Mining Pools vs Solo Mining: Lottery Tickets vs Steady Paychecks

Imagine you have a single lottery ticket, and the drawing happens every 10 minutes. The jackpot is huge — over $200,000 at current Bitcoin prices — but there are hundreds of trillions of other tickets in the drum. You could win on the very next draw. Or you might not win for 50 years. That’s solo mining.

Now imagine pooling your ticket with thousands of other people. Your group wins the lottery far more often. The prize gets split between everyone based on how many tickets each person contributed, so each individual payout is small. But at least you get something on a regular basis, instead of potentially nothing for years. That’s pool mining.

Let’s dig into the math, the mechanics, and the practical reality of why over 99% of Bitcoin miners choose pools.

Solo Mining: You Against the World

Solo mining means your miner connects directly to the Bitcoin network (via a Bitcoin full node) rather than to a pool. When your miner finds a valid block, you receive the entire block reward plus all transaction fees — currently around 3.125 BTC plus fees, potentially worth $200,000 or more. But you keep everything only because you do everything alone.

The Probability Math

Your chance of finding any given block equals your hashrate divided by the total network hashrate. Let’s work through this with a concrete example.

Say you’re running a single Antminer S21 at 200 TH/s, and the network hashrate is 700 EH/s (700,000,000 TH/s):

Your probability per block = 200 / 700,000,000 = 0.000000286
That's a 0.0000286% chance per block.

Since blocks are found roughly every 10 minutes (144 blocks per day), your expected time to find one block is:

Expected blocks to find one = 1 / 0.000000286 = 3,500,000 blocks
At 144 blocks/day: 3,500,000 / 144 = 24,306 days = 66.6 years

Let that sink in. With a single S21, you would statistically need to mine for over 66 years to find one block. And that’s an average — you could easily go twice that long.

Caution

The math gets worse as the network hashrate grows. If the network goes from 700 EH/s to 1,400 EH/s (which is plausible over a few years), your expected wait doubles to 133 years. Solo mining with a single ASIC is, statistically, an exercise in extreme patience.

But What If I Get Lucky?

People do get lucky. There are documented cases of solo miners with modest hashrate finding blocks. It’s like winning the lottery — it happens to someone, somewhere, occasionally. The Bitcoin network doesn’t know or care how long you’ve been mining. Every hash is an independent event. Your one-millionth hash has exactly the same probability of being a winner as your first hash.

This is what mathematicians call a memoryless process. The network doesn’t owe you a block after a certain amount of time. You could theoretically mine for 100 years and never find one. Or you could find one in the first hour. Each hash is its own coin flip — an absurdly weighted coin flip, but a coin flip nonetheless.

Variance: The Real Problem

The core issue with solo mining isn’t the expected value — over infinite time, your expected earnings per hash are the same whether you solo mine or pool mine (minus pool fees). The problem is variance.

Think of it this way. Suppose a gold prospector earns, on average, $50,000 per year. But the earnings come as one giant $500,000 nugget every 10 years, with nothing in between. On paper, the average is fine. In reality, you starve for 9 years and feast for 1. You can’t pay rent with an expected value.

This is exactly the solo miner’s dilemma. Your expected revenue might be $10/day, but it arrives as one lump sum of $200,000 every 55+ years. Meanwhile, your electricity bill comes every month.

Pool Mining: Sharing the Risk

A mining pool is a group of miners who combine their hashrate and split rewards proportionally. The pool operates a server that distributes work to all connected miners and collects shares (proof of work units) from each one. When any miner in the pool finds a valid block, the reward is divided among all participants based on their contributed shares.

How Pools Actually Work

Here’s the mechanics:

1. You connect your miner to the pool’s stratum server
2. The pool sends you work — block templates to hash against
3. Your miner hashes and submits shares back to the pool. A share is a hash that meets a lower difficulty than the actual Bitcoin target. It proves you’re doing legitimate work even though the hash wasn’t good enough to be a real block.
4. The pool tracks your shares and compares them to everyone else’s shares
5. When any miner in the pool finds a real block, the pool collects the reward
6. The pool distributes the reward proportionally based on each miner’s share count

Think of shares like punch cards at a coffee shop. Every share is a punch. When the pool earns a reward (the free coffee), it’s split based on how many punches you have compared to everyone else.

