Mining toils has two purposes: to generate new coins, and the second is to keep a record of all transactions of existing digital tokens. All the transactions are deposited as blocks and combined internally, making a chain called blockchain in a cryptocurrency interface. These blocks are required to be analyzed and approved to make sure flawless transactions are across the network. Ether’s blockchain is called Ethereum. Once a deal is added to the ethereum blockchain, it can neither be modified nor deleted, giving observers a sound and valid record. The issue that sometimes occurs is that the parties involved in issuing such currencies are not always equipped with the processing power of technologies to ensure seamless transactions. This is where the role of miners comes into the picture; as they enter the mining process, they have to participate in a cryptocurrency network and solving mathematical problems. Miner helps the issuer of currencies in handling transactions blocks and offers issuers solutions that are used to verify transactions. Miners are given rewards for the solutions they provide; they also get digital coins in return for the services they offer. Ethereum mining is done to boost the volume of Ether in the market. Let us have a quick insight into Ethereum.
How to Mine Ethereum? (Beginners Guide)
How to Mine Ethereum? (Beginners Guide)
Ethereum Overview
Ethereum works very similar to Bitcoin; it is also a decentralized software platform based on blockchain technology. All the transactions are approved by a miner, which is why it takes a little time when you process transactions as it has to be verified and put inside the Ethereum blockchain. This verification method is termed proof of work. As a miner, your role is to keep a check on transactions and see that no one cheats. Ethereum also gives decentralized applications called DApps and peer-to-peer contracts that are described as smart contracts. The benefit of these contracts is that users can exchange values without any intermediary. Their entire network works as a decentralized computer that performs the smart contract code. For maintaining decentralization DApps also use smart contracts, as it contains crucial data about the transactions. The smart contract code is used on all the data operations in the Ethereum network as it helps maintain data integrity.
What Is Ethereum?
It can be said to be the fuel needed to run the Ethereum platform. Ether is the cryptocurrency used for operating the Ethereum platform. Users can also use it for clearing transaction fees and computational expenses as well. The good part is that you can also exchange it between different users and developers who work on the Ethereum platform. Developers can use smart contracts for receiving, storing, and sending Ether to other developers. Developers also get Ether as an incentive for creating better applications for them. Remember that you need an Ethereum wallet for receiving Ether; you can download the wallet on your laptop or phone. Don’t worry; these wallets are absolutely safe as there is a private key for owners to authenticate transactions and sending Ether to others. There are other methods as well for obtaining Ether, such as:
Receive it from a different user on the Ethereum platform. If you need it, you can exchange it for another cryptocurrency such as Bitcoin or transactions that support BTC-ETH pair. You can also obtain it as a miner by obtaining a cloud mining contract or becoming a part of an existing mining pool.
Also Read: How to Mine Cryptocurrency? What Is Crypto Mining?
What is Etheruem Mining?
It is the mining of Ether and can be done from your home. You must be thinking that how to mine Ethereum from your computer? It is a very easy and effortless process. You can do it if you have an understanding of command prompt and scripting. The major expense in Ethereum mining is electricity and computational power. For Ethereum mining, you would need to have a computer with a minimum 2GB of RAM in your GPU as it is 200X faster than your CPU. What do you need for mining? There are just a few things that are required for starting the mining process. Here is the list for you:
Methods to mine Ethereum
There are three ways to mine Ethereum; you can choose any method as per your convenience and ease-
Heating issues: If the system that you are working on gets too hot, then there are chances that it could break. Once it breaks, the chances are very few that it could be repaired. Thus, there could be an additional expenditure either in fixing the equipment or buying a new one. Ventilation: It is important to see that there are many fans moving air quickly to keep everything working correctly. Noise- There could be a lot of noise around as the fans and cooling equipment would make noise that would be very loud. Hence, try and opt for a garage or a remote location if you use this method for mining. Electricity cost: If you use so many pieces of equipment simultaneously and for so long, then just imagine the cost of electricity. As you are mining alone, the cost might reach up to $30-$40 per day for just electricity cost. Space: The space required for storing more than 100 Ethereum rings is not available to most people. Thus, if you rent it, the cost would go even high.
