Definition ∞ Team-based mining, often called pool mining, is a collaborative effort where multiple participants combine their computational resources to mine cryptocurrencies more effectively. By sharing processing power, participants collectively increase their probability of solving a block and earning rewards. The generated rewards are then distributed proportionally among the pool members.
Context ∞ Team-based mining is a dominant practice in Proof of Work cryptocurrencies like Bitcoin, as individual mining has become largely unprofitable due to increasing difficulty. News often reports on the concentration of hashing power within large mining pools, raising concerns about potential centralization and its impact on network security. The dynamics of these pools significantly influence the distribution of new coin issuance and network control.
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