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How to mine Ethereum – All you need to know

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How to mine Ethereum is simple. Knowing how to do it might appear complex unless you get concise and complete instructions. The Ethereum network validates incoming transactions into the blockchain using a proof-of-work scheme, similar to Bitcoin and other proto-currency crypto-ledgers.

Also Read:
• Ethereum Mining Pool
• Ethereum Mining Software: 4 Best Options
• How To Mine Ethereum Classic (ETC)?
• What Is Ethereum Mining?

Ethereum is one of the fastest-growing cryptocurrencies next to Bitcoin, the native digital currency which has been taking the world by storm. Just a year and a half ago, the price of Ethereum was $1, now it is well over $300 with an all-time high of over $400. The rapid growth of Ethereum mining excited users who were eager not to miss out on another hyper-growth opportunity.

Mining is the process by which computations are verified and the network is secured, which also leads to the minting of new coins in Bitcoin and a gas market on Ethereum (gas being the internal currency used for paying for computational cycles executed by the EVM).

Developed by Vitalik Buterin, Ethereum is a public, open-sourced Blockchain-based platform developed that features smart contracts. It would be wrong to define Ethereum as a cryptocurrency or confuse it with Ether, a cryptocurrency part of the Ethereum system.

Before you start mining Ethereum, a few clarifications and preparations must be done. Let’s see what you know about the mining pool, Etherum wallet, and terms all relative to the Ethereum blockchain.

Briefly, I’ll take you through the following discussions:

  1. Can Ethereum be mined?
  2. How many Ethereum can you mine in a day?
  3. How much does it cost to mine 1 Ethereum?
  4. Can you mine Ethereum on your phone?

Can Ethereum be mined?

The answer to this is YES for now, as the current way to utilize its blockchain technology is with the product from mining. However, mining Etherium means more than increasing the volume of Ether in circulation. It is also necessary for securing the Ethereum network as it creates, verifies, publishes, and propagates blocks in the blockchain.

Ethereum mining is done as that of Bitcoin. For each block of transactions or math problems, the miners use computers repeatedly to solve the math problems until one of the miners win. Specifically, the miners would run the block’s unique header metadata through a hash function. Once the miner finds the hash that matches the current target, the miner gets awarded.

The Ethereum mining difficulty chart provides the current Ether mining difficulty (ETH diff) target, as well as a historical data graph visualizing Ethereum mining difficulty chart values with ETH difficulty adjustments (both increases and decreases), defaulted to today with timeline options of 1 day, 1 week, 1 month, 3 months, 6 months, 1 year, 3 years, and all time.

The hash function employed is called Ethash and is a modified version of Dagger-Hashimoto which uses the Keccak algorithm (eventually standardized to SHA-3. The Ethash design rationale states:

“GPU friendliness: We try to make it as easy as possible to mine with GPUs.”

Ethash is based around the provision of a large, randomly generated DAG (directed ayclic graph) dataset and working to solve some particular constraint on it, partially derived from the block’s header hash.

A DAG is generated for every epoch (that is 30000 blocks or ~100 hours) and since it only depends on the block number, it can and should be generated in advance to avoid long waits at epoch transitions. To generate a DAG for an arbitrary epoch using the geth client execute:

geth makedag <block number> <outputdir>

For example, “geth makedag 360000 ~/.ethash” — note that ~/.ethash is the path under Linux/Mac, while in Windows it’s usually ~/AppData/Ethash.

In the Ethereum blockchain technology road map, there’s a plan to transition to Proof of Stake which will render the current Proof of Work obsolete. The Ethereum Github mining page states:

“Becoming an Ethereum miner is not recommended. Ethereum is going to transition to proof-of-stake, making Ethereum mining obsolescent.”

When deciding to start mining Ether, one should consider Ethereum’s transition to proof-of-stake in the major 2.0 upgrade. Once that upgrade takes place all the hardware invested in Proof-of-Work will immediately become useless.

