The concept of bitcoin mining pools first appeared in 2010 with the founding of Slushpool. Back then, the idea of pooled mining was foreign, and seen as unnecessary. However, as more miners started plugging into the bitcoin network between 2010-2021, the number of mining pools exploded.
According to Blockchain.com, the amount of computing power used for mining by the entire bitcoin network (i.e., hashrate) increased by a factor of 100 million between 2011 and 2018. This figure has grown tenfold from 2018 to 2020.
Prior to joining mining pools, most miners used GPUs (mining directly on PCs). GPU mining quickly became inefficient and unprofitable as more miners entered the space between 2014-2017. This influx of miners increased the total hash rate of the bitcoin network. As hashrate increases, each individual miner’s share of the total hashrate declines.
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To be successful, miners need a decent share of the hash rate; holding a higher share of the hashrate increases their probability of solving the next block and collecting its reward. The exponential increase in the hashrate over the past decade has rendered SOLO mining unfeasible for small scale miners. To solve this problem, mining pools emerged, allowing these smaller miners to pool their hashrate together.
The above data displays the founding dates of the top bitcoin mining pools. Notice, most of these pools launched during or after the 2017-2018 bitcoin bull market. This bull market brought bitcoin, and by extension, bitcoin mining into mainstream consciousness. Google searches for “bitcoin” and “bitcoin mining” broke records, companies and individuals rushed to buy ASICs, and total hashrate hit new highs. The proliferation of mining pools followed this increase in active miners and hashrate.
Bitcoin mining will continue to gain traction among large and small players alike, but, thanks to these mining pools, anyone can fire up a miner, join a pool, and start mining bitcoin.