Ethereum is one of the easiest cryptocurrencies to mine as no complex ASIC hardware is required. Anyone can mine ETH with their GPU unit at home. However, to really make a substantial profit, you need to build a miner with at least several GPUs and tune them for maximum efficiency. Additionally, there are several other key things to know about Ethereum mining. Therefore, in this article, let’s take a closer look at the main aspects of ETH mining.
Can Ethereum be mined?
Same as Bitcoin, Ethereum can be mined and also employs a proof of work protocol, like Bitcoin. The only means to update a new block of Ether transactions is only through mining. Mining refers to the process of maintaining the Ethereum ledger through solving complex mathematical problems. Ethereum blockchain still uses a proof-of-work mining algorithm, allowing for anyone to use their GPUs to help sustain the network. This, however, is set to change with the Proof-of-Stake algorithm taking over fully in the upcoming years.
How do I start mining Ethereum?
Mining Ethereum is relatively simple to start. All you need is a basic computer that supports several GPU`s as running with only a single graphics card takes a lot more time to regain your investment. From there, you install Ethereum mining software and join a mining pool. Over time, you receive rewards based on your hashing power and uptime. Therefore, make sure your rig runs without interruptions.
Three ways to mine Ethereum
Pool mining allows you to share your mining power and distribute rewards without less risk for not receiving anything from a single reward block. Therefore, it is the preferred way to operate unless you own a huge mining farm that can hash a big enough part of the overall network hashing power to reduce the huge variance in the reward distribution.
Mining alone is not recommended as running a single or even several GPUs at once still creates a very small chance that you will be the one that will receive each of the ETH block rewards. Therefore, the best option is to join a mining pool and reduce the variability of receiving mining rewards.
For several years, cloud mining has been available as huge mining companies started to sell some of their mining power to lock in future profit. By using a cloud mining solution, you can simply purchase hashing power by paying a fixed price per period of time. As this requires no further work from you, it is a very easy way to mine Ethereum. However, there are always debates whether it is even profitable to cloud mine.
Ethereum Mining vs Bitcoin Mining
One of the biggest challenges the Bitcoin network is facing right now is the centralization of Bitcoin mining. About ten years ago, when the network was invented, people could mine Bitcoin using a strong desktop computer or even a laptop. This, however, has changed dramatically over the past years. With the development of advanced ASIC miner rigs, the only companies that can make a profit from mining are giant mining farms equipped with massive mining equipment infrastructure.
On the other hand, the process of mining Ethereum is quite different from Bitcoin. The Ethereum Network rewards miners depending on the proof-of-work algorithm dubbed Ethash. This algorithm supports decentralized mining of Ether by individuals and does not support ASIC mining. However, securing a powerful enough computer unit can be expensive, and it will add to your electricity bill.
The Bitcoin Network halves its mining rewards every four years to control the inflation rate of the scarce supply of Bitcoins. The current price of successfully mining a Bitcoin block is 6.25 BTC. On the Ethereum blockchain, the successful mining of one Ethereum block is priced at three Ether, including all transaction fees and code-processing fees, based on the Ethash algorithm.
It takes about ten minutes or more on average to successfully verify and mine one block of Bitcoin transactions. On the other hand, the ETH network takes about 12 seconds or more to mine a block of Ether transactions. This means you can mine more blocks of Ether transactions in the same amount of time taken to confirm and mine one block of Bitcoin.
How does Ethereum Mining Work?
Ethereum mining works by connecting a group of miners together in a single network, with each of them competing for who will find the next block hash. If a miner finds a hash that matches the latest aim, they will be rewarded using ETH and relay the block across the entire blockchain for each node to confirm and record in their smart ledgers. For instance, if miner Y finds the hash first, the other miners will stop work on the block at hand and start targeting the upcoming block.
After roughly every 12-15 seconds, an Ethereum miner finds a hash. Suppose the miners begin solving the mathematical calculations faster or even slower than standard. In that case, the algorithm is programmed to alter the mining difficulty to maintain the about 12- seconds designated task time. Miners randomly earn ETH, and the profitability of each is based on luck and their computer hash rate. As more miners join the network, the problem becomes even more difficult to solve, demanding additional computational power as rewards decrease. However, as the value of Ether keeps rising, the rewards that miners receive remain sufficient.