On the other hand, accumulating Ether through mining Ethereum in anticipation of PoS may also prove a profitable long-term strategy as the rewards earned in a PoS consensus arrangement is proportional to the amount of Ether staked in the system.

How many Ethereum can you mine in a day?

According to the hash rate, mining difficulty, and electricity, the number of Ethereum you can mine in a day can be computed. In addition to these factors, how many Ethereum you can mine is decided. You should even incorporate the cost of the device and the maintenance expenses at the time of calculating the ROI.

As an example, according to the current difficulty level of Ethereum, which is 2418530528083430 and generates a block reward 3.00000000, you can mine 0.01071725 daily.

The computational difficulty of solving a block is dynamically calibrated so as to produce a block every ~12 seconds — the systo-diastolic rhythm punctuating system state synchronization and assuring that rewriting of history and arbitrary blockchain reorganizations are impossible unless the attacker controls at least 51% of the network’s hashing power.

The market price of ETH naturally drives the changes in the network hash rate (the number of nonces tried per second) and difficulty.

The miner of a winning block receives both a static block reward of 2 Ethers and all of the gas consumed by the execution of the transactions included in the block (compensated for by the senders).

Extra rewards for including “uncles” (stale blocks which were very close to being “correct”) as part of the block is also included as an additional incentive for securing the network. Uncles are rewarded ⅞ of the static block reward and a maximum of two uncles is allowed per block.

Ethereum is yet to shift to Proof of Stake mining, till then its conventional Proof of Work mining algorithm, which consumes a lot of electricity and the risk associated with not getting any return is high. You can start mining Ethereum on a computer, once you fulfill all prerequisites.

How much does it cost to mine 1 Ethereum?

The cost of mining Ethereum will be dependent on power consumption cost and the purchasing power of 1 ETH. Due to frequent fluctuations in the price of Ethereum, the price varies daily. Based on the electric cost and the purchasing power of 1 ETH, you can calculate the cost to mine 1 Ethereum. Factors like hash rate, energy costs and proof of stake shift help decide whether to mine Ethereum is going to be profitable for you or not.

As with other PoW crypto-coins that spawned mining as an entire dedicated industry, hashing power is for the most part controlled by large mining pools where resources of different miners from different locations are pooled together and have rewards accordingly divvied up and distributed among miners relative to how many resources they contribute. In both Bitcoin and Ethereum, the top 5 mining pools control more than 70% of the market.

Etherscan provides a mining calculator for estimating expected earnings in Ethers and US dollars. It’s a rough approximation that assumes all conditions (difficulty, prices, etc.) remaining the same.

how to mine ethereum 2

The Ethereum network validates incoming transactions into the blockchain using a proof-of-work scheme, similar to Bitcoin and other proto-currency crypto-ledgers. Mining is the process by which computations are verified and the network is secured, which also leads to the minting of new coins in Bitcoin and a gas market on Ethereum (gas being the internal currency used for paying for computational cycles executed by the EVM). 

However, Ethereum’s roadmap includes a gradual transition to a more energy-efficient and higher throughput Proof-of-Stake consensus arrangement, eventually making the mining process obsolete. At present, however, the network operates on an ASIC-resistant memory-hard PoW hash function and Ether is usually mined with a GPU (graphics processing unit) setup.

How to mine Ethereum - All you need to know 1

Ethereum block structure. Detailed diagrams illustrating Ethereum’s architecture —  transaction and block structure and the workings of the EVM (Ethereum Virtual Machine) as specified in the yellow paper are available at the dedicated stackexchange here.

What’s the process of mining Ethereum?

The Ethereum mining process is simple and clearcut:

  1. Set up a wallet
  2. Choose a suitable mining hardware
  3. Download the mining software and ETH client
  4. Join a mining pool
  • Setting up a wallet

MetaMask is the most commonly used Ethereum wallet. It’s a browser plug-in (as Firefox, Chrome or Opera extensions) that provides a convenient gateway to access the Ethereum network. Get the MetaMask extension for your respective browser and create an account. Choose a strong alphanumeric password and copy the recovery mnemonic somewhere safe.

