introduction
Mining pools have been crucial in shaping the cryptocurrency mining landscape since the early days of Bitcoin. As mining hardware evolves from CPU to GPU and then ASIC, mining pools simultaneously adapt to these technological advances. This article explains how mining machines and mining pools grew alongside each other, and the evolution of the mainstream mining pool models that define mining today.
From CPU mining to the birth of a pool
At the start of Bitcoin in 2009, mining went solo on personal computers using traditional CPUs. Mining is less difficult, allowing individuals to find blocks and earn Bitcoin independently. However, as more miners joined the network and the difficulty increased, solo mining became unrealistic for most people.
This solution formed the first mining pool, such as a slash pool, in the second half of 2010. The pool reduced income variance by combining calculus capabilities to distribute compensation proportionally to the work they contributed. This innovation has transformed mining from a lottery-like effort to a more predictable and stable revenue stream for participants.
Hardware evolution and industrial mining
By 2010, GPUs had replaced CPUs with superior parallel processing power, leading to increased mining competitiveness and complexity. The mining pool expanded quickly, allowing more miners to join forces. The FPGA temporarily increased its mining efficiency before being overtaken by ASICs.
The ASIC ERA began around 2013 and dramatically increased mining speeds and power efficiency. ASIC miners have been individually mined using less specialized equipment, making them almost impossible. Mining pools have expanded their infrastructure and introduced sophisticated reward distribution mechanisms to grow, accommodate diverse memberships, and have become essential for mining operations around the world.
Formation of mainstream pool models
Mining Pool has developed various reward systems over time to balance risk, equity and income stability.
- Proportional model: The oldest system in which miners pay proportionally based on stocks within the mining round.
- Pay-per-last-n-shares (pplns): The latest stock-based compensation miners contributing to Block Discovery were introduced around 2011 to reduce pool hopping.
- Pay-Per-Share (PPS): The payment model pioneered by VIABTC was introduced and launched in August 2016. In addition to PPS fees, trading fees were added, which were later adopted by many other mining pools.
- Full Payper Share (FPPS): It was later than PPS+ and came out around 2018. It evolved from PPS to provide stable incomes by miners, including both block rewards and transaction fees.
These models aimed at reducing payment variance and risk, providing miners’ options that suited their preferences for reward frequency and stability.
Modern mining pools and their services
Today, mining pools manage millions of miners worldwide using sophisticated software that coordinates mining tasks and efficiently manages proportional payouts. They charge competitive fees and provide transparency and security. Major pools like VIABTC provide flexible mining services and competitive reward systems to support mining from individuals to large-scale operations.
Conclusion
Mining pools have evolved from a simple collaboration of Bitcoin’s early CPU mining days to sophisticated global operations along with ASIC miners. Continuing development of mining hardware has encouraged innovation in the pool reward model, increased equity, reduced revenue volatility, and encouraged large-scale mining participation. Together, the evolution of mining machines and pools supports today’s robust and dynamic cryptocurrency mining ecosystem.
