What a mining pool is, and why your machine mines in one

On its own, one Antminer S21 would find a bitcoin block about once in 89 years. A pool puts many machines to work on the same block and pays each by its share of the effort, which turns a lottery into a small daily payment to your wallet.

A rowing eight moving down a wide, misty river at dawn, seen from a bridge high above

A miner makes guesses, and one guess in a trillion wins

A bitcoin miner is a box that does one job. It takes the latest block of transactions, adds a number, and checks whether the result meets a target. If it does not, it changes the number and tries again, trillions of times a second. Nothing clever is going on in there. The more guesses a machine makes, the better its chance of a win.

A win is a valid block. The network accepts about 144 of them a day, roughly one every ten minutes, and each pays its finder the block reward: 3.125 bitcoin at the moment, plus the fees attached to the transactions inside it. That is the prize, and there is one of it every ten minutes for the whole world to share.

Mining alone is a lottery you would wait about 89 years for

Take an Antminer S21, which the store lists at 200 terahashes a second. Over the week to 28 September the whole network averaged about 935 exahashes a second, on our hashrate chart. One S21 is about 0.00002% of that.

If a block arrives 144 times a day, that share works out to one block every 32,455 days on average, or about 89 years. In any single year the chance that the machine finds one is about 1.1%. Nobody would run a business on those odds, and this is the reason nobody mines alone at this size.

And the miss is not a near miss. A machine on a losing streak is not closer to a win than one that just started. Each guess is independent, so there is no way to be owed one.

On its own, one machine would find a block about once in 89 years.

Chart: Bitcoin's total hashrate. A single machine is a sliver of this line, which is why a machine needs a pool. Open the chart

A pool is a syndicate: everyone guesses, everyone shares

A mining pool fixes the waiting by putting many machines to work on the same block and splitting whatever the group wins. Your machine still does its own guessing. It just does it as part of a much larger team, so the team finds a block often and everyone in it is paid in proportion to the work they did.

To keep it fair, the pool counts every machine's effort. A share, as the Bitcoin wiki explains, is a proof of work that is easier than a full block but still costs real guessing to produce. A machine that submits a lot of shares has done a lot of work, and the pool can see it without waiting for anyone to win.

This is how pooling trades one big rare payment for lots of small regular ones. The wiki puts it as spreading the reward “out more smoothly over time”. Instead of one block every 89 years, a machine is paid a small amount every day.

What a machine actually earns in a pool

Our hashprice chart is the best way to see what a unit of hashing earns. On 28 September it was 0.000477 bitcoin per petahash per day, which was $40.26 at that day's close of $84,444.

An S21 is 0.2 petahash, so it earns about 0.0000953 bitcoin a day on that figure, which is about $7.96 at our 29 September price of $83,471. That is revenue, before the pool's fee and before the electricity bill, and it moves with the price of bitcoin and with how much hashing the rest of the network adds. Over a 30-day month, the same figures come to about 0.00286 bitcoin, or roughly $239 at today's price, again before fees and power.

It is also the same number, up to the pool's fee, whether the machine is in a pool or not. A pool does not make a machine earn more. It makes the earnings arrive as a steady stream instead of a lottery.

Chart: What one petahash earns per day. Multiply by your machine's size in petahash to see its income before the pool fee and the power bill. Open the chart

How the payout reaches you

A pool pays out to a bitcoin wallet address. An address is a long string of letters and numbers that works like an account number that can only receive: you can give it to anyone, and it lets people send you bitcoin but not take any of yours out. The keys that spend from it stay with whoever controls the wallet.

You give the pool your address once. From then on it sends what your machine has earned to that address, usually every day or when your balance passes a small minimum. On Firsthand's own how it works page, the bitcoin is paid to your wallet by the pool as it is earned, we do not hold it, and we take no cut of what the machine makes. The only bill is the electricity.

Copy the address from the wallet itself rather than typing it, and check that the first payment lands before you assume everything is working. Wallets reject most mistyped addresses, but the safe habit costs nothing.

Four things that differ between pools

Pools are not all alike, and a few differences matter to a first-time owner.

How they pay for shares. Under pay-per-share, the Bitcoin wiki notes, the pool pays “an instant flat payout for each share that is solved” out of its own reserves, so your income has no luck in it and the pool carries the risk. Full pay-per-share does the same and adds a share of the fees. Other schemes wait for actual blocks and split what arrives, which is fairer over a long time and lumpier in a single week.

The fee. Most pools keep a small percentage of what they pay out, and that is the price of the smooth income. A fee looks small on the page and it is taken from every payout for as long as the machine runs, so compare it like a running cost.

The payout rules. Many pools pay out only when your balance passes a minimum, and some let you choose how often. A high minimum on a small machine can mean a wait of several days for the first payment, which is normal and not a fault, so find the rule before you start and set your expectations by it.

How reliable it is. A pool that goes down leaves your machine guessing for nothing. Machines are usually given a backup pool to fall back on for exactly that reason.

What a pool does not change

A pool decides how you are paid. It does not decide how much your machine earns, and it does not touch the two things that do: how efficient the machine is, and what you pay for electricity. Those are the numbers to compare when you are choosing a machine, and the ones the rest of our guides build on.

If you want to see how they fit together, read why nobody sells the coins to pay the power bill, how the halving affects efficiency and what the box price leaves out.

The short version

Solo mining with one machine is a lottery you would wait decades for. A pool lets many machines guess together and pays each in proportion to its work, so you earn a small amount every day.

Your machine's income depends on hashprice, efficiency and the electricity rate, and the pool only changes how it arrives. Give it one bitcoin address you control, check that the first payment lands, and treat the pool's fee as a running cost.

Disclosure

Firsthand Bitcoin sells and hosts mining hardware, including this machine. No manufacturer, distributor or affiliate programme paid for or reviewed this page and we take no commission on the links above. Historical figures are computed from daily bitcoin price and network hashprice, each day valued at its own prices. Nothing here is investment advice.