A mining pool is a group of cryptocurrency miners who combine their computational resources to increase their chances of successfully mining new blocks on the blockchain. By pooling resources, miners can collectively solve complex mathematical algorithms required to validate transactions and add new blocks to the blockchain.
When a new block is successfully mined, the rewards are distributed among all participants in the mining pool based on their contributed computational power. This allows individual miners to receive more frequent, albeit smaller, payouts compared to solo mining.
Mining pools are popular among smaller miners as it reduces the variance in rewards from block to block. Additionally, joining a mining pool can help miners compete against larger mining operations that have significant resources. It also helps to decentralize the mining process by allowing more participants to contribute to securing the network and validating transactions.
