How do pools work?

[Sir_lagsalot]

Hey guys, I have done spare cash and im thinking of buying a few antminers. Id just like to know how a pool works. Does the pool find a block, and allocate a few hash combinations to each connected miner, or is it basically each miner mining solo, except that the coinbase is split around the latter?

I think the first option would be better, as there won't be people hashing the same hashes when mining the same click :-/

Am I getting it wrong? What am I missing? Is the truth one of my listed options, or is it totally different?

[foxbitcoin]

Hey guys, I have done spare cash and im thinking of buying a few antminers. Id just like to know how a pool works. Does the pool find a block, and allocate a few hash combinations to each connected miner, or is it basically each miner mining solo, except that the coinbase is split around the latter?

I think the first option would be better, as there won't be people hashing the same hashes when mining the same click :-/

Am I getting it wrong? What am I missing? Is the truth one of my listed options, or is it totally different?

Yes, I think you got it. You miners are connected to the pool, which accumulate all of the hash power and have more chance to find blocks. After that, it allocates all the rewards to every individual miner proportional to their actual hash power. For the details, you could check here to see how they allocate the rewards.

[bernardk]

Your terminology is a bit off and I'm not sure what you mean with "hashes" and "clicks". I will try to write a short explanation if it helps.

All miners connected to the pool are mining for the pool. So if anyone finds a block the block will belong to the pool (gets paid out to the pools address).

Now the pool has the responsibility to split the reward (25btc currently) between miners depending how much work (hashpower) they put in to find this block. Usually this is done by pools setting a lower difficulty for the miner when sending them jobs. Miners will send back results (called shares) earlier when they find a block matching the lower difficulty set by the pool. The pool will count this shares as proof that the miner actually did the work.

Shares are like real blocks that just don't match the full target (difficulty). One of those shares will actually match the current real difficulty and the pool will submit it as a valid new block.

Different pools use different ways to count the shares (determine your payout) and you will see terms like PPS, PPLNS, ....

You can find more information on wikis:
https://en.bitcoin.it/wiki/Mining_pool_reward_FAQ
https://en.bitcoin.it/wiki/Pooled_mining
https://en.bitcoin.it/wiki/Why_pooled_mining

The hashrate is on a steep curve going up right now and it looks like each week a new mining data center is announced. I personally would wait a bit now before investing into mining hardware.

[jonnybravo0311]

All miners connected to the pool are mining for the pool. So if anyone finds a block the block will belong to the pool (gets paid out to the pools address).

Just a quick correction here... not all pools mine to a central address and then distribute payouts - although most do (including my own pool).  P2Pool and Eligius split the 25BTC up in the coinbase transaction itself so when the block is found, the miner gets virgin coins.

[kano]

All miners connected to the pool are mining for the pool. So if anyone finds a block the block will belong to the pool (gets paid out to the pools address).

Just a quick correction here... not all pools mine to a central address and then distribute payouts - although most do (including my own pool).  P2Pool and Eligius split the 25BTC up in the coinbase transaction itself so when the block is found, the miner gets virgin coins.

P2pool always, eligius ... most of the time.

[Stoneboy]

Your terminology is a bit off and I'm not sure what you mean with "hashes" and "clicks". I will try to write a short explanation if it helps.

All miners connected to the pool are mining for the pool. So if anyone finds a block the block will belong to the pool (gets paid out to the pools address).

Now the pool has the responsibility to split the reward (25btc currently) between miners depending how much work (hashpower) they put in to find this block. Usually this is done by pools setting a lower difficulty for the miner when sending them jobs. Miners will send back results (called shares) earlier when they find a block matching the lower difficulty set by the pool. The pool will count this shares as proof that the miner actually did the work.

Shares are like real blocks that just don't match the full target (difficulty). One of those shares will actually match the current real difficulty and the pool will submit it as a valid new block.

Different pools use different ways to count the shares (determine your payout) and you will see terms like PPS, PPLNS, ....

You can find more information on wikis:
https://en.bitcoin.it/wiki/Mining_pool_reward_FAQ
https://en.bitcoin.it/wiki/Pooled_mining
https://en.bitcoin.it/wiki/Why_pooled_mining

The hashrate is on a steep curve going up right now and it looks like each week a new mining data center is announced. I personally would wait a bit now before investing into mining hardware.

thanks for the info will look at it.