[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.