Guide to Mining Ethereum (ETH)
22 Aug, 2022
A Comprehensive Guide to Mining Ethereum (ETH)
Since its launch in July 2015, Ethereum (ETH) has steadily climbed in popularity, now widely considered to be the second-largest cryptocurrency after Bitcoin. The coin represents a lucrative opportunity for many crypto miners, being a relatively future-proof asset with a high value. With its price climbing ever higher upwards and with the considerable utility of the Ethereum network, it’s no wonder that many people are taking up ETH mining.
Mining Ethereum is one of the best ways to make money from this lucrative coin. Where trading and investing in Ethereum involves the stress of figuring out the most opportune moment to buy coins, as a miner all you have to concern yourself with is knowing when to sell them. Furthermore, mining is usually done over a long period, meaning you can benefit from a reasonably steady outcome and avoid becoming reliant on ETH market movements.
If you’ve ever wondered how to mine Ethereum yourself, this article will provide you with the perfect starting point. Read on to find out what ETH mining is, what you need to get started, and whether or not mining this cryptocurrency is a worthwhile endeavor.
What is Ethereum Mining?
Ether mining is the process by which ETH coins are put into the market. Of course, as with any other digital currency, there is no physical mining process involved. Rather, Ethereum mining involves using advanced hardware to solve complex mathematical equations. When a computer successfully solves one of these problems, it is rewarded with Ethereum coins.
The more difficult the equation, the more valuable the coin, as there will be fewer in market circulation. This is why some cryptocurrencies gain a reputation for being difficult to mine, leading to high demand and high prices.
How to Get Started as an ETH Miner
To begin your journey into Ethereum mining, the first thing you’ll need to do is acquire a computer with sufficient processing power. A lot of computational power is needed to mine any cryptocurrency, and, what’s more, the profitability of your mining is dependent on the power of your mining hardware.
Before you can start, you’ll also have to download the necessary software for connecting to the ETH network and processing transactions. This software connects your computer to other network nodes—the name given to computers on a blockchain that support the network—and allows you to process transactions and receive incoming transaction information. When you’re investigating your options, make sure that the software you choose is compatible with both your hardware and operating system.
Before you start mining Ethereum, it’s also important that you set-up a wallet for your digital currency. Make sure that the wallet supports ETH; otherwise, you will have no place to store your coins. Depending on whether you want a software or a hardware wallet, and depending on whether or not you have plans to hold onto your Ether, some wallets may suit you better than others. This is something we’ll discuss more in-depth later in the article.
The ETH Mining Algorithm
Ethereum uses a particular mining algorithm called Ethash. This proof-of-work algorithm is memory hard—a concept too complex and detailed to go into now, since it really requires a full article of its own! Suffice it to say that this memory hardness means that Ethash is ASIC-resistant, making it easier to mine with a normal computer than with a specialized Ethereum mining rig.
This is one way in which Ethereum differs significantly from Bitcoin. Because of the particular algorithm it uses, entitled the SHA-256 algorithm, BTC is easier for ASIC users to mine.
Ethash’s special mining algorithm means ETH mining is way more accessible than other types of crypto mining. This is a large part of the reason why Ethereum is so popular among crypto miners when compared to other digital currencies.
How is Mining Ethereum Different from Mining Bitcoin?
As mentioned above, one of the greatest differences between ETH and BTC mining is the different algorithms they use. Each algorithm dictates the approach miners must take with each currency. As fundamental a difference as this is, however, it’s not the only thing that differentiates these two types of mining. Below, we’ve included a table that summarizes the main differences between mining Ethereum and mining Bitcoin.
As mentioned above, Ethereum’s mining algorithm makes it resistant to ASIC mining whereas Bitcoin’s SHA-256 algorithm makes it particularly well suited to that type of hardware. As a result, Bitcoin is compatible with ASIC, whereas Ethereum is not.