How to mine Ethereum - All you need to know 2

How to mine Ethereum - All you need to know 3
The 12 words used to restore an account are called a “mnemonic”.

Your Ethereum address is automatically generated as the public key from the keypair. 

How to mine Ethereum - All you need to know 4
MetaMask is opened from the button in the right corner of the browser window. Tokens are manually added via their contract address.

Exodus is another popular option, a multi-currency Desktop and mobile wallet that supports close to a hundred crypto-tokens and digital assets and is easy to use, coming with ShapeShift integration for cross-chain conversions and swaps. It is supported cross-platform and can be downloaded from here.

How to mine Ethereum - All you need to know 5
The Exodus wallet interface. Make sure to create a backup and avoid using hot wallets for storage of large amount of funds.

Other options include the web-based MyEtherWallet (MEW), multi-currency supporting Jaxx (similar to Exodus), Atomic wallet and others. For better security, cold storage hardware wallets such as Ledger Nano and Trezor are recommended.

  • Choosing a suitable mining hardware

The graphics card is the mining hardware as a whole, while the GPU is a chip, part of the graphics card or an onboard similar, which stands for “Graphics Processing Unit”. No one should be bothered that GPU and graphics card are generally used interchangeably. PCs can be sold with an integrated Graphics Card (no separate card) or a discrete GPU. Although marketing teams might use slightly incorrect terms, the differences in terminologies are generally accepted or ignored.

Ethereum can be mined with ASIC and GPU, not CPU. Mining with a large GPU is profitable. Your graphics processing unit must have at least 3 GB of RAM to be able to start mining Ethereum. Radeon and GeForce are the most commonly used and reviewed GPU brands for mining Ethereum.

Choose an optimal solution depending on your budget for mining hardware – it must strike some balance between the highest number of hashes per second and power efficiency. When shopping for the best mining GPU, think about the memory of the GPU, as well as its power demands and cost.

It’s important to consider the GPUs value because when you start mining Ethereum, you won’t be yielding initially large amounts of cryptocurrency. Thus, minimizing initial costs as much as possible can maximize your profits and allow recovery of your initial investment as quickly as possible.

AMD made headlines in 2017 when it released the AMD Vega 64, as not only was that graphics card good at gaming but it also quickly rose to fame as a cryptocurrency mining champion. The AMD Radeon VII takes things to a whole new level, tripling the Vega 64’s hash rate to 90MH/s right out of the box.

AMD Radeon VII is more powerful than the significantly pricier Nvidia Titan V, making the Radeon VII the new king of the cryptocurrency mining scene. It helped that this card was only $700 at the time of its introduction.

How to mine Ethereum - All you need to know 6
A 13 GPUs mining rig setup. Setting up a mining rig may take up to a week to build.

Set up your GPU or mining rig of multiple GPUs, corresponding drivers, etc. and proceed with downloading mining software and choosing a pool to plug into.

  • Download mining software and Ethereum client

Choosing which mining software program to use will depend on one’s technical literacy and proficiency. Most commonly used are command-line programs such as Claymore’s Dual Miner and Ethminer.

For the less technically inclined, there are mining programs that have simple graphical user interfaces (windows, buttons, and menus) such as WinEth and MinerGate.

Miners also need to install a client that connects to and communicates with the Ethereum network. Geth is the most popular Ethereum client (written in Go). Once installed it can talk to other nodes and propagate gossip, providing an interface for on-chain contract deployment and executing transactions from the command-line.

  • Join a mining pool

The top Ethereum mining pools by market share are:

EtherMine – fee of 1%

F2Pool – fee of 3%

SparkPool – fee of 1%

Nanopool – fee of 1%

It’s important to keep in mind that each pool has different payout structures, review the pools available and decide on which one to join based on each one’s specifics. 

