Ethereum mining can be a wonderful way to understand what cryptocurrency is all about as well as gaining integral technical knowledge while earning a consistent profit.
Ethereum by design depends on proof of work, aka mining. This means that individual users completely provide computing power in order to validate blocks as well as transactions. When this happens, Ethereum (ETH) is earned during the process.
While Bitcoin was the first cryptocurrency to introduce mining, it has become increasingly difficult to earn money from bitcoin mining. It is for this reason that Ethereum mining became a captivating alternative for cryptocurrency users, especially for the computer components used in mainstream computing.
However, before you learn how to mine Ethereum, you have to consider the requirements, profits, and of course the costs.
Ethereum’s Mining Algorithm
At this moment, Ethereum utilises a mining algorithm known as Ethash. When broken down to its basics, it just means that Ethereum is slightly ASIC- resistant. ASIC-resistant is the term given to a cryptocurrency’s property that is immune to ASIC mining. ASICs, simply are integrated circuits which have been designed to have a unique use case such as performing a computing task. In the cryptocurrency world, ASIC devices have been created to be used to mine cryptocurrencies such as Ethereum, Bitcoin and more.
ASICs that we’re specifically built for Ethereum mining wouldn’t be able to perform better than a general-purpose but high-end GPU. This also means that ASICS created solely for Bitcoin mining are unable to efficiently mine Ethereum.
It is possible that the algorithm controlling Ethereum’s mining might change later in the future. Developers have been considering introducing ProgPOW which has the ability to provide Ethereum ASICs with less of a lead on GPUs. It does not matter if you intend to mine using an ASIC or a GPU, you will first have to buy a device before you can begin.
How to Mine Ethereum By Calculating Device Profitability Using Ethash
The most efficient mining devices tend to have an extremely high hash rate, which is signified by MH/s. This means that they can solve calculations faster causing them to earn more Ethereum. Energy efficiency, which is highlighted by W is also another important factor, given that power bills can reduce the profit made.
When it comes to profitability, the top-performing mining devices were able to make a daily revenue of about $5 to $9. When you take into account the costs accrued by energy usage, the profits for those same devices become anything from $3 to $6. That being said, it is imperative to note that revenue and profits attained are subject to the fluctuating prices of both electricity and Ethereum.
While higher hash rates can provide increased revenue, it is still crucial to consider things such as electricity efficiency, depreciation and upfront costs. It is surprising to some to know that it could take years to recoup the upfront capital of any device be it an ASIC or a GPU.
A major disadvantage is that ASICS quickly becomes obsolete. It is even possible for an ASIC to become useless if developers choose to change the mining protocol associated with Ethereum. Even if this is not the case and an intentional change is not made, manufacturers of ASIC tend to have trouble publishing updated firmware.
Compared to ASICs, GPUs will always have a resale value thanks to the fact that they can be useful for system performance and gaming in general. That being said, continuous mining could result in the GPUs wearing out, especially if they do not get adequate cooling and proper maintenance. That being said, they are still a lot easier to resell compared to ASICs because they have other use cases besides cryptocurrency mining.
Ethereum can be mined using previous generation, low end or even integrated GPUS. Nevertheless, the profit margin for that setup is bound to be quite small. Moreover, electric costs could cause your ethminer rig to lose you more money than you make overall. This is why you have to know what your electricity expenses are going to be before you start.
Changes on How to mine Ethereum
The mining protocol associated with Ethereum as well as its network has been gradually changing. These changes have of course affected revenue and profits made. Fortunately, it does appear that the total hash rate of Ethereum has declined for over 2 years. In layman terms, this simply means that ethermine is not as competitive as it used to be and the ethash is affected
An inverse of that is the fact that mining rewards have dropped as well. Ethereum, in February ‘19, had a hard fork which saw block rewards reduced to 2 ETH from 3 ETH. This has made mining less lucrative in overall terms and that decrease appears to continue. Additionally, it does appear that a difficulty bomb designed to make mining each block more difficult is set to be detonated soon. However, this process has stalled in various updates, so being an ethminer is not at risk yet.
These two significant changes have been made in order to determine, forging the way ahead for staking. The second iteration of Ethereum is said to introduce staking, however, this has also been continuously delayed and is unlikely to take the place of mining at this moment. This simply means that Ethereum mining is said to be viable for a little longer.
Ways to mine Ethereum
Mining Ethereum by Pool Mining
Learning how to mine Ethereum, you discover that an individual mining by themselves is unlikely to unearth a block, which then means that individual miners have to join a mining pool. Deciding mine by yourself means that you will have to wait months, years even before you can get a payout.
As an ethminer, you join a mining pool, you will have to pay fees and share your profits with miners in the pool. While this could lower the financial rewards you get slightly, you are still able to earn rewards regularly to help offset the reduction.
Some of the largest mining pools are Nanopool, F2pool, Ethermine, and Sparkpool.
