• Validating and adding new transactions to the blockchain record
These roles are carried out by utilizing a PC which is connected to the internet and well-equipped with specialized mining hardware and software to manage/control cryptocurrency mining. As more and more individuals join the mining network, the mining difficulty level also increases, so as to keep a check on the number of coins being mined. In order to solve the complex algorithmic equations, one requires high computing power (hash rates) in order to solve a block. Solo mining becomes an expensive affair as you need to purchase high-end mining hardware and spend a lump sum amount on electricity. Evidently, the profit margin tends to be on the lower side, making individual mining an unproductive venture.
In contrast, when you participate in a mining pool, (a platform comprising of miners’ groups), you basically share your resources, i.e. processing power, and your chances of locating a block also increases.
However, pool mining has some major disadvantages. The mining reward received for solving a block is divided among the different members of the mining pool, which is quite less, when contrasted with the sole ownership of the entire reward earned via solo mining.
Mining pool basically functions as an organizer for the members of the pool. The roles include handling the shared resources of the pool members, allocating individual rewards for pooled processing power as per the contribution, recording the efforts of each pool member, and the like.
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