Mining has become a very complex and very expensive venture. Mining pools are groups of miners who cooperate and agree to share block rewards proportionate to their contributed mining hash power. Mining pools are desirable to the average miner because they even out rewards and make them more predictable. Unfortunately, this tends to concentrate power on whoever owns the mining pool. Below (Figure 10.2) is an example of a Bitcoin Mining Pool, showing the percentage split of bitcoin mined (https://www.blockchain.com/pools):
Figure 10.2: Mining Pool Percentage Split
Miners can also redirect their hashing power to a different mining pool at any time to share block rewards proportionate to their contributed mining hash power.
One of the main reasons to join a mining pool is it is less expensive to mine collaboratively. Mining expenses can reach thousands of dollars. Currently, with a Bitcoin being worth about $7,300, that is a good investment. However, when it drops to below $1,000, as it did in 2017, it could prove to be economically disastrous. To help level out the investment playing field, many mining pools have sprung up and are available for almost every cryptocurrency. The idea is that you collaborate with many other miners worldwide, add your mining power to the entire pool, then share the proceeds.
It is simple and fast to join a mining pool. To do so, you download mining software and run it with the mining pool as the target. Authenticate with a user name and password. The pools are normally free to use but will charge a percentage of the coin you are awarded for your efforts. This has lead to scams and mining fraud.
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