[W-Stool]

Can you ELI5 how making small amounts of money in crypto works? I thought it was a "winner take all" kind of arrangement where whomever solves the "puzzle" (for lack of a better word) first gets all the bitcoin as a reward, until the next block is up and ready to be solved. You're talking about making $100 a day - a very tiny fraction of one bitcoin - how does that work?

[rfd4sgmk8u]

Back in the early times, 'solo mining' was trying to find actual block target values and would yield the full reward, winner takes all. Mining pools were invented, that aggregate a whole bunch of miners all working on the same thing. Although there is only one true winner a block, the rewards are shared among all the miners, prorata their submitted hash rate. Care was taken by miners not to use one big pool, and keep the number of blocks produced to be <50% to any one pool. Came close a few times over the years!

The pool accepts 'shares' of 'close but not quite' values to prove that the client is actually doing work. Then, you had the emergence of marketplaces of hash power -- you could bid on or sell a specific number of hashes a second for a given time. The highest bidder would be able to point your mining hardware at their choice of pool with their payout credentials.

[danielsokil]

One of the problems I have been thinking about, people can still solo mine when they have lots of capital to buy hardware. Now, most crypto miners are using pools that reward them for their hashrate. However, there are only a handful of pools that the majority of miners use, which means centralization.

[rfd4sgmk8u]

The current pool distribution for Bitcoin is here: https://btc.com/stats/pool No pool has >20% today.

It is in the interests of the miners to prevent a situation where one pool takes a majority of the hash rate. Miners will migrate to smaller pools if one is getting too big.

[adossi]

Bitcoin is highly divisible. When I say $100/day what I really mean is something around 0.0016 BTC per day. This number fluctuates a lot so it’s best to look at the average over a week or month.

The best way to learn IMO is to try it yourself with your gaming computer. I personally use a platform called NiceHash (not sponsored, nor am I advocating for them, there are alternatives) which pays out in Bitcoin. Try it out yourself, depending on your GPU you could be making $3-10 per day. Run it for a month or two, or longer. Transfer that Bitcoin to an exchange of your choice (Coinbase, crypto dot com, etc.) and sell it for cash. Then use that cash to buy more hardware (or beer).

[W-Stool]

So you are part of a collective then - you have a small mining/compute farm in your home that contributes results to a much larger group?

[lopatin]

Yes: https://www.investopedia.com/terms/m/mining-pool.asp

[downandout]

You can contribute mining power to a large network of miners and get a percentage of the profits. They are called mining pools. These exist for virtually all currencies. Here's a list for bitcoin: https://www.buybitcoinworldwide.com/mining/pools/

[artdigital]

Barely anyone mines alone. You join a mining-pool, so your hashrate gets added to that pools hashrate. When the pool finds the next block, everyone gets a share proportional to their contributed hashrate

[abrookewood]

You join a pool and mine collectively. The pool takes a small cut and then distributes any rewards amongst the pool members.

[iampims]

Mining pools split profits according to each participants contributions (~= hashrate)