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A mining pool is when a group of cryptocurrency miners combine their processing power to get quicker mining results. The amount of processing needed to compete with mining pools has become very expensive and solo mining is no longer seen as viable an option by many. In a mining pool, contributing miners are paid in proportion to the amount of processing power they contribute.
Payment for the contribution made can be calculated in different ways depending on the type of pool the miners have joined. Each pools sets their own payment scheme, you can read more about the ethpool payout scheme. The most common calculation is PPS Pay per share where there is a standard payout for each miner based on the amount of processing power hashtag rate contributed.
The mining pool will pay a set rate based for each completed hash, so the more power your machine has, the more you contribute, the greater your earnings. To get an estimated idea of what you can earn, refer to https: The earned amount per hash is dependant on the difficulty at a certain point in time.
The difficulty is calculated on the overall hashing power of the global network. PPS is a popular choice by miners because of the ease in which potential earnings can be calculated. This payment calculation generally gives higher payout over a long period of time, but has a level of unpredictability, or luck involved. A pool may have a consistent number of blocks over a period of time, or may have large variances, which affects the calculation and ultimately the payout.
As you earn based on the blocks found during the time that you mine, you may see large variances in the payments. The amount of processing power you have will have a significant impact on your earnings as your power is relative to the size of the pool instead of there being a direct proportion between input and output. If your mining rig is not as powerful as some other miners, choosing a pool that pays on PPS would be more beneficial.
Miners are paid for each share that they submit, giving them the predictable payment method of PPS, but an additional transaction fee will be paid based on the PPLNS calculation method. This gives miners the best of both worlds as well as the potential to earn more. For a clear comparison of the payment methods see the ViaBTC page at, https: For clarity, many of the pricing discussions mention Solo. This is when a miner is allocated the full payment for the block they mined alone.
Different mining pools offer different payment options. Some pools give you the option to choose your payment method, such as ViaBTC and some have a standard payment methods for all the miners in the pool so it is important to check before committing your resources.
You can also use a mining calculator to get an estimate of how much you can earn. Check out post on the top ethereum pools for for more info on the different pools. In short, be prepared to do your homework ans shop around before you join a pool if you want to get the maximum return from your investment in mining hardware.