So now that we’re familiar with mining pool schemes, we can talk about the pros and cons of mining pools.
The pros of mining pools are that they give individual and smaller miners the opportunity to make profit without waiting decades to get payment.
On top of that, software changes are easy to make.
Only one person is running a full node for the mining pool, and that person can upgrade on behalf of the pool.
Cons include trust in the pool manager.
You have to rely on them not to misuse your mining power and not to withhold rewards.
This is a consequence of centralization.
On top of that, a multitude of attacks are enabled by mining pools, which we will discuss further in the Game Theory lecture.
The community typically dislikes large mining pools.
For example, GHash.io once approached 50% of the network mining power.
Miners within GHash voluntarily pulled out of the mining pool because they were aware of the dangers of approaching 51% of the network.
In addition, another concern is that a single entity might be hiding their total amount of mining power.
We see here that BTC.com has about 29% of the mining power in their pool, but what’s to stop them from submitting hashpower to other pools? This is known as laundering hashes, by hiding the origin of mining power.
This allows you to leverage great amounts of mining power without revealing your prowess to the community.
By doing so, you experience no backlash while still receiving major profits.
Because of this, the graph is only a high-level estimate.
We don’t know the true concentration of control over mining hardware, and we may never know.