When you think about how to mine Ethereum on PC, cloud mining should be the first method that should come to your mind. In this method, you pay someone else to mine for you, and in return, they give you all the rewards they can mine. A lot of questions would come to your mind regarding cloud mining, such as:
Why would other person use their devices to mine for you when they can mine for themselves? Why would you reward someone else to mine for you when you can invest the money in equipment and mine yourself? Why don’t you employ the money on obtaining the cryptocurrency you want instead of finding someone to mine it?
All these questions are absolutely valid and worth asking, so here are the benefits of opting for this method:
The foremost benefit is that you are free from any expenses that might occur due to an equipment outbreak. The repair expenses are not your liability; once you pay to mine, you’re hiring a certain amount of work that has to be done. But, before signing the contract, be careful that there are no electricity or repair costs included in it. Another benefit is that you do not need to rent a big space required for mining, plus you are saved from the noisy equipment you would keep in your house or warehouse.
Disadvantages of Cloud mining
Certain cons come along with this method and are important to know before choosing this method. Some of them are-
You might get stuck with the mining work you bought as you pay the money upfront, and if the Ethereum price drops, you will not get your money back. You would have to accept the mining software and hardware that the provider uses as you do not have any say on it.
All in all, cloud mining is a safe way, especially for the mining providers, as it assures them revenue for the equipment they have purchased. The price of crypto does not affect them as they charge you up-front. But, cloud mining is relatively less profitable less than mining it yourself. You can also buy Ethereum directly instead of mining them. Also Read: How to Make Money with Bitcoin
Step by step guide on Mining process
As you know everything about mining, let us learn how to mine Ethereum with CPU or other resources.
How to pool mine Ethereum?
For mining Ethereum the foremost thing you would need is a computer. There are various other things required, such as a compatible operating system, a mining application, GPU drivers, graphics card with a minimum of 3GB of RAM, mining pool address, and an Ethereum Wallet. Before getting on to the mining process, the first step that you will need to take is:
Pricing
The prices of Ethereum constantly change; thus, giving a price range is very difficult as they see a sudden drop and rise in just a couple of hours. But, its pricing is available in a range of different currency equivalents, which are-
US Dollar – ETH to USD British Pound Sterling – ETH to GBP Japanese Yen – ETH to JPY Euro – ETH to EUR Australian Dollar – ETH to AUD Russian Rouble – ETH to RUB Bitcoin – ETH to BTC
Also Read: Top 15 DeFi Lending Platforms
Why should you mine Ethereum?
Mining might seem a bit tough as it includes a lot of steps, but it is a profitable affair. As a miner, you get rewards for every block along with that; you also get the transaction fee paid by the users. Although the fee is of a nominal amount, but the drastic change in 2020 changed the equation of Ethereum completely. Another benefit of mining is that you can get Ether without directly investing in the asset. Another unconventional benefit is that the mining process produces a lot of heat, which can be beneficial for people who live in colder areas.
How to check how much you have mined?
All the pools have a unique or different interface, but the principal for each of them remains the same. So, for checking the mine count, you would have to go to your pool’s website and put in the public wallet address, and you will be able to see all the information there. In the case of a 2miners pool, once your balance reaches 0.01 ETH, it will automatically be sent to your wallet address which you typed in the start.bar file earlier.
How to calculate profits?
First, you need to open your miner and see how many Megahashes per second (mh/s) your hardware is submitting, how much power your computer draws under load, and how much electricity cost is in your area? Next, you can download the mining calculator, and there you need to insert your Mh/s, cost of electricity, and power consumption. This would give you information about the average results based on how much 1 ETH is at the time.
Why choose Ethereum over Bitcoin?
This is one thought that comes to every investor’s mind that why to choose Ethereum over Bitcoin. The major reason is that Ethereum was created to be mined with graphic cards. On the contrary, Bitcoin is mined with ASICs that is hardware designed particularly for mining Bitcoin. Because of the benefits of mining with huge ASIC operations, this network is not that decentralized as people think it is. However, Ethereum is resistant to ASICs; this means that smaller players with consumer hardware would have a better chance of participating in mining. Also Read: Top 15 Cryptocurrencies to Invest other than Bitcoin
Is Ethereum worth mining?