How to mine Ethereum - All you need to know 7
Front page of Ethermine. The pool takes 1% fee and has instant payouts.
How to mine Ethereum - All you need to know 8
Available mining servers at Ethermine. Use default port given, if it doesn’t work for whatever reason at the time — use the alternative one. For a secure SSL connection, use SSL port.

Using the Claymore miner from the command line, input the pool to connect:  

EthDcrMiner64.exe -epool eu1.ethermine.org:4444 -eworker YOUR_RIG_NAME -ewal WALLET_ADDRESS_FOR_PAYOUTS -epsw POOL_PASSWORD

Your rig name could be any and there’s no password associated with Ethermine. Once launching the mining software, block rewards will be automatically paid out to the designated Ethereum address. The miner will generate a DAG file on each of the GPUs and begin hashing away. If everything goes smoothly, the output should look something like this:

How to mine Ethereum - All you need to know 9

You can also set up your own mining pool. You can try MPOS and tutorials are a dime a dozen. This step by step guide is also good. If you see at the footer there, you find a link to the source code it is built from, on GitHub. Those interested in setting up a mining pool have found this guide for Ethereum and you might want to give it a try. Credit the encoder for the code and give proper acknowledgment. When you have your pool set up, you can get a commission from those who use your pool.

GPU mining with Ethminer

To mine with Ethminer:

eth -m on -G -a <coinbase> -i -v 8 //

To install ethminer from source:

cd cpp-ethereum
cmake -DETHASHCL=1 -DGUI=0
make -j4
make install

To set up GPU mining you need a Coinbase account. It can be an account created locally or remotely.

Using Ethminer with Geth

geth account new
geth --rpc --rpccorsdomain localhost 2>> geth.log &
ethminer -G  // -G for GPU, -M for benchmark
tail -f geth.log

Ethminer communicates with Geth on port 8545 (the default RPC port in Geth). You can change this by giving the –rpcport option to Geth. Ethminer will find get on any port. Note that you need to set the CORS header with –rpccorsdomain localhost. You can also set the port on Ethminer with -F http://127.0.0.1:3301. Setting the ports is necessary if you want several instances mining on the same computer, although this is somewhat pointless. If you are testing on a private cluster, we recommend you use CPU mining instead.

Also, note that you do not need to give Geth the –mine option or start the miner in the console unless you want to do CPU mining on TOP of GPU mining.

If the default for Ethminer does not work try to specify the OpenCL device with: –opencl-device X where X is 0, 1, 2, etc. When running Ethminer with -M (benchmark), you should see something like:

Benchmarking on platform: { "platform": "NVIDIA CUDA", "device": "GeForce GTX 750 Ti", "version": "OpenCL 1.1 CUDA" }


Benchmarking on platform: { "platform": "Apple", "device": "Intel(R) Xeon(R) CPU E5-1620 v2 @ 3

The C++ implementation of Ethereum also offers a GPU miner, both as part of Eth (its CLI), AlethZero (its GUI) and EthMiner (the standalone miner).

NOTE: Ensure your blockchain is fully synchronized with the main chain before starting to mine, otherwise you will not be mining on the main chain.

When you start up your Ethereum node with Geth it is not mining by default. To start it in mining mode, you use the –mine command line option. The -minerthreads parameter can be used to set the number of parallel mining threads (defaulting to the total number of processor cores).

Geth –mine –minerthreads=4

You can also start and stop CPU mining at runtime using the console. miner.start takes an optional parameter for the number of miner threads.

> miner.start(8)
true
> miner.stop()
true

Note that mining for real Ether only makes sense if you are in sync with the network (since you mine on top of the consensus block). Therefore the eth blockchain downloader/synchroniser will delay mining until syncing is complete, and after that mining automatically starts unless you cancel your intention with miner.stop().

