Definition ∞ Collaborative mining describes the practice where multiple participants combine their computational resources to mine cryptocurrencies more efficiently. This typically occurs within mining pools, where individual miners contribute their processing power to increase the probability of solving a block and earning block rewards. When a block is successfully mined, the reward is distributed among the pool participants proportionally to their contributed hash power. This method mitigates the high variance of solo mining, offering more consistent, albeit smaller, payouts.
Context ∞ Discussions around collaborative mining often address the centralization concerns associated with large mining pools controlling a significant portion of a network’s hash rate. News reports may cover the formation of new pools, changes in pool distribution, or regulatory scrutiny over their operational models. The ongoing debate concerns balancing individual miner profitability with the decentralization ideals of proof-of-work blockchains.
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