Definition:
A mining pool is an online service where miners combine their computational resources to mine cryptocurrencies. All miners connected to the pool contribute to the overall hashing power of the network. The rewards received by the pool is shared among the miners in proportion to the amount of processing power supplied by each miner.
Explanation:
Mining pools are associated with proof-of-work coins, like Bitcoin, where network difficulty determines the rate at which blocks are found. Mining pools began when the Bitcoin mining difficulty increased to levels where vast amounts of processing power and electricity were required to mine a block.
This made it almost impossible for solo mining to be profitable. To solve this issue, miners decided to pool their resources together to generate blocks more consistently and receive rewards faster. Block rewards are then shared among miners participating in the mining pool.
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