Timechain Wiki

Mining pools

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Mining pools coordinate the hashrate of many individual miners — public-miner facilities to home miners — into a single pool-level hashrate that competes for blocks; participants contribute work and receive proportional payouts when the pool finds blocks, while the operator builds the block template, distributes work, verifies shares, and pays rewards. The principal payout schemes — PPS, PPLNS, and FPPS — distribute variance differently between pool and miners, with FPPS dominant for large miners since 2020. Pool concentration is structurally significant: as of 2026 the top four pools (Foundry USA, Antpool, F2Pool, ViaBTC) account for over 70% of hashrate, with Foundry alone around 25-28%. The concentration is operationally rather than custodially centralizing — operators build templates and could in principle censor transactions, but they do not custody participant Bitcoin. Stratum V2 (gradually deploying since 2022) lets miners build their own templates while still receiving pool payouts, addressing some centralization concerns. Substantive engagement with pool-concentration and AI-infrastructure-pivot dynamics lives in dedicated Criticism and Controversy notes.

Why this note matters

Mining pools are the coordination layer of the mining industry. They translate millions of individual ASIC hashes per second into the unified pool-level hashrate that competes for blocks. Understanding pool architecture, payout schemes, and concentration dynamics is the precondition for evaluating mining-related centralization concerns and for understanding how block templates (and therefore which transactions get included) are actually constructed.

The pool-concentration concern is one of the most-cited mining-centralization vectors. This section provides the operational-empirical foundation; substantive analytical engagement lives in Mining centralization concerns (Criticisms) and event-level engagement with the 2024-2026 AI-infrastructure pivot dynamics lives in Mining pool centralization and the AI infrastructure pivot (Controversies).

What a mining pool does

A mining pool performs four principal functions:

  1. Block template construction. The pool operator selects the transactions to include in the candidate block, orders them, calculates the merkle root, and distributes the block-header template to participating miners.
  2. Work distribution. The pool operator provides each participating miner with a portion of the search space (a range of nonces and/or extra-nonce values) to search. Miners hash the block-header template with their assigned search parameters.
  3. Share verification. Each miner submits “shares” — block-header hashes that meet a pool-set difficulty threshold lower than the network difficulty. Shares are proof of work performed by the miner. The pool verifies shares cryptographically.
  4. Payout calculation and distribution. The pool tracks shares submitted by each participant and pays out mining rewards (block subsidies + transaction fees) proportionally according to the pool’s payout scheme.

The why-pools-exist question. Individual miners (even very large public miners) cannot reliably win blocks. A single high-end ASIC’s chance of finding a block per day is essentially zero; the variance is enormous. Mining pools aggregate hashrate to reduce variance: if you contribute 1% of pool hashrate, you receive (approximately) 1% of the pool’s block rewards over time, smoothing out the per-block lottery into a more-predictable income stream.

The pool-operator role. Pool operators provide the coordination infrastructure plus take on the variance risk between pool earnings and miner payouts (under PPS-family payout schemes; not under PPLNS). Pool operators charge fees (typically 1-3% of payouts) for the coordination service.

Payout schemes

Three principal payout schemes structure the pool-economic relationship:

Pay Per Share (PPS). The pool operator pays each miner a fixed amount per submitted share, calculated based on the expected value of the share (network difficulty × subsidy/fees / shares-per-block). The pool operator absorbs all variance — miners are paid regardless of whether the pool finds blocks. The pool operator’s pricing typically includes a risk premium.

Pay Per Last N Shares (PPLNS). The pool operator pays out only when the pool finds a block, distributing the block reward among the miners who submitted shares during the “last N shares” window before the block was found. Miners absorb the variance — short hashing periods may produce no payout if no block was found during the window. PPLNS rewards loyal miners and disincentivizes short-term pool-hopping.

Full Pay Per Share (FPPS). Pays miners based on expected block-subsidy (like PPS) plus actual transaction-fees that were collected in blocks (rather than expected). FPPS distributes fee variance to miners more cleanly than pure PPS does. FPPS has become the dominant scheme for large miners since 2020 — particularly important during high-fee periods (Ordinals-era 2023-2024).

