Crypto Mining Glossary

Pool centralization refers to the concentration of mining power in a few large mining pools, leading to reduced decentralization in the Bitcoin network. When a small number of pools control a significant portion of the network’s hashrate, they can potentially exert influence over block production, transaction validation, and other aspects of the network. High pool centralization can undermine the principles of decentralization.

A pool fee is the percentage of the rewards that a mining pool operator takes for managing the pool’s operations, including maintaining servers, security, and payouts. Mining pools charge these fees to cover their costs, and the fee typically ranges from 1% to 3% of the total rewards. The fee is deducted before rewards are distributed to the individual miners based on their contribution to the pool’s mining efforts.

Pool hashrate refers to the combined computational power of all miners in a mining pool. It is the total number of hashes the pool can compute per second, measured in terahashes per second (TH/s). A higher pool hashrate increases the pool’s chances of solving a block and earning mining rewards, as it allows the pool to perform more hash calculations faster, making the mining process more efficient.

Pool luck is a measure of how often a mining pool successfully mines a block compared to its expected rate based on the pool’s hashrate. Pool luck reflects the randomness and variability in the process of solving blocks. It is calculated by comparing the actual block mining rate to the expected rate. A pool's luck can be higher or lower than expected due to the inherent randomness.

Pool mining is the process of miners combining their computational power to work together on solving the cryptographic puzzles required to add a new block to the Bitcoin blockchain. In a mining pool, miners share their resources and the rewards based on their contribution.

A pool server in Bitcoin mining is a server that manages communication between miners and mining pools. It distributes mining tasks to connected miners, collects the results (shares) submitted by miners, and communicates the pool’s mining work. The pool server also handles reward distribution, ensuring that miners receive their share of the pool’s earnings once a block is successfully mined.

Power consumption (wattage) refers to the amount of electrical energy that a Bitcoin miner uses to operate. It is measured in watts (W) and is a critical factor in determining the efficiency and profitability of mining hardware. The higher the power consumption, the more electricity a miner uses.

A Power Supply Unit (PSU) is a crucial component in a Bitcoin mining rig that converts electrical power from the wall outlet (AC power) into the appropriate DC power required by mining hardware, such as ASIC miners or GPUs. The PSU provides the necessary voltage and current to run the mining device.

PPLNS (Pay Per Last N Shares) is a payout model used by mining pools to distribute rewards to miners. In the PPLNS model, miners are paid based on the number of shares they contribute over a specific period, known as the "last N shares" window. This model emphasizes the contribution made during a defined period rather than just the shares submitted for a particular block.

PPS (Pay Per Share) is a payout model used by mining pools to distribute rewards to miners. In the PPS model, miners are paid a fixed amount for each share they contribute to the pool, regardless of whether the pool successfully mines a block. This system ensures consistent payouts and reduces the variability in miner earnings, providing a more predictable and stable income stream for participants.

Proof of Work is a consensus mechanism used in blockchain networks where miners compete to solve complex cryptographic puzzles to validate transactions and add new blocks. It requires computational effort and energy. In Bitcoin, PoW determines who creates the next block and earns the block reward.

PROP (Proportional Reward) is a mining pool payout model where miners are rewarded based on the proportion of shares they contribute to the pool relative to the total shares submitted by all miners. In the PROP system, miners receive a percentage of the total reward (block reward + transaction fees) in direct proportion to their share of the pool’s total work.

A rejected share is a share that a miner submits that does not meet the pool’s criteria for a valid partial solution. Rejected shares are discarded and do not count towards the miner's total contribution, meaning the miner will not receive a reward for them.

Renewable energy in Bitcoin mining refers to the use of sustainable energy sources, such as solar, wind, hydroelectric, or geothermal power, to run mining rigs and operations. By utilizing renewable energy, miners can reduce the environmental impact of their mining activities, lower electricity costs, and improve the long-term sustainability of their operations. The growing adoption of renewable energy is a key step toward making Bitcoin mining more eco-friendly.

SHA-256 (Secure Hash Algorithm 256-bit) is a cryptographic hashing function that produces a fixed-length 256-bit hash. It is used in Bitcoin and many other cryptocurrencies for the Proof of Work (PoW) mining process. SHA-256 is used to secure transactions, verify data integrity.

SHA-256 coins are cryptocurrencies that use the SHA-256 cryptographic algorithm for securing their blockchain and ensuring the integrity of transactions. SHA-256 (Secure Hash Algorithm 256-bit) is a hashing function used in the Proof of Work (PoW) consensus mechanism to validate transactions and create new blocks in a blockchain. The most famous SHA-256 coin is Bitcoin, but other coins, such as Bitcoin Cash and Bitcoin SV, also use the SHA-256 algorithm.

A mining share is a unit of work done by a miner in a mining pool. It represents the miner’s contribution to solving the cryptographic puzzle required to add a new block to the blockchain. Shares are used to distribute the block reward among all miners in the pool based on their contributions.

Share difficulty is a parameter in mining pools that defines the level of difficulty required for a miner to submit a valid share. It adjusts based on the pool’s total hashrate and helps ensure that miners are contributing meaningful work towards solving the block puzzle.

Solo mining is the process of mining Bitcoin independently, without joining a mining pool. In solo mining, a miner uses their own hardware to solve cryptographic puzzles and find blocks. If the miner successfully mines a block, they receive the full block reward.

A stale share is a share that is submitted by a miner after the mining pool has already found a valid solution for the current block. It becomes invalid because the block has already been confirmed and added to the blockchain. Stale shares do not contribute to the successful mining of the block.

The Stratum Protocol is a communication protocol used in Bitcoin mining to facilitate the efficient exchange of information between miners and mining pools. It allows miners to connect to a pool’s server, receive work (mining tasks), submit results (shares), and receive block rewards. Stratum is designed to reduce latency, optimize performance, and allow for scalable, low-bandwidth communication between mining hardware and pool operators.

Stratum V2 is an updated version of the Stratum protocol used in Bitcoin mining. It builds upon the original Stratum protocol by adding features that improve communication efficiency, security, and decentralization. Stratum V2 enables more advanced features such as block template negotiation, miner-generated block proposals, and better data privacy, aiming to give miners more control over their mining operations while reducing the risk of centralization.

Transaction fees in Bitcoin mining refer to the fees paid by users who want their transactions included in the next block to be mined. Miners collect these fees in addition to the block reward (currently 6.25 BTC). Transaction fees vary based on the transaction size and the demand for space in the blockchain. As the Bitcoin network becomes congested.

An uncle block is a valid block in Ethereum that is mined but not included in the main blockchain because another block at the same height has already been added. Unlike orphan blocks in Bitcoin, uncle blocks are accepted by the Ethereum network and reward miners with a smaller incentive.

Undervolting is the practice of reducing the voltage supplied to a mining device's hardware components (such as ASIC chips or GPUs) while maintaining stable performance. In Bitcoin mining, undervolting helps lower power consumption, reduce heat generation, and improve the energy efficiency of the mining rig, ultimately enhancing profitability and extending hardware lifespan.

A valid share is a partial solution submitted by a miner in a mining pool that meets the pool’s requirements for the current block’s Proof of Work puzzle. These shares represent work done by miners and contribute to the pool’s chances of successfully mining a block.

Whatsminer is a brand of ASIC (Application-Specific Integrated Circuit) mining hardware developed by MicroBT. Whatsminer devices are specifically designed for Bitcoin mining and are known for their high efficiency and performance. These devices are used by miners worldwide to mine Bitcoin.