How to Mine Ethereum? A Beginners Guide To Ethereum Mining 2022

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What Is Ethereum Mining & How to Mine Ethereum?

Simply put, cryptocurrency mining is a process that seeks to solve complex mathematical problems. Miners are a fundamental part of any cryptocurrency system that operates within a Blockchain network. By contributing their time and computing power to solve these math problems, they provide a so-called ” proof of work ” for the network, thus verifying Ether transactions. Additionally, miners are responsible for creating new Ether tokens through this process, as they receive rewards in Ether for successfully completing a proof-of-work task.

Let’s learn more in: What is Ethereum, the multi-use Blockchain of smart contracts

As more and more miners join, problems automatically become more difficult to solve, which means more time and computational power are required to solve and the rewards become smaller. However, as the value of the Aether continues to rise, the rewards received by the miners are still quite substantial in Fiat value. Furthermore, many people see mining as an ideological incentive, a means to directly support and sustain the network.

A Bit About Ethereum Mining …

For each block of transactions, the miners apply their computational power to solve the mathematical puzzle.

To be more specific, miners take the metadata from each block’s unique headers, data that sets a timestamp and a software version, via a hash function, which generates a fixed-length string of random numbers and letters. case sensitive. This chain is called a hash, and if the miner finds a hash that matches the current target, the block will be considered mined and broadcast to the entire network for other nodes to validate and add the transaction to their copy of the blockchain.

To learn more: What is mining?

“Hash – a single, fixed-length sequence of random digits, which can be created from data of any size.”

Even though Bitcoin is still the most dominant and valued cryptocurrency out there, it presents certain problems on its network. One of those problems is the increasing centralization of Bitcoin mining. In the days when the network emerged, individual mining from a powerful enough computer or even from a laptop was a reality. However, today, with the advancement of ASIC machine mining rigs, the only entities that can benefit from this process are large companies that own huge mining rigs. These rigs require a lot of electricity to run and are very expensive to install and maintain, drastically limiting your involvement.

When it comes to Ethereum, the process is a bit different. Ethereum rewards its miners based on a proof-of-work algorithm called Ethash, which actually encourages decentralized mining by individuals and does not support ASIC mining, or at least it was until Bitmain introduced its Antminer E3 in April. of 2018.

Bitcoin’s reward for successful mining is cut in half every four years, correlated with the limited total number of tokens in circulation. Currently, the reward for successfully mining a block of transactions on the Bitcoin network is 12.5 Bitcoin. Based on the Ethash algorithm, the success of mining on the Ethereum network is valued at three Ether, plus all transaction fees and code processing fees. But, on average, it takes about 10 minutes to verify and mine a block of Bitcoin transactions, while the average for Ethereum is about 12 seconds. This speed is achieved through Ethereum’s GHOST protocol, which allows for quick confirmations, but also results in more blocks being orphaned. So potentially we can mine multiple blocks of Ethereum in the same time it takes to mine just one block of Bitcoin.

Transactions are also priced differently on the two networks. In Ethereum, transactions are called ‘Gas’, which essentially powers all operations on the network. This means that to make any changes to the Blockchain the user is required to spend a bit of Ether. The gas is calculated based on the storage needs, the complexity of the action, and the required bandwidth. On the other hand, Bitcoin transactions are limited by the maximum block size, which is one MB, and they compete with each other equally.

Finally, the main difference is perhaps that Ethereum has its own complete internal Turing code, which means that basically anything can be calculated, as long as there is enough time and computing power available. Bitcoin, on the other hand, does not have this option. However, while there are indisputable advantages to having a complete Turing code, its complexity entails certain security complications, which contributed to the famous attack on DAO and the subsequent fork of the network.

Let’s learn more about the subject in: What is DAO?

Ethereum Mining Hardware

Before we begin, we will have to choose the dedicated hardware to configure our computer for full-time mining. There are two options: CPU (Central Processing Unit), which means using our computer’s processor, and GPU (Graphics Processing Unit), which will involve buying an expensive graphics card.

It’s important to note that mining Ether with CPUs is not profitable right now, as even the most basic GPUs are about 200 times faster than mining CPUs. Before buying a graphics card, we must consider the costs associated with the purchase itself, as well as the power consumption. The most important thing that we will have to consider is the performance of the hash rate, which is the speed at which the math problem will be solved.

We could also consider installing a mining rig, a machine made up of multiple GPU units to increase your hash rate and, by extension, your chances of mining success.

Here is a comparison chart of some of the most efficient GPUs on the market today.

Name

Hash rate Approximate price
Antminer E3 190 MH / s from $ 1162
Nvidia GTX 1080 Ti 32 MH / s from $ 750
AMD RX 580 28 MH / s from $ 190
AMD RX 570 29 MH / s from $ 100
Radeon RX Vega 45 MH / s From $ 350

Ethereum Mining Software

Once we have chosen and purchased the hardware, we will have to install the software. First of all, we will need drivers for our graphics card, which we can find on the manufacturer’s website or that we will find together with the card itself.