In order to earn Ether, you must have your Etherbase (or Coinbase) address set. This Etherbase defaults to your primary account. If you don’t have an Etherbase address, then geth –mine will not start up.

You can set your Etherbase on the command line:

geth --etherbase 1 --mine  2>> geth.log // 1 is index: second account by creation order OR
geth --etherbase '0xa4d8e9cae4d04b093aac82e6cd355b6b963fb7ff' --mine 2>> geth.log

You can reset your Etherbase on the console too:

miner.setEtherbase(eth.accounts[2])

Note that your Etherbase does not need to be an address of a local account, just an existing one.

There is an option to add extra Data (32 bytes only) to your mined blocks. By convention this is interpreted as a unicode string, so you can set your short vanity tag.

miner.setExtra("ΞTHΞЯSPHΞЯΞ")
...
debug.printBlock(131805)
BLOCK(be465b020fdbedc4063756f0912b5a89bbb4735bd1d1df84363e05ade0195cb1): Size: 531.00 B TD: 643485290485 {
NoNonce: ee48752c3a0bfe3d85339451a5f3f411c21c8170353e450985e1faab0a9ac4cc
Header:
[
...
        Coinbase:           a4d8e9cae4d04b093aac82e6cd355b6b963fb7ff
        Number:             131805
        Extra:              ΞTHΞЯSPHΞЯΞ

How to mine Ethereum - All you need to know 10

How to mine Ethereum - All you need to know 11

Using the Claymore miner from the command line, input the pool to connect:

EthDcrMiner64.exe -epool eu1.ethermine.org:4444 -eworker YOUR_RIG_NAME -ewal WALLET_ADDRESS_FOR_PAYOUTS -epsw POOL_PASSWORD

Your rig name for mining could be any and there’s no password associated with Ethermine. Once launching the mining software, block rewards will be automatically paid out to the designated blockchain address. The miner will generate a DAG file on each of the GPUs and begin hashing away. If everything goes smoothly, the output should look something like this:

How to mine Ethereum - All you need to know 12

Cloud Mining for Ethereum

Cloud mining is simply a process where you pay somebody to “rent” out their cryptocurrency mining devices, electricity and – naturally – the service of mining itself.

People (though more often it’s companies) who offer Ethereum cloud mining services usually have huge farms at their disposal. A farm is simply a big amount of mining rigs operating in one specific facility. This facility has to be well equipped, though – cooling has to be up to par, it has to have a lot of space to store all of the mining rigs. A need for huge amounts of electricity is also a thing to consider.

If, for example, you’d want to start cloud mining Ethereum, the first thing that you would have to do is to find a host – somebody that would be willing to sell you their Ethereum cloud mining services. After that you would simply agree upon a contract, shake hands (whether physically or via the internet) and that’s it!

Hosts usually offer a wide variety of available contracts ranging from “minor investment – minor profit” to “huge investment – major profit”. People who have never had any experience with cryptocurrencies tend to start from the lower levels of investment. When you see that the service is actually legit and you’re slowly but surely making a profit, you can upgrade your contract at any given time.

Alternatively, you might want to find a free Ethereum cloud mining host.

Can I mine Ethereum on my phone?

Crypto mining applications for Android generate incremental Bitcoin, Litecoin, and ETH in the background. No one using a mobile phone can grow rich overnight, but they’re a great way to put your idle smartphone to good use. There are apps now offering to mine using a mobile phone. MobileMiner is one platform that produces it super straightforward to mine from your smartphone or pill.

To incentivize the confirmation of new transactions, miners mint a small amount of new cryptocurrency each time a currency unit transfer is confirmed. It’s not easy money — the cryptographic difficulty of the proof-of-work puzzles increases over time — but it’s enough to make a tidy profit over the long run. The downside is that Google has banned all kinds of cryptocurrency mining apps from Play Store. Read their dedicated article on it to know more.

You might be wondering: How can I get in on the cryptocurrency mining action? Well, the most profitable miners use beefy PCs with multiple GPUs or custom-built computers. But that’s not to suggest you can’t mine on other, less powerful devices.