There are various benefits of Mining Ethereum; it is essential to know some of its advantages as a lot of people are not even aware of them-
It is a perfect method of subsidizing the purchase of a new GPU Ethereum can be traded for Bitcoin; thus, it’s a slow method of holding a position in Bitcoin and that too at a reasonable price You can also see Ethereum for cash on various big exchanges like Gemini, Coinbase, etc. Mining is a reasonable method for people who want to enter the Ethereum market. Traders like it because of its high volatility, and if you are a good trader, then you can earn good profits through it. If you truly believe in the ETH concept, then only you will be able to gain a voice in the Ethereum network by mining.
Is Ethereum mining profitable?
This needs some economic calculations to understand that whether Ethereum mining is profitable or not. It takes time to gauge whether it is profitable or not because mining not only earns money but also costs money, and if you make wrong decisions, you may end up with a negative ROI. Here is a dummy of Ethereum mining calculator, where you need to put these required fields, and you will get to know whether you are earning profit or not: When you fill in the data in any calculator, you need not fill in difficulty Factor, Block reward, and ETH/USD rate as these fields are updated automatically. In the pool fees % field, you need to out your mining fee in case if you are mining through a pool. However, you need not fill it if you are mining on your own. In the Hardware section, fill the amount you paid for GPU and other equipment in USD. In the Power cost option, but the electricity price that comes on your utility bill. Also Read: BlockFi Review: Is it legit or too risky?
What’s better for Ethereum mining, a GPU, FPGA, or ASIC?
When you think about how to mine Ethereum on PC, the next thing your mind comes up with is the processing units attached to it, as it is substantial to choose the best one so that the mining can be done quickly. Ether is designed in such a way that it can only be mined with GPUs (Graphics Processing Units). On the contrary in Bitcoin can only be mined effectively with specialized devices called ASICs. ASICs are hardwired and can do only one task because of which they can achieve more efficiency than the generic computational hardware. Making a mining algorithm that is ASIC resistant is nearly impossible. Hence, the ASIC algorithm was also created for Ethereum called Ethash; it was released in 2018. These miners provide a comparative improvement over GPUs in the aspect of hashing efficiency. But, the ASICs for Bitcoin is more efficient than GPUs because of the specifics of their mining algorithm. Although it is feasible to mine Ethereum with all the devices, the truth is that not all are practical and sensible. FPGAs are inferior to GPUs usually plus they are expensive and complex devices. Ether ASICs provide a measurable performance boost over graphics cards but carry a host of drawbacks in practical usage. Hence, GPUs are the most sensible choice because of its flexibility and good performance compared to price.
How to find the best mining hardware?
Selecting the perfect hardware depends significantly on three factors which are energy consumption, maximum possible hash rate, and purchase price. People usually ignore the purchasing price, but it is an essential factor to consider as it can make or break a mining operation because the hardware does not last forever. The good part is that GPUs are resilient devices, and as perusers, they continue mining for more than five years. Another risk associated with hardware becoming obsolete is where miners get stuck. If they opt for the latest GPUs or ASICs helps them in reducing electricity cost but think of the payback period; it will take longer for the miners to pay themselves back. Hence, mining hardware becomes a significant factor for financial analysis. Therefore, choose the hardware carefully and see all the aspects before choosing one. Also Read: 33 Best Cryptocurrency Exchanges Q1) Can mining be done with CPU instead of GPU? A1) CPU mining is not profitable as GPUs are must faster and can give you more profits. You would be amazed to know that even if you opt for entry-level GPUs, they are 200X faster than the CPU mining process. Q2) Can any ETH wallet address be used for mining? A2) Yes, any ETH wallet address can be used for mining, but a few exchanges do not enable deposits, so check with the site before mining. Q3) What about cloud mining sites? A3) You should not buy into ETH mining sites or programs related to it as most of them are Ponzi schemes. Although some websites have been around for a couple of years, their profits are very low; plus, there have been no third-party audits done of the hashing power sold; thus, it is not advisable to trust cloud mining sites. Q4) How many Ethereum can be mined? A4) The good thing is that there is no limit to the amount of Ethereum that can be generated; in this aspect, it is quite different from Bitcoin as it has a limitation to it. Every day approximately 13,500 Ether can be mined. Recommended: 15 Best Staking Coins As an Ethereum miner, you support them to stay decentralized and get compensated in the process. The price of Ethereum is quite high as of now; thus, it will help you easily outpace the electricity cost of a single GPU, which would eventually help increase your profit. Thus, mining Ethereum is not a rich quick scheme but a great method to earn a side income with almost negligible work.
