# 5.4 Mining Pools ###### tags: `Blockchain` The following notes are taken from [Coursera](https://www.coursera.org/learn/cryptocurrency/home/week/2) --- ### Economics of Being a Small Miner - Cost = $6,000 - Expected time to find a block = 14 months - Expected revenue: $1,000/month ![](https://i.imgur.com/DgwykXe.png) ### Mining Pools - **Goal:** pool participants all attempt to mine a block with the same coinbase recipient - send money to key owned by pool manager - Distribute revenues to members based on how much work they have performed - minus a cut for pool manager ### Mining Pool Variations - **Pay per share:** flat reward per share - typically minus a significant fee - what if miiners never send in valid blocks? - **Proportional:** typically siince last block - Lower risk for pool manager - More work to verify - **"Luke-jr" approach:** no management fee - Miners can only get paid out in whole BTC - Pool owner keeps spread ### Mining Pool Protocols - API for fetching blocks, submitting shares - Stratum - Getwork - Getblcoktemplate - Proposed for standardization with a BIP - Increasingly important; some hardware support ### Mining Pool History - First pools appear in late 2010 - Back in the GPU era - By 2014: around 90% of mining pool-nased - June 2014: GHash.io exceeds 50% ### Are mining pools a good thing? - Pros - make mining more predictable - allow small miners to participate - more miners using updated validation software - Cons - lead to centralization - discourage miners from running full nodes Can we prevent pools?