Ethstats.net provides a web interface monitoring the current state of the Ethereum network, including average block time and hash rate, difficulty and gas prices, and limits, uncles and number of active nodes, etc.

How to mine Ethereum - All you need to know 13

What’s the latest on Ethereum mining?

Ethereum’s roadmap includes a gradual transition to a more energy-efficient and higher throughput Proof-of-Stake consensus arrangement, eventually making the mining process obsolete. At present, however, the Ethereum mining operates on an ASIC-resistant memory-hard PoW hash function and Ether is usually mined with a GPU (graphics processing unit) setup.

Some recent updates include:

  • Ethernodes.org is a node explorer showing the geographic distribution of live nodes and the client versions of the software they run.
  • A comprehensive technical documentation and configuration details on how to use Claymore’s Dual AMD+nVidia GPU miner is available in the BitcoinTalk forum post here.
  • Geth (Ethereum full node implementation in Go) official documentation is available on the Ethereum Github repository here.
  • Be in the lookout for Coinomi giveaways too. Yes, Coinomi takes it up to the next level and introduces giveaways and contests for its users. The last giveaway ended on October 2, and there’s more where that came from. As an additional perk, the platform occasionally offers giveaways of different tokens and coins. The volume of the gifts is not much, but it’s worth the wait and participation.
  • Coinomi also recently announced support for the conference on blockchain technology and digital currencies – Decentralized, November 12-13, 2020.

The latest news about Ethereum (ETH) mostly concerns the move to Serenity, the last post-development phase of Ethereum, as well as changing Ether mining’s concept from Proof-of-Work to Proof-of-Stake in order to reduce the power cost of the process.

While the ETH network is preparing to start shifting to proof-of-stake (PoS) consensus, some mining devices might soon stop supporting ETH mining.

Bitmain’s Antminer E3, once the “world’s most powerful” hardware for mining Ether (ETH), will allegedly stop Ethereum mining in April 2020, according to a Feb. 24 report by altcoin mining pool 2Miners.

Ethereum’s prevailing price is $227.41, which is down 1% over the last 24 hours. Ethereum’s market cap is $25.01B. 24 hour ETH volume is $12.32B. It has a market cap rank of 2 with a circulating supply of 109,963,981. Ethereum is traded on 206 exchanges, with the top exchanges being BitMart ($874.04M), Bilaxy ($801.46M), and Dcoin ($697.66M).

One top exchange reports that Ethereum had an all-time high of $1,403 about 2 years ago. Over the last day, Ethereum has had a 6% transparent volume and has been trading on 11,763 active markets with its highest volume trading pairs being USDT ($7.23B), BTC ($3.69B), and USD ($1.55B).

how to mine ethereum

Screenshot from: https://nomics.com/assets/eth-ethereum

There are varied ideas on Ethereum and comparisons with fiat have been made with the corresponding backlash from the crypto community.

Pompliano’s comment that Ethereum and fiat as being one and the same were met with heavy criticism. Erik Voorhees, who is the founder of instant digital asset exchange ShapeShift, responded to the blog by stating that Ethereum and state-backed currencies are, in fact, two very contrasting concepts.

The value of fiat currency is decided by a country’s government instead of a physical commodity. However, cryptocurrencies like Bitcoin and Ethereum, as well as speculative assets like gold, are traded in open markets. People decide their value and for this reason, ETH CANNOT be valued the same as a fiat, explained Voorhees.

Shawn Du'Mmett

Shawn Du'Mmett

Former IT development and consultant, remote team and collaboration expert, PM, CCO, writer, dreamer, idealist looking to collaborate with global teams on a global teal/turquoise organisation. Shawn's dream is working together openly, to get what writers need and want, and to solve biggest global problems. He is building a collaboration system from the start that everyone can own and define, allowing them to work together, to decide how it works and to their highest ideals.

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