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I have been using robocopy with the switch MT and really makes a difference in coping time.

I would like to know why the CPU treads act as a bottle-neck while copying files or what makes robocopy with multi-treading copy faster.

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It's faster because you're copying more than one file at once.

It's possible to overdo it; if you use /MT:64 (for example) on a desktop with limited resources it'll grind to a halt, but in general: If you have the RAM, the CPU, the disk IO, and the network to support it, multithreading is faster because you're copying more than one file at a time.

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