Simply; Cryptocurrency mining is the process of solving complex math problems. Miners are the cornerstones of the cryptocurrency network as they provide ‘proof of work’ that validates Ether transactions over time and the computing power they devote to solving these math problems. In addition, miners are also obliged to create new Ether tokens with this transaction, as they receive Ether as a reward for successfully completing a proof of work tasks.
As the number of participating miners increases, problems become more difficult to solve automatically, thus increasing the time and processing power to solve while the rewards shrink. However, as Ether’s value continues to rise, the rewards miners receive are still satisfactory. Additionally, many people see mining as an ideological stimulus; a way to directly support the network.
About Ethereum Mining
For each block transaction, miners spend their computing power on solving the math problem.
To be more precise, the miners get the unique metadata of the block, which is a fixed-length sequence, with case-sensitive numbers and letters with a timecode and software version. The name given to this array is ‘hash’, and if the miner finds a hash that matches the current target, the block is considered processed and broadcast to the entire network for other nodes to approve and add the transaction to the blockchain.
While Bitcoin is still the most dominant and valuable cryptocurrency, some problems are poisoning the network. One of these problems is Bitcoin mining, which is increasingly centralized. When the network first appeared, individual mining was possible with a sufficiently powerful computer or even a laptop. Nowadays, with the development of ASIC mining operations, it is only companies with huge mining crews that can make a profit. These operations consume a lot of electricity and are very expensive to set up and run.
In Ethereum, the process is a little different. Ethereum rewards its miners with a proof-of-work algorithm called Ethash, which paves the way for decentralized individual mining while not supporting ASIC mining. Still, building a powerful enough computer can be costly and your electricity bill will be higher than usual.
Bitcoin’s reward for successful mining halves approximately every four years, which is associated with the limited total circulating amount. Currently, it rewards 12.5 Bitcoin for successfully processing a block on the Bitcoin network. Turns to the Ethash algorithm, successful mining 3 Ether on the Ethereum network, plus transaction fees and code transaction fees. But, on average, it takes an average of 10 minutes to process and verify the Bitcoin block, while Ethereum’s average goal is to be around 12 seconds. What makes this possible is Ethereum’s GHOST protocol, allowing for fast verifications, leaving more blocks unattended. So, potentially, you could process several Ethereum blocks in the amount of time you would process one Bitcoin block.
At the time of this writing, 17 million out of 21 million Bitcoins will be in circulation, while in the fifth year of the Ethereum network, only half of the total resources of 92 million will be processed.
The charges for transactions across the two networks are also different. In Ethereum, transactions are called ‘gasoline’, which is basically the power of all operations in the network. Gasoline is calculated based on the storage need, the complexity of the action and the required bandwidth. On the other hand, bitcoin transactions are limited by the maximum block size, that limit is one MB and they compete with each other equally.
Finally, perhaps the most important difference is that Ethereum has its own full Turing internal code, so with enough time and processing power, everything is computable. On the other hand, Bitcoin does not have such an option. However, while there are indisputable advantages of having a full Turing code, it does come with some security problems; The famous DAO attack and the trailing distinction are an example of this.
Ethereum Mining Hardware
Before you get started, you need to choose specific hardware when preparing your computer for full-time mining. You have two options; Using the CPU, that is your computer’s processor, and buying a GPU, that is, an expensive video card.
It should be noted that mining Ether using the CPU is a waste of time and money because even beginner graphics cards are 200 times faster to mine. When purchasing a graphics card, you should take into account the costs of both this and energy consumption. Most importantly, you should also consider the hash rate performance at which the math problem will be solved.
Alternatively, you can increase your hash rate and therefore your chances of successful mining by creating a mining machine made up of several graphics cards.
Below you can find some of the most effective graphics cards on the market.
|Nvidia GTX 1070
||30 MH / s
||Over $ 500
|AMD RX 580/570
||29 MH / s / 27 MH / s
||Over $ 500 / Over $ 470
|Nvidia GTX 1080 Ti
||32 MH / s
||Over $ 900
|AMD RX 480
||28 MH / s
||Over $ 500
|AMD RX 470
||29 MH / s
||Over $ 500
Ethereum Mining Software
After selecting and receiving your hardware, you need to install the software. First of all, you need the driver for your video card, you can get it from the manufacturer’s website or with the card.
Next, you need to set up your node and connect it to the network. For this, you need to download the Ethereum blockchain, which is currently 20 GB in size and continues to grow. Next, you have to connect your node to the network. There are several ways to do this. Users who are familiar with the command line Gethin can download. After setup is complete, your node connects to the network itself and all other nodes. At this point, you can start mining, create your own smart contracts, create decentralized applications, and trade.
Before you start mining Ether, it is possible to create a private test network. It’s an extremely useful tool for testing contracts, developing new technology, or testing your mining capabilities. You are the only user in a private test network, so it is your responsibility to find all blocks, validate all transactions and execute smart contracts. It can be called a kind of Ethereum sandbox. Currently, this can be done with a command line, with options offered by services like Geth.
Knowing the approximate hash rate of your device can also be extremely useful when calculating potential profits. Basically, you want the highest possible hash rate, the higher the faster Ether you can get.
After you are set up and connected to the network, you need software called Ethminer (Windows) to start mining Ether. You can find GPU mining instructions for other operating systems here. Ethminer gets the proof of work required for the network by enabling your processor or graphics card to execute the hash algorithm. The interface consists of just one command line, but future versions of the Ethereum network are expected to have a more user-friendly interface. More detailed information on all of these can be found on the ethereum official site.
How and when can I get paid?
After successfully processing a block, you are entitled to 3 ETH awards. Along with the reward, miners also receive fees associated with the transaction. These fees also act as incentives for miners, as miners will prioritize higher-fee transactions. The reward is then transferred almost instantly to the Ethereum wallet associated with the miner or the miner’s pool.
Your estimated income can be calculated based on your hash rate and electricity consumption. In addition, be sure to factor in the cost of your chosen hardware and upgrades on your bandwidth. You can calculate your Ethereum profit probability with various online services such as Cryptocompare, Coinwarz , Whattomine, and Mycryptobuddy.
Joining the mining pool
For starters, joining one of the Ethereum mining pools can be much more efficient than mining alone. The mine pool is a group of miners who combine their efforts and processing powers to increase the chances of solving cryptographic riddles and earning Ether. The profits obtained afterward are shared among the participants according to the contribution provided.
There are many different factors you should consider before joining a mining pool. For example, the processing power of the entire pool, payment structures, fees, and so on. Additionally, not every pool is permanent. Generally, fees can range from zero percent to two percent. You can get paid once, four or six times a day, depending on the pool. For such frequent payments, most pools require a balance higher than 1 ETH.
Joining pools is easy as most of them don’t even require registration. However, before joining some pools, you have to enter the registration process from the website. The largest Ethereum mining pool, currently hosting 25 percent of the hash power of the entire network, is Ethanol and Ethmine ; Although they have two separate websites, they form a huge mining pool together. Other major pools include Dwarfpool, which holds 13 percent of the network’s hash rate, second and fourth places, Ethfans, and f2pool. The last two pools we mentioned are only in Chinese, so they may not be suitable for our readers.
Is Ethereum still worth mining?
For most cryptocurrencies, the mining difficulty and the costs that come with it continue to rise. However, as you can see in the table below, the Ethereum mining difficulty dropped 50 percent in October 2017. This is probably because the reward per block has dropped from 5 ETH to 3 ETH.