1 min read
The mining industry has several economies of scale, due to energy costs, capital costs, regulatory capture, and intricacies of Proof-of-Work. Thus, miners pool their resources and split the rewards. Mining pools allow smaller miners to smooth their returns and lower their risk instead of mining for very rare, exorbitant returns. When a member of a pool finds a valid block, they split the rewards with the rest of the pool based on each member’s hashrate contribution. Operators of mining pools typically collect a fee for their coordination services.