Hello, in this lesson, we are going to cover what a mining pool is. So is it just a pool that a bunch of miners sit in? And let's talk about mining? No, it is not that it's not a physical pool at all. As we already know, if you haven't watched the what is mining video, feel free to check that out and then come back here. If you haven't you already aware what mining is, then you'll know mining is the process process of various very find transaction, nothing more to it than that using mathematical algorithms which are used to verify the transaction but the whole aim is just to verify transactions.

That's it and I'll offer you know the best coin network auto magically increases the mining difficulty depending on how often it is occurring and how often coins are being produced, it just ensures that not too many coins get produced at any given time. So, so that's all good. So it's getting more and more difficult. We already know that a fantastic also, as you are aware, initially, CPUs were sufficient for mining Bitcoin. They were more than enough for solving the problems. But the difficulty increased miners soon turn to GPUs and they will be there A lot more efficient than CPUs in the mining process, but they had two main flows.

One, they run very hot. And two, they weren't very well went very energy efficient. So they cost users a lot of money. And that's just to actually run them. If users were actually building wish they weren't building systems specifically designed for mining, now to also factor in that cost and load time. It wasn't cost effective to do it, at least not at the price that he really used to be.

Obviously, considering the price is over $5,000 they're mining it when you've $10 or hundred dollars or $1,000. It would have paid off for them. Then eventually came something called a a sick car which is Earth. It stands for application specific integrated circuit chip. And they have specific processes designed for mining Bitcoin. They are very fast, a lot faster than GPUs, and very efficient.

But ultimately, the same problem is occurring for miners, the difficulty is going up as more of it occurs, the difficulty increases. So you can even a buy more hardware buy more powerful hardware, but even then, it is becoming very difficult just to be able to get into it. So the barrier for entry from a cost perspective is very high now to effectively mined Bitcoin to the Stoker Do you own a processor We'll just be inefficient and there'll be no need with that there will be no reason for you to do. But even with AC cards. The barrier to entry isn't like $10. It can be hundreds or even thousands or even 10s of thousands of dollars to do it effectively.

So what miners have done, they've created groups. They have created groups where miners collectively collectively, share resources to line flush solve problems a Faster, right? So you can be part of a mining pool, have hardware that isn't, let's say top of the end, but still be effective because you're part of a bigger pool that is able to solve the problems a lot quicker and it's a lot more effective, because you can use just regular hardware hardware that you've already got, but you can actually do something worthwhile. Now in terms of mining, you might think and how are the bitcoins that are generated split between the miners, they're not evenly split, which they shouldn't be. The coins are rewarded and split according to and in The withdraw miners contribution. So if for example, I create a pool and then Bob the knee, and then then let's just say you, it could be whatever your name could be whatever, if Bob is contributing 25% of the resources, I'm contributing five on the contribution a lot and on you're contributing 70% if all of our efforts was generating 100 Bitcoin is in basic mathematics, Bob would get 25 coins.

I mean, he would get five coins and you will get the biggest chunk At 70 coins, trust me 70 coins if you got that now, you'll be a HAPPY BUNNY experience over $5,000 that is over $350,000 worth of coins. I'm just getting started thinking about 70 Bitcoin. So that is what a mining pool is nothing more to it than that. It's just a collection of miners helping each other that to mine coins faster. If you have any questions or any queries regarding the concepts covered in this lesson, feel free to go over the video again. Feel free to go over as many times as you want to.

And feel free to pop me a message because I'll help out for your questions. And as usual, thanks for watching, and I look forward to seeing you in my next lesson.