The Pool’s Role

The pool server does several important things:

• Work distribution: Assigns unique work units to each miner so they’re not duplicating effort (using the extraNonce system we covered in the Stratum articles)
• Share validation: Checks that submitted shares are valid and legitimate
• Block detection: Monitors for shares that also meet the full Bitcoin difficulty (those become actual blocks)
• Reward distribution: Calculates and distributes payouts to miners
• Network communication: Runs a Bitcoin full node and handles block propagation to the network

Note

The pool doesn’t make your individual miner hash any faster. Your hashrate is the same whether you’re solo mining or pool mining. What the pool does is combine your hashrate with everyone else’s, so the group finds blocks frequently even though no individual miner could find them on their own.

Pool Mining Math: Smoothing the Variance

Let’s revisit our S21 example, but now in a pool context.

Your S21 does 200 TH/s. The pool you join has a total hashrate of 50 EH/s (50,000,000 TH/s). The network hashrate is 700 EH/s.

The pool’s share of the network:

50 EH/s / 700 EH/s = 7.14% of the network

The pool finds, on average:

144 blocks/day x 7.14% = 10.3 blocks per day

Your share of the pool:

200 TH/s / 50,000,000 TH/s = 0.000004 = 0.0004% of the pool

Your daily earnings (at 3.125 BTC per block, ignoring fees):

10.3 blocks x 3.125 BTC x 0.000004 = 0.000129 BTC/day

That’s about $8.30/day at $64,000 per BTC. Not life-changing, but it arrives every day like a paycheck. Compare that to the solo mining scenario: the same expected value, but delivered as one $200,000+ lump sum roughly every 67 years.

Tip

The beauty of pool mining is not that you earn more — you actually earn slightly less due to pool fees (typically 1-3%). The beauty is that you earn consistently. You can predict your weekly, monthly, and yearly income with reasonable accuracy.

Pool Fees: The Cost of Consistency

Pools charge fees for their services. Running a pool requires infrastructure, engineering, and maintenance. Typical fee structures:

Fee Model	Typical Range	What You Pay
Percentage fee	1-3%	Pool keeps a percentage of every reward
Transaction fee retention	Varies	Pool keeps transaction fees and only distributes the block subsidy
Hybrid	Varies	Some combination of the above

A 2% pool fee means that out of every 3.125 BTC block reward, the pool keeps 0.0625 BTC and distributes 3.0625 BTC among miners. On your individual daily earnings, that’s the difference between $8.50 and $8.33. Barely noticeable day-to-day, but over a year it adds up.

Is the Fee Worth It?

Almost always, yes. The fee buys you revenue predictability. Without a pool, your revenue variance is so extreme that financial planning is impossible. With a pool, you can project earnings, calculate ROI, and make rational business decisions.

The only scenario where solo mining makes financial sense is if you control an enormous amount of hashrate — enough to find blocks regularly on your own. How much is “enough”? Let’s see.

How Much Hashrate Do You Need for Solo Mining?

There’s no hard rule, but let’s frame it in terms of expected block frequency:

Your Hashrate	% of Network (at 700 EH/s)	Expected Blocks/Day	Expected Time per Block
200 TH/s (1 S21)	0.0000286%	0.00004	~66 years
1 PH/s (5 S21s)	0.000143%	0.0002	~13 years
10 PH/s (50 S21s)	0.00143%	0.002	~1.3 years
100 PH/s (500 S21s)	0.0143%	0.021	~48 days
1 EH/s (5,000 S21s)	0.143%	0.206	~5 days
10 EH/s (50,000 S21s)	1.43%	2.06	~12 hours

At 100 PH/s (~500 S21s), you’d find a block roughly every 7 weeks. That’s still extremely lumpy income. Most mining operations would consider solo mining only at 1 EH/s or above, where blocks come every few days and variance smooths out within a month.

Note

Even large mining operations with hundreds of PH/s typically use pools. The variance reduction is worth the 1-2% fee. Only the very largest operations (multiple EH/s) sometimes mine solo or run their own pool.

How Long Would a Single S21 Take to Find a Block?

This is one of the most commonly asked questions in mining, so let’s really nail it down.

An Antminer S21 produces approximately 200 TH/s. Against a 700 EH/s network:

• Expected time: ~66 years (24,000+ days)
• Probability of finding a block in 1 year: about 0.55%
• Probability of finding a block in 5 years: about 2.7%
• Probability of finding a block in 10 years: about 5.4%

To put that in perspective: if you started solo mining today with one S21 and ran it continuously until you retired 30 years from now, there’s about a 15% chance you’d find at least one block (assuming network hashrate stays constant, which it won’t — it’ll grow, making your odds even worse).

