• Market Cap: $266b

  • Aug 10, 2022

Chapter 5.1

What is Cryptocurrency Mining Pool?

What is a Bitcoin Mining Pool, Types of Cryptocurrency Pools and How To Choose Your Pool?

What is Cryptocurrency Mining Pool?

What is a Bitcoin Mining Pool, Types of Cryptocurrency Pools and How To Choose Your Pool?

When it comes to mining Bitcoins there are four major aspects. You can take a look at the first three here:

Let us now talk about the fourth and final aspect of mining Bitcoins - Bitcoin Mining Pools.

What Is Bitcoin Mining Pool?

Mining Bitcoins seems like an easy process on paper. However, even if you gather the best of mining hardware, software and wallets - the thing is, that mining for Bitcoins alone is always harder than mining in a group. While mining solo is always more profitable, mining in a group results in faster generation of bitcoins. Also mining solo might involve a lot of initial investment as well.

When you are mining alone, you are mining on a limited hashpower which results in slower results. This is where pools come in. Joining a pool means that you are willing to mine along with other Bitcoin miners and share the reward according to the work you have put in. Miners pool in their resources together and generate blocks faster.

Types of Cryptocurrency Mining Pools

Single Coin Pools:

Single Coin pools allow the users to mine only one type of coins. While it is the biggest and most popular currency, Bitcoin isn’t the only cryptocurrency in the market. There are mining pools dedicated to mining different crypto-currencies such as Ethereum, ZCash, etc.

Multi Coin Pools:

Multi Coin pools allow the miners to mine multiple coins at the same time without losing efficiency. Some of these pools also convert the mined cash to Bitcoins automatically if instructed by the miner.

Local Mining Pools:

Local mining pools are pools where the users have to set up their own hardware equipment. The ASIC devices, electricity and other similar equipment have to be purchased by the user.

Cloud Mining Pools:

Cloud Mining Pools are mining pools where you do not have to purchase equipment as they can be bought at a contract. This is an online mining contract where you pay a fee for the mining to happen. This fee will be deducted from your mining reward during the pool payout.

Factors To Keep in Mind Before Choosing a Bitcoin Pool

Pool Fee:

The most important factor that one has to keep in mind before selecting their bitcoin mining pool is the Pool Fee. The pool fee generally ranges from around 0% to 4% - this varies depending on which party is covering for the risks. If the pool assumes the risk, the fee might be higher and a lower fee usually indicates the user assumes the risk. The average fee is generally around 1%

Often when new pools come out, they start off with a 0% fee - which makes it quite lucrative. However, these pools might not be secure and might end up being a scam too. While that does not happen at all times, it’s better to be aware of the risk.

You can take a look at our comparison of the best Bitcoin Mining Pools here to ensure that you select the best possible pool. We have mentioned the Pool Fee for each pool there.

Payment System:

After the Pool Fee, the second most important factor that must be kept in mind is the payment system. Each Bitcoin Mining Pool offers a different payment system. While Pool Fee deals with what you pay to the pool, the Payment System is about what the pool pays you. The payment system depends on two factors: Is the pool assuming the risk or are the users assuming the risk.

In case of pool assuming the risk: The miners will be paid every month regardless of the pool being able to solve a block or not. Even if the miners of the pool do not solve a block, they would be assured of getting some amount of profit in return. However as mentioned above, in these kind of pools, the fees are high, often going as high as 10%.

In case of users assuming the risk: In this case, there are multiple payment methods. Users are paid only when the pool mines a block. Payments may be less frequent, but they are usually higher compared to when the pool assumes the risk because of a lower fee.

In addition to these rules of payment, some pools also have a minimum payout threshold - which means you need to have collected a certain amount of Bitcoins before you could transfer them to your wallet. It is advisable to read the rules of payout very carefully before choosing your Bitcoin Mining pool.

Also Read: How are Bitcoin prices determined


Another basic thing that has to be considered before mining is the currency that you want to mine. Some pools allow merge mining - which is the ability to mine multiple cryptocurrencies at the same time while other pools allow mining only a specific kind of currency.

Some pools also allow you to mine for cryptocurrencies and automatically convert them to Bitcoins.


Location is another major factor to keep in mind before choosing a mining pool. A bitcoin mining pool which is not in your country or your continent might not be the best pool for you. If you are living in America, you should ideally look for a pool in America rather than opting for one in China or Europe.

Reputation, Transparency and Support System:

It is always advisable to go for pools which have been running for some time rather than risking going with new pools. Reputed pools might charge you a little higher in terms of fees, but they are more trustworthy compared to others. These trusted, reputed mining pools have a high up-time too - which is another advantage.

Transparency is another key factor. While most pools provide statistics and data, there are some pools which have gone above and beyond this to offer better transparency such as a system where everyone can check the contribution of other miners down to an hourly breakdown!

Last but not the least, you also need to make sure that the Bitcoin mining pool that you are joining offers a good support system so that you can take their help to set up things in case you get confused at any point of time while mining.

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