How are mining rewards distributed among miners?

Mining rewards are typically distributed among miners in two main ways: solo mining and mining pools. Here's how each method works:

1. **Solo Mining**:
   - In solo mining, individual miners work independently to solve cryptographic puzzles and mine blocks on their own.
   - When a solo miner successfully mines a new block, they receive the entire block reward, including newly created coins and transaction fees, directly to their own wallet.
   - Solo mining can be lucrative if a miner has significant computational power and luck to find blocks regularly. However, it can also be highly unpredictable and may result in long periods without rewards.

2. **Mining Pools**:
   - Mining pools are collaborative networks of miners who combine their computational power to increase their chances of mining blocks and earning rewards.
   - When a mining pool successfully mines a new block, the block reward is distributed among pool participants based on their contributed hash rate (computational power).
   - Rewards are typically distributed proportionally to each miner's contribution to the pool's total hash rate. Miners with higher hash rates receive a larger share of the rewards.
   - Mining pools often charge a fee for their services, which is deducted from the total block reward before distribution to pool participants.

The choice between solo mining and mining pools depends on factors such as available computational power, risk tolerance, and preference for steady income versus potential for higher rewards. Solo mining offers the possibility of earning full block rewards but requires significant resources and luck, while mining pools provide more consistent income but with shared rewards among participants. Many miners opt to join mining pools to increase their chances of earning rewards and reduce the variability of income.