It’s like buying one lottery ticket per week and expecting to win within your lifetime. Possible? Technically yes. Likely? Overwhelmingly no.

Why Pools Exist: The History

Mining pools were invented because of this variance problem. In the earliest days of Bitcoin, when the network hashrate was tiny, a single CPU could find blocks regularly. But as more miners joined, individual block-finding became increasingly rare.

In November 2010, Marek Palatinus (known as “slush”) launched the world’s first mining pool, originally called “Bitcoin Pooled Mining” and later known as Slush Pool (now Braiins Pool). The concept was revolutionary: miners could combine their hashrate, find blocks more frequently as a group, and split rewards fairly.

The idea caught on immediately. By 2011, multiple pools existed. By 2013, the vast majority of mining was done through pools. Today, solo mining is essentially limited to:

• Lottery miners: Hobbyists who mine solo knowing the odds are terrible, treating it like buying a lottery ticket
• Extremely large operations: Those with enough hashrate to find blocks frequently on their own
• Educational purposes: People running miners to learn how Bitcoin works, not for profit

Centralization Concerns

There’s a dark side to the pool model. If most mining goes through a handful of pools, those pools accumulate significant influence over the Bitcoin network.

The 51% Problem

If a single pool (or a coalition of pools) controls more than 50% of the network hashrate, they could theoretically:

• Double-spend transactions by reorganizing recent blocks
• Censor transactions by refusing to include them in blocks
• Block other miners from finding blocks (selfish mining)

This isn’t hypothetical. In July 2014, the pool GHash.IO briefly exceeded 51% of the Bitcoin network hashrate. The community was alarmed, miners voluntarily left the pool, and the situation resolved without an attack. But it highlighted the risk.

Pools Are Not Monoliths

It’s important to understand that a pool operator doesn’t own or control the miners in their pool. Individual miners can switch pools at any time — it takes about 60 seconds to change a pool URL in the miner’s settings. If a pool behaves badly, miners will leave.

This dynamic creates a natural check on pool behavior: pools must act in their miners’ interests or lose business. But it’s not a perfect defense, and the concentration of hashrate among a few large pools remains an ongoing concern for Bitcoin’s decentralization.

Tip

You can contribute to Bitcoin’s decentralization by choosing smaller pools when possible. The top 3-4 pools often control 60%+ of the total hashrate. Mining on a smaller, reputable pool helps distribute power more evenly across the network, even if the pool finds blocks slightly less frequently.

Solo Pools: A Compromise

Some pools offer “solo” mode — a hybrid approach where you mine through the pool’s infrastructure but keep the entire reward if your specific miner finds a block. The pool charges a small fee (typically 1-2%) for providing the infrastructure, but there’s no reward splitting with other miners.

This is essentially solo mining with better infrastructure: the pool handles the full node, block propagation, and work distribution. You still face the same extreme variance as true solo mining, but you don’t need to run your own Bitcoin node.

Solo pools are popular among lottery miners who want the excitement of potentially finding a full block reward without the hassle of setting up their own mining infrastructure.

Quick Decision Guide

Factor	Solo Mining	Pool Mining
Revenue predictability	Extremely unpredictable	Fairly predictable
Expected earnings	Slightly higher (no fees)	Slightly lower (1-3% fee)
Minimum hashrate needed	Enormous for any consistency	Any amount works
Technical setup	Need your own full node	Just a pool URL
Risk	Very high variance	Low variance
Best for	Very large operations or lottery players	Everyone else

Quick Recap

• Solo mining means finding blocks alone. You keep everything, but blocks arrive extremely rarely for individual miners.
• A single S21 at 200 TH/s would take roughly 66 years on average to find one block at current network hashrate.
• Mining pools combine hashrate from many miners and distribute rewards proportionally, providing consistent income.
• Pool fees (typically 1-3%) are the cost of revenue predictability — almost always worth it.
• Variance is the real enemy of solo mining. Expected value is the same, but the distribution of payouts is what matters for real-world financial planning.
• Centralization concerns exist with pools, but miners can freely switch pools, providing a natural check on pool behavior.

Next: we’ll dig into the specifics of how pools actually divide up the rewards — PPS, FPPS, PPLNS, and other payout methods — and which one is best for different situations.