This ASIC-compatibility results in Bitcoin having a higher hashrate and improved mining performance when compared to the likes of Ethereum and other cryptocurrencies. However, it also means that BTC mining uses far more electricity than mining other cryptocurrencies. As you can see from the table above, Bitcoin’s power consumption is more than three times as much as that of Ethereum.
Another big difference between these two cryptocurrencies is the hardware used to mine them. In the case of the ASIC-friendly BTC, miners have to use specialty Bitcoin mining rigs, where a standard GPU is more than adequate for mining Ethereum.
How Do You Mine the ETH Coin?
Having explained what Ethereum mining is, how it differs from Bitcoin mining, and how you can get started on the road to becoming an ETH miner, we’ll now go into the mining process in some more detail. Read on to find out more.
Main ways of mining ETH
There is more than just one way of mining Ethereum. Some of the various methods people choose include:
Pool mining. Ideal for miners working on a budget, pool mining involves groups of miners working together and pooling their resources to mine Ether. This can save you time, money, and resources, and can also benefit from having the support of other like-minded people.
Solo mining. As it sounds, solo mining is when you take on the ETH mining challenge by yourself. On the one hand, this means you don’t have to share the rewards with others; on the other, it’s far riskier and involves a significant investment of your money and time.
Cloud mining. This involves renting hashing power from a mining company. While this is the most convenient, low-effort option on this list, you also run the risk of not making any profit. You also have no control over the hardware or software used.
Choosing a wallet
The next step in the process is to select an ETH-friendly crypto wallet to store your Ethereum. Read customer reviews to make sure you’re choosing a wallet that’s trustworthy and reliable. For miners who would prefer to use a hardware wallet, Trezor and Ledger are good options. Furthermore, if you’re not planning on holding onto your ETH after mining it, you might consider a hot wallet such as Enjin or MyEtherWallet.
Invest in suitable hardware
After completing the above steps, it’s time to purchase your hardware, if you don’t already have a suitable setup. While you don’t need a dedicated mining rig, you will need a GPU powerful enough for crypto mining—an endeavor that can take up a serious amount of resources.
Find the right software
The final step in the process is to find the right software for the job. You want to make sure that you find the best Ethereum miner for your setup, one that’s fully compatible with your GPU and its operating system.
As for which of the many options out there is the best Ethereum mining software, there is no clear-cut answer. Rather, that all depends on what kind of graphics card you’re using, what your budget is, and how much energy you’re comfortable using. Make a list of your desires and expectations, along with the resources you have available now and going forward. This should help you find the best software for you.
Can You Make a Profit from Mining Ethereum?
The amount of profit Ethereum miners make depends on a few factors:
How many Ether coins they’re successfully able to mine.
The current block reward.
The current value of ETH crypto coins.
Because of these variables, it’s difficult to give a general idea of how much money you can expect to make from mining—if any. It is possible to make a profit from mining Ethereum, or else it wouldn’t be so popular. But to find out for yourself whether you’re likely to make money off a mining endeavor, we encourage you to use one of the many mining profit calculators available online.
The amount of profit you make is also dependent on how much you invest in your mining set up. If you’re looking for a less resource-intensive approach to mining, an ETH mining pool may be a good solution for you.
Can I make money from mining Ethereum?
While there’s no guarantee that you will make money from Ethereum mining, it certainly is possible to do so. Whether or not you’re able to make a profit from mining Ether depends on what resources you have at your disposal and the current value of the coin.
How long will it take me to mine one ETH coin?
The time it takes to mine one block of ETH is quite short, only ten to twenty seconds. However, because of the high complexity of the mining process and the resultant high demand for the coin, mining in practice takes far longer. The time it takes to mine a single coin varies dramatically but is currently about four hundred days at a hash rate of 100MH/s.
Will I be able to produce one Ethereum per day?
No, it is impossible to mine an Ethereum in one day. It would take the majority of ETH miners a matter of months to produce even that much.
How do I get started as an ETH miner?
You need relatively little equipment to begin mining Ethereum. All you need is a crypto wallet, specifically one which supports Ethereum; a suitable internet connection; a GPU; and reliable mining software.