Ethereum is a cryptocurrency that currently has the second-largest market capitalization in the market. This popular cryptocurrency first went live in 2015 and is the first to feature smart contracts. Today, we will discuss how you can start to mine Ethereum by understanding the process behind it. Mining is not an easy undertaking though. It is the process of creating blocks of transactions to be added to the Ethereum blockchain. In its essence, Ethereum miners around the world compete to solve cryptographic puzzles on computers around the world. This process requires a lot of energy and processing power. Miners are rewarded with ether (ETH) for securing the network, verifying transactions, and adding blocks to the blockchain. Let us discuss and understand the process behind mining Ethereum in detail.
Ethereum Mining Explained
Why Mine Ethereum?
During its first launch, Ether was priced below a dollar. This did not inspire many to believe that Ethereum mining would be profitable. The miners at that point in time mainly consisted of developers or crypto enthusiasts that believed the concept would work. However, Ether prices continued to rise and mining became a lucrative mainstream business that generated ample profits. Currently, Ether prices have crossed $2000 and many are looking for ways to mine Ethereum. Those having unused GPU processing power can certainly look into making profits by Ethereum mining. However, not anyone can earn profits by mining ether (ETH). Though anyone can mine on the Ethereum network with their computer, an average computer will not earn enough block rewards to cover the costs of mining.
Ethereum allows for efficient mining with graphics processing units or GPUs. Ethreum was developed in such a way that it would be possible for those with personal computers to mine Ethereum even after network growth and increased difficulty rate. In addition, these steps also ensure that the network stays decentralized. Since ether supply does not have an upper cap, its supply growth never stops.
The Cost Of Ethereum Mining
While anyone with a computer device can start mining ether, certain customizations would be needed individuals actually plan on making any profits from it. Therefore, mining is not entirely investment free. You need to consider certain costs when thinking of Ethereum mining. These include the tentative costs of the hardware required to build and maintain a mining rig, the electrical cost of powering it, as well as the cost of equipment to support the mining rig. In addition, if you are mining in a pool, they charge a percentage fee for each block generated by the pool.
Types of Ethereum Mining
This method uses your central processing unit to mine ether. Since it does not require a lot of external investment, it did capture the interest of miners for a long time. You just need a computer and appropriate software programs to get started. However, it is an extremely slow process that can go on for long periods of time without equivalent gains.
This method of mining ether uses graphics processing units to mine the cryptocurrency. Miners interested to start mining this way need to have a motherboard, a processor, and a rig frame. It is a popular method of mining ether as it is cheap and efficient.
ASIC mining is a bit more high-end method than the others on this list. While it is capable of producing a lot of ETH, it is usually a method that is out of the reach of casual ether miners. The ASIC method is looked down upon as ASIC miners can disrupt the balance of opportunities available to miners not using this method.
This mining method is probably the best way to mine Ethereum. Here, miners pay to rent out their mining rigs. The miner gets the earnings the rig makes in their crypto wallet. However, if the price of ether drops, you risk losing the money invested. In addition, you cannot change the hardware or software provided by the cloud mining company.
This method of mining only works for those with enough resources to compete with the high competition. You might have to maintain a mining farm to make any real profit from this method. This can be quite cumbersome as it can create heating and ventilation issues while also consuming large amounts of electricity.
This is an efficient way of mining ether as a group of miners come together and join their resources into a mine poo. This increases the chances of them finding a block and increasing the profits. It is a good option for individuals that do not have sufficient resources to strike out on their own.
How To Mine Ether?
Create An Ethereum Wallet
If you do not have an Ethereum wallet, create one as it will be required to receive your rewards. While there are a number of wallet options available, the best one for the task is MetaMask.
Update GPU Drivers
Ensure that you have the latest GPU updates installed to get the best out of your mining experience. An outdated GPU will not be efficient for mining ether so ensure that the GPU is fully up to date.
Install Ethereum Mining Software
Select the mining software that works best for you and download the latest version of it. Having this mining software is essential to profitably mine ether.
Choose A Mining Pool
Join a mining pool to share resources and lower the cost of running the mining rigs. This step can massively improve your chances of finding a block during the mining process. You just need to give your wallet address to get started with the mining pool. There is no sign-up process involved and you can mine anonymously.
Go to the pool’s webpage to check your earned mining rewards. You can also get an overview of the mining rewards by copy-pasting the public Ethereum wallet address in the search bar. The rewards will either get sent to your wallet automatically when they have reached the minimum payout or you can manually claim your rewards.
Cryptocurrency Mining and Malware Dangers
Cryptocurrency mining can sometimes lead you towards phishing links that load cryptocurrency mining code on other computers. Moreover, attackers may also infect websites with malicious code. Some malicious websites have codes that run on visitors’ computers mining the cryptocurrency of the owner. It can also put users data and privacy at risk at times. Therefore, it is advised that if you are starting out with Ethereum mining, do so with caution. It is easy to be misdirected when mining but ultimately you need to be vigilant about your safety as well.
That is all there is to know about How to Mine Ethereum? If you are looking for mining software, here are the Top 5 Best Bitcoin Mining Software In 2022.