Variations and hybrids:

  • Score-based payouts. Some pools use proprietary scoring algorithms (Bitmain’s score-based pool reportedly uses a variant).
  • Solo-mining-as-pool. Some pools (Solo CKPool) offer essentially-solo mining with shared infrastructure but per-block payouts to the winning miner.
  • P2Pool and decentralized pools. Decentralized mining pools (P2Pool historically; Braidpool, Stratum V2-based pools today) use peer-to-peer architectures rather than centralized pool operators.

The pool concentration landscape

As of 2026, the major mining pools by network share:

PoolApproximate shareOperator
Foundry USA~25-28%Foundry (Digital Currency Group subsidiary)
Antpool~18-22%Bitmain
F2Pool~10-12%F2Pool (Chinese-headquartered)
ViaBTC~8-10%ViaBTC (Chinese-headquartered)
Binance Pool~5-7%Binance
MARA Pool~3-5%Marathon (public miner)
Spiderpool, OCEAN, Braiins, othersRemainderVarious

Concentration patterns:

  • The top 4 pools account for over 70% of hashrate.
  • Foundry’s ~25-28% share remains the highest single-pool concentration.
  • Several major public miners (Marathon, Riot) operate their own pools.
  • The Chinese-pool concentration (Antpool, F2Pool, ViaBTC, Binance Pool collectively) reflects the residual concentration of Chinese-operator participation despite the 2021 hashrate exodus.

The concentration trajectory. Pool concentration has fluctuated; the post-2022 trajectory has been toward larger top-pool shares. Foundry’s growth has been particularly notable — it has captured share from Chinese-headquartered pools as US institutional miners have preferred Foundry’s compliance-and-operational profile.

The OCEAN pool exception. OCEAN (launched 2023) is positioned as a censorship-resistant alternative: miners construct their own block templates and OCEAN handles only payout coordination. OCEAN’s hashrate share is small (~1-2%) but it represents a structural alternative to template-controlling pool operators.

Block-template construction and the censorship-resistance question

The structural pool-concentration concern is that pool operators construct block templates and could in principle censor transactions. A pool that captured >50% of hashrate could in principle:

  • Refuse to include specific transactions (sanctioned addresses; specific protocols)
  • Reorganize the chain by mining alternative histories
  • Coordinate with other large pools for similar censorship

In practice, this has not happened at scale. Pool operators have substantial economic incentive against censorship (lost fees from excluded transactions; reputational damage; potential miner-defection to competing pools).

The OFAC-compliant block question. A small number of US-based pool operators have been observed to exclude OFAC-sanctioned-address transactions from block templates. The fraction of OFAC-compliant blocks has hovered in the low single-digits percentage; non-compliant pools include these transactions. The censorship-at-pool-level concern is real but the empirical landscape is one of partial-rather-than-systemic compliance.

The Stratum V2 protocol response. Stratum V2 (in active deployment since 2022) addresses the template-construction-centralization concern by allowing participating miners to construct their own block templates while still using the pool for payout coordination and variance smoothing. Adoption has been gradual but is growing; Stratum V2 deployment is the principal protocol-level path toward addressing this concentration concern.

Decentralized pool architectures

Several decentralized-pool architectures attempt to remove the pool-operator-as-trusted-party:

P2Pool. Historical (2011-2018) peer-to-peer pool that distributed block-template construction across participants. Eventually superseded by Stratum V2’s approach but pioneered the concept.

Stratum V2. Not a pool itself but a protocol upgrade enabling decentralized template construction within a pool architecture. Major pool operators (Braiins, F2Pool partially) have deployed Stratum V2 support. The protocol’s principal innovation is “job declaration” — allowing miners to construct their own templates and submit them to the pool for coordination.

OCEAN. A pool launched 2023 with explicit censorship-resistance design. Miners construct their own templates; OCEAN handles only payout coordination. OCEAN’s approach is operationally a simplified version of what Stratum V2 enables more generally.

Braidpool. An emerging decentralized-pool architecture using a peer-to-peer payout protocol with miner-controlled template construction. Early-stage deployment.

