner submits shares but secretly discards real blocks to harm the pool) and pool hopping. Newer protocols like Stratum V2 aim to return transaction-selection power to individual miners to dilute this centralization.
A pool sets a share target that is, say, a million times easier than the network. A miner submits a winning share roughly every minute, proving steady work. Only about once a week does one of those shares also clear the real difficulty and win a block; that reward is then split across the week's accumulated shares.
Pooling smooths a miner's income but concentrates power: the operator usually picks the block's transactions, so a few big pools can dominate a chain's block construction even though thousands of miners contribute the raw hash power.