Next, we will have to configure the node and connect it to the network. To do this, we will download the entire chain of blocks ethereum, which currently has a size of more than 132 GB and continues to grow over time. Next, we will have to connect the node to the network. There are several ways to do it. Users familiar with the command line can install Geth, with other services such as MinerGate or Ethermine also available.

Once configured, our node will be connected to all other nodes and to the network itself. This will allow us to start mining, as well as implement your own smart contracts, create decentralized applications, and submit transactions.

Evidence

Before starting Ether mining, it is possible to set up a private test network. It is an extremely useful tool in case we want to test smart contracts, try to develop new technology, or simply test our mining capabilities. In a private testnet, we are the only users, which means that we are responsible for finding all the blocks, validating all the transactions, and executing smart contracts, it is an Ethereum sandbox, so to speak. Currently, this is done through a command line, with services like Geth providing such options.

Knowing at least an approximate hash rate of our device will also be of great help when it comes to calculating the potential benefits that we can obtain on the network. We can use this profitability calculator, which will automatically calculate using our hash rate based on the hardware we are using and the electricity costs of the country we are in. Essentially, we will need the highest possible hash rate, as the higher it is, the more profit we can make from mining Ether.

Ethminer Installation

Once we have configured a node and connected it to the network, to start mining Ether we still need to install a mining software called Ethminer for Windows. GPU mining instructions for other operating systems can be found here. Ethminer makes our CPU or GPU run the essential hashing algorithm to protect the network through proof of work. The interface is basically a command line, but future versions of the Ethereum network are expected to have a more user-friendly interface. More information on all of the above can be found on the official Ethereum website.

How and When Do I Get Paid?

Once we have successfully mined a block, we are entitled to receive a reward of three ETH. Along with the reward, miners receive fees associated with the transaction. These fees serve as another incentive for miners to do their job, as many miners will prioritize transactions with higher fees. The reward is transferred to the Ethereum wallet linked to the miner or the pool of miners, which happens almost instantly.

The approximate income can be calculated based on the hash rate that we have and the electricity consumption that is generated by providing the computing power. In addition, we cannot forget to take into account the costs of the chosen hardware and possible updates to our bandwidth. There are several Ethereum mining profitability calculators available online, provided by services like CryptoCompare, CoinWarz, WhatToMine, and MyCryptoBuddy.

Join a Pool or Mining Pool

For beginners, joining a pool of Ethereum miners can be much more profitable than mining on your own. A mining pool is a group of miners who combine their efforts and computational power to improve their chances of solving cryptographic puzzles and earning ether. The benefits are distributed among all participants in proportion to the computational power provided.

the Creation of Adam with bitcoins

There are many different factors that we will need to consider before joining a mining pool. Elements such as the computational power of the entire pool, payment structures, and fees are essential issues to take into account. Also, some pools may have problems with payments and disappear with user funds. Typically, the fees they charge from the pool can range from zero percent to around two percent. Depending on each particular pool, we can receive payments from once every 24 hours, up to four to six times a day. For these frequent payments, most of the pools will require us to have balances greater than 1 ETH.

Joining a pool is easy, as many of them don’t even require registration. To join some groups, however, we will have to go through a registration process on the website. Currently, the largest Ethereum mine, with 25.66 percent of the network’s hash power, is SparkPool. Other large pools include Ethermine which is the second-largest pool on the market at 25.42 percent power. f2pool and Nanopool are the third and fourth pools, respectively, within the market. All this is according to the latest information provided by EtherScan regarding who are the 25 miners with the highest power within the network in the last 7 days. These data may vary each week.

Is it Worth Mining Ethereum?

When it comes to most cryptocurrencies, the mining difficulty and by extension the costs associated with it are only going up. However, as can be seen from the graph below, the difficulty of mining Ethereum has varied over time. In October 2017, it went from 3,013 Tera Hashes to 1,389. Subsequently, as shown in the graph below, the difficulty increased during 2018 until reaching a peak of 3,606 Tera Hashes in August of the same year. In 2019 the network also underwent drastic changes, going from 3,019 Tera Hashes in February to 1,716 at the end of March.

These strong variations are due to the fact that the Ethereum network is undergoing great changes. At some point in the foreseeable future, the team behind him is planning to ditch its proof-of-work algorithm and instead adopt a Proof-of-Stake or “Proof-of-Stake” framework. To achieve this change the developers have already implemented the Constantinople and St. Petersburg updates prepared to pave the way for the new change.

Once this occurs, the network will no longer need the miners to secure and confirm the transaction, as this will be done by the token owners. The creators of new tokens will be chosen deterministically, based on their wealth, which is also defined as a bet. Most importantly, miners will no longer receive block rewards, they will only charge transaction fees.

The update will come in the form of a fork, once again splitting the network in two. Therefore, those who wish to continue mining for rewards could do so on the old version of Ethereum. Without a fixed date for the update, it is really difficult to predict how profitable it can be to go into mining at that time.