The decentralized-pool adoption barrier. The trade-off for decentralized pools is reduced variance smoothing (the pool’s smoothing-of-variance is constrained by the architecture’s decentralized payouts). For very-large miners (public miners; large industrial operations), this is acceptable. For smaller miners, the variance smoothing is the principal value of pool participation; decentralized alternatives are less attractive.

Operational reality of large-pool participation

For a large public miner (Marathon, Riot, CleanSpark), the pool-relationship dynamics are:

  • Pool choice as strategic decision. Public miners choose pools based on payout scheme, fees, operational reliability, and pool-operator alignment. Several public miners operate their own pools (MARA Pool, Riot’s pool) for additional operational control.
  • Bilateral relationships. Large miners negotiate bespoke arrangements with pool operators (custom payout terms, hashrate guarantees, custom fee structures).
  • Pool-redundancy strategies. Many large miners split hashrate across multiple pools for redundancy and pool-failure mitigation.

For a smaller individual miner, the dynamics are:

  • Pool choice based on minimum-payout-threshold, fee structure, and operational reliability.
  • PPLNS preferred for variance-tolerant miners; PPS preferred for variance-averse miners.
  • The Stratum V2 question is becoming relevant as more pools and miner software support the protocol.

Tradeoffs and design choices

Pool-concentration vs network-effects-of-pools. Larger pools provide better variance smoothing for miners (smaller per-block-payout variance) but produce structural concentration. The trade-off is intrinsic; market dynamics favor 3-5 major pools at any given time.

Centralized template construction vs decentralized template construction. Centralized template construction is operationally simpler and currently dominant; decentralized (Stratum V2; OCEAN; Braidpool) addresses the censorship-resistance concern but at the cost of operational complexity and weaker variance smoothing.

Pool-fee structure vs payout-scheme choice. Different payout schemes (PPS, PPLNS, FPPS) trade off variance differently between pool and miner. FPPS has become dominant for large miners during high-fee periods; PPLNS retains appeal for loyalty-and-variance-tolerant miners.

The OFAC-compliance-at-pool question. Some pools comply with OFAC sanctions on transaction inclusion; others do not. This is a real pool-level political-and-regulatory variation that produces censorship at the margin but not systemically.

The AI-infrastructure pivot interaction. Public miners increasingly pivot a portion of their compute to AI infrastructure. The pool-relationship implications are complex — pool-operator-affiliated miners may have different incentives than AI-pivoting public miners. See Mining pool centralization and the AI infrastructure pivot for the event-level engagement.

Substantive analytical critique of pool concentration lives in Mining centralization concerns; the AI-infrastructure pivot dynamic is engaged in Mining pool centralization and the AI infrastructure pivot.

Open questions for further development

  • How will Stratum V2 adoption progress? The protocol addresses the template-construction-concentration concern; deployment depends on miner-software upgrades and pool-operator commitment.
  • Will pool concentration meaningfully decrease, or are network-effects of pool size structural? The empirical history suggests 3-5 major pools is the long-run equilibrium; major shifts have been rare.
  • What is the equilibrium for OFAC-compliant vs non-compliant pools? Regulatory pressure and miner-preference both shape this; the trajectory is unclear.
  • How does the AI-infrastructure pivot affect pool-operator economics? Public miners pivoting hashrate to AI compute reduce their pool-participation; pool operators face revenue pressure as a consequence.
  • Can decentralized pool architectures (Braidpool, OCEAN, Stratum V2-derived) achieve meaningful market share? The variance-smoothing trade-off has constrained adoption; whether this changes depends on miner-preference evolution and protocol improvements.

Canonical sources for this note

  • Hashrate Index (Luxor Technology) — pool-level hashrate data
  • mempool.space — block-level data including pool identification
  • BTC.com pool data — historical pool-share data
  • Stratum V2 protocol documentation: stratumprotocol.org
  • OCEAN pool documentation: ocean.xyz
  • Foundry, Antpool, F2Pool, ViaBTC public documentation
  • The Bitcoin Standard - Saifedean Ammous — mining-economics engagement
  • Mastering Bitcoin - Andreas Antonopoulos — chapters on mining and pools

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