Every pool has its own set of fees, payment thresholds, and payout models. Generally, the fees expected, amount to about 1%, with the cashing out threshold held about 0.1 ETH. Nevertheless, despite the restrictions, it is definitely a boon to have an increase in consistent earnings.
In order to join a mining pool, you have to install the mining software, configuring it to your chosen mining pool’s instructions.
Cloud Mining: Paid & Free Ethereum Mining
Rather than buying your very own GPU or ASIC, it is actually possible to ethermine by renting Ethereum hash power directly from a remote provider. You could also choose to discover the free Ethereum mining offered by cloud mining. A few notable names that provide the free and paid services are Minergate, NiceHash, CCG Mining, IQ Mining, and Genesis Mining.
There is quite a lot of appeal to be had with cloud ethermine. For one, you do not have to set up or maintain any hardware, worry about electricity costs or even consider the number of hours in a day you have to spend mining in order to turn a profit. All you have to do is purchase a contract.
That being said, cloud mining and the services that offer it aren’t as accountable or transparent as mining pools are. You will be required to pay upfront and this can be a risk, given that the cloud service might close its doors or incorrectly manage its funds. It could also be that the mining service might get attacked and then becomes unable to pay the clients.
While there are quite a lot of prominent cloud mining service detractors, they still are quite popular. Nevertheless, it can be nearly impossible to gain continuous revenue using cloud mining. The most effective way to make money via mining would always be to maintain an efficient rig, made with inexpensive hardware and reduced electricity costs.
While Ethereum is the most popular Ethash based coin, it is not the only one. It is actually possible to mine QuarkChain, Ethereum Classic, Ellaism, EtherGem, Expanse, Ubiq, EtherGem, Dubaicoin, Ether-1, Callisto, Metaverse, and EtherSocial. Mining these altcoins offer miners the opportunity to get even bigger profits.
This just shows that while there are quite a number Ethash based coins available to mine, Ethereum is still profitable out of all of them.
Setting up your mining rig as an ethminer
When it comes to selecting the hardware you intend to mine with, you will have to experiment with quite a number of varying GPU selections. You should bear in mind that Nvidia cards are outperformed by AMD cars when it comes to cryptocurrency mining. Your selected card should come with a minimum of 3 Gigs of ram. Anything less will hamper its ability to effectively mine Ethereum. The minimum ram requirement is down to the increasingly large directed acyclic graph or DAG file utilised by Ethereum’s proof of Work hashing process.
When it comes to the requirements of the operating system, you have to ensure that you use the latest iteration of Windows, which is Windows 10. Additionally, it has to be 64 bit. While there are numerous Linux distributions, Windows is still the most seamless operating system to set up and have running as quickly as possible. At this juncture, there isn’t a Macintosh version. Nevertheless, there are a couple of things you have to cover when creating your own mining rig
You will have to get a motherboard that comes with sufficient PCI-E slots in order to help support all the cards you intend to run. Should you utilise more than a single GPU, you will want to have a powered PCI-E riser that attends to every additional GPU. This is why it is important to double or even triple-check that the power supply unit or PSU comes with a sufficient number of connections that support the GPUs you intend on running. Additionally, you should also ensure that you have an overall wattage that cannot only support your entire system’s power draw but also leave you with a little buffer room.
This will involve you getting a low end or previous generation CPU that comes with 4 gigs of ram as a minimum. You also have to ensure that the RAM, CPU and motherboard chosen are all compatible.
It is also imperative that you remember to use a power button. Having a basic power button that can be connected to the motherboard’s headers enables you to switch the system off and on. You will require a standard mouse, monitor and keyboard.
Should you decide to be an ethminer and create numerous rigs to boost your ethash, it is best to stick to one brand of PSU or power supply unit. This enables you to have additional cables that can be used on any of the other systems should a need arise. So long as your system can meet the prerequisites and comes with 1 3 gig ram GPU, you should be able to mine Ethereum.
You might consider using a gaming laptop as your rig given that they tend to have high-end cards. However, this would be the wrong thing to do given that mining would generate considerable heat and that could impact other aspects of the laptop. For this reason, it is always best to use a desktop build.
Learning how to mine Ethereum and transforming yourself into an ethminer can be an extremely viable option as there are numerous advantages associated with it. They are:
- GPU mining support, especially for high-end GPUs
- Decent profits
- Quite a number of mining pools one can select from
- Numerous mineable coins, as well as dual mining support
That being said, there are a few disadvantages associated with ethermine. They are:
- Increasing mining difficulty
- Decreasing block rewards
- High upfront expenses associated with ASIC and GPU devices
Nevertheless, choosing to ethermine can be a wonderful method to properly comprehend cryptocurrency, whilst gaining valuable technical knowhow. Should you learn how to mine Ethereum, you would be able to gain consistent profits.Leave a comment