Create a digital wallet
To receive your rewards, an Ethereum wallet needs to be created first. All the rewards are sent there are soon as either your miner finds a new block or a mining pool releases your part of the rewards. Any digital wallet usually works fine with some exceptions for exchange held addresses.
Ethereum mining hardware
Before you commence the mining ETH, you will need to purchase powerful and expensive graphics card units (GPU) such as Geforce RTX cards in order to prepare your computer for dedicated POW mining. Keeping in mind that even the most basic GPU miner is multiple times faster than CPU’s. Therefore, they are the ones that are used to mine ETH in a professional mining farm. Additionally, before considering Ethereum cryptocurrency mining and whether to buy a graphics card, you should review the expense of getting cryptocurrency miners, plus energy consumption. You are also supposed to consider the performance of the hash rate, which determines the speed of resolving the mathematical calculations to calculate your Ethereum mining revenue and mining profitability. If running a single GPU mining rig is profitable, consider upgrading to a multiple GPU Ethereum mining rig.
Ethereum mining software
After securing the perfect hardware for your Ether mining ventures, you are now required to download and install the software. The first thing you will be required to do is install drivers for your graphic cards, which can be obtained from the developer’s website or provided with the graphics card. In the next step, you will be required to establish your node and connect to the network; by downloading the full Ethereum platform. The network is currently more than 20 GB big and still expanding. Next, you can link your node with the network using any of your preferred methods. You can either use Geth or install other alternative services such as MinerGate or Etherminer.
Once everything is in place, your node will link with all the other nodes and the Ethereum network itself. This will make sure you start mining Ether on top of launching your own smart contracts, and developing DApps, and sending transactions.
Ethereum mining testing
Before you initiate your mining operation, it is possible to establish a private test network to ensure everything is working well. This is an important tool if you want to test public contracts, try out new technology, or even examine your cryptocurrency mining processor capabilities. In the test tool, you are the sole user who runs the mining algorithm, which means you are tasked with finding all blocks, confirming transactions, launching smart contracts, creating DApps, and initiating transactions.
Having an idea of your average hash rate could be of massive importance when speculating about potential gains. This profitability calculator automatically aids in your hash rate depending on the hardware you are utilizing and the price of electric consumption in your country. Basically, aim for the highest possible hash rate, since the higher it is, the quicker the process of mining Ether.
In the next step to mine Ethereum, you are supposed to have software dubbed Ethminer for the windows operating system. Ethminer software enables your mining unit to run the hashing algorithm necessary to secure the network via proof-of-work. The primary user interface of its blockchain is a command line, but with the imminent launch of Ethereum 2.0, you can anticipate a friendlier interface.
How to get paid to mine Ethereum
After successfully completing mining one block of Ether transactions, the crypto miner is qualified to receive a reward of three Ether tokens. On top of the reward, they are also entitled to get the fees associated with any Ethereum transaction verified at the specific block. Those fees serve as incentives to motivate the miners to continue doing their work, as the majority focus on transactions with higher fees to increase their mining revenues. The rewards are afterward transferred to the Ethereum wallet address associated with the miner or pool instantaneously.
The average income generated can be calculated depending on your total computing power or hash rate and electricity consumption. Besides, you should also remember to include the cost of your hardware and the probable bandwidth upgrade. A number of Ether profitability calculators can be obtained from platforms like Cryptocompare, MyCryptoBuddy, CoinWarz, and WhatToMine.
How to join a mining pool
For the newbies, joining an Ethereum mining pool can translate into more profits compared to a solo Ether miner. A pool refers to a group that combine their resources including computational power to raise their speed of solving mathematical problems to earn rewards. The proceeds are then split between the participants depending on the amount of computational power contributed.
It is simple to join a mining pool since most of them do not even need registration to start mining cryptocurrency. However, to join some of them, you have to undergo registration on the pool’s website. Ethpool and Ethermine is currently the largest Ether mining pool contributing to about 25 percent of ETH’s hashing power. Despite having two different websites, it is one giant crypto mining pool.
Some of the other notable pools include DwarfPool, the third-largest pool contributing about 13 percent of the network’s hash rate, and Ethfans and f2pool, the second and fourth-largest pools on the network. The latter two mining pools are only available in Chinese, which might not be suitable for some of the readers. The lastly named two are only available in China which might inconvenience some of the readers. Additionally, the same mining pools often offer to mine Ethereum classic as an additional option.