How to Mine Ethereum: Step by Step Process to Start Mining
Ethereum is arguably the second most popular cryptocurrency after Bitcoin in terms of market capitalization. In addition to having the second-largest market capitalization in the entire cryptocurrency market, it was the first cryptocurrency to implement “smart contracts” functionality. Smart contracts are individual, decentralized, and self-executing agreements that are coded into the blockchain and can be executed by anyone, anywhere in the world.
Ethereum, which was created by Vitalik Buterin in 2014, went live with its beta version in 2015. Ethereum virtual machine (EVM), which is capable of running smart contracts as a representation of financial agreements such as swaps, options contracts, and coupon-paying bonds is featured in the application. Ethereum can be used to fulfill employment contracts, act as a trusted escrow, and place wagers and bets, among other things.
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Experts and analysts in the cryptocurrency industry believe that Ethereum mining is more profitable than Bitcoin mining. According to the most recent statistics, Ethereum miners generate an average of $77 million in daily revenue, compared to Bitcoin miners who generate an average of $67 million in daily revenue. As a result, many experts in the field believe that mining Ethereum rather than Bitcoin is generally more profitable in the long run.
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What exactly is mining?
First and foremost, we must understand what mining as a process entails before we can discuss Ethereum mining in detail. Mining is a term used to describe computationally intensive work that necessitates the use of a large amount of computer processing power and time. In the mining process, the miner is an investor who contributes energy, computer space, and time to sort through the blocks to extract valuable minerals. When the mining process reaches the correct hash, they submit their solutions to the issuers for consideration. Miners receive rewards in the form of portions of transactions as a thank you for participating in the mining process. Miners in the cryptocurrency industry are responsible for increasing the amount of a particular cryptocurrency that is available on the market for purchase. Every cryptocurrency has a cap on the total number of coins that can be mined, which is known as the hard cap. Consequently, as rewards are reduced, the inflow of new cryptocurrencies decreases as well.
What is Ethereum Mining and how does it work?
More than just increasing the amount of Ether in circulation, mining Ethereum has several other benefits. It also entails maintaining the security of the Ethereum network while simultaneously creating, verifying, and ad blocking blocks of the blockchain.
When compared to Bitcoin mining, Ethereum mining consumes a significant amount of electricity and computational power. It is dynamically adjusted to produce one block every 12 seconds, with the difficulty level increasing or decreasing as needed.
The Proof-of-Work (PoW) system is used in the Ethereum mining procedure (POW).
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What is Ethereum Proof of Work, and how does it work?
Bitcoin and Ethereum both operate using consensus protocols, known as Proofs-of-Work, to achieve their goals (PoW). This protocol is used by the Ethereum network to ensure that all of its nodes agree on the current state of the information recorded on the blockchain. It is the mechanism that allows the nodes of the Ethereum network to reach a consensus on certain data points.
The protocol’s goal is to deter or limit attacks on or abuse of the blockchain network. They accomplish this by requiring all participants to solve moderately difficult calculations or computations to verify blockchain transactions in exchange for a reward. Aside from that, PoW is in charge of introducing new currency into the system. No one can erase or create fake transactions in the Proof of Work system.
For PoW mining to be successful, miners must use their computational resources to solve hashes to verify transactions. This is done to avoid double-spending. You can also use Proof of Work to make sure that the network functions properly without the involvement of a third party or middleman.
Puzzles, integer factorization, Merkle tree-based puzzles, hash sequences, and functions are some of the Proof-of-Work functions that miners perform. As a result of the completion of these activities, the network can produce more blocks, after which the miners are rewarded.
The Factors Influencing the Profitability of Ethereum Mining
The amount of money that an Ethereum miner makes is determined by a variety of factors, including the amount of electricity consumed, the number of fees charged, and the cost of the hardware used.
In general, three factors influence the profits from Ethereum mining.
Rewards for mining a block: At the moment, miners receive 2 ETH in addition to the transaction fees for each block that is mined. Sites such as etherscan.io, which provides updated statistics on block rewards for Ethereum daily, are a good place to start looking into the rewards per block for Ethereum.
Chart of the Ethereum Block Count and Reward Distribution
Network difficulty: Every cryptocurrency, including Ethereum, has its mining difficulty, which is different from one another. The difficulty of a problem that miners must solve to produce a block is referred to as the Ethereum mining difficulty. As a general rule, the greater the number of miners in the network, the higher the difficulty of mining. The greater the difficulty in locating a block, the greater the difficulty in locating a block. The greater the number of miners with powerful hardware who enter the market, the greater the difficulty, and the lower the profits will be. To determine the current network difficulty of Ethereum, you can consult websites such as ethstats.net, which provides up-to-date network difficulty statistics daily.
Uptime refers to the amount of time that a miner’s rig is online and actively mining during a particular period.
Mining hash pools: Miners use mining hash pools to pool their hash rates to find blocks more quickly and earn more rewards. When compared to solo mining, it is significantly more efficient. It is widely regarded as one of the most profitable and dependable methods of Ethereum mining.
Physical mining equipment: Miners must always be on the lookout for updates and innovations in mining rigs and GPU models, which can save them a significant amount of money by increasing the hash rate or consuming less electricity, respectively. Alternatively, miners can join mining pools to more efficiently mine Ethereum for a profitable outcome.
Changes to the Ethereum network: The transition from the Proof-of-Work model to the Proof-of-Stake model will have an impact on mining profits. PoW (Proof of Work) mining is expected to be in use until 2023 at the earliest.
The Different Types of Ethereum Mining
There are several different ways to mine Ethereum, each of which is dependent on the type of processes and hardware that is used. We will now go over each of them in more detail.
CPU Mining: CPU mining is a method of mining Ethereum that makes use of the miner’s central processing unit. When I was younger, it was a viable option for about 5 to 6 years. However, as a result of dwindling profits, it has lost some of its popularity.
It is an extremely slow process that can take several months to complete without yielding any significant results. CPU mining Ethereum can be done with only a computer and a few software programs, which is all that is required.
GPU mining is the most popular method of cryptocurrency mining, and it is also the most expensive. Ethereum is mined using one or more graphics processing units, which are owned by the miner. Building a mining rig made up of graphics processing units (GPUs) is a relatively inexpensive and efficient endeavor. A standard Ethereum mining rig is comprised of a motherboard, a processor, and a rig frame, which houses the graphics cards that mine Ethereum.
The term “ASIC mining” refers to devices that are specifically designed to perform crypto mining. ASIC is an abbreviation for “Application-Specific Integrated Circuits.” Because of its greater computational/processing power when compared to the methods described above, ASIC mining can generate a significant amount of ETH. Ordinarily, when companies announce a new version of their ASIC miners, they receive a barrage of criticism from members of the cryptocurrency community.
Because ASIC miners have significantly greater computational power than other miners, there is concern that they will deny other miners the opportunity to compete on an equal basis. When it comes to hashing speeds and earnings, miners who use CPUs and GPUs are unable to compete with ASIC miners.
There have been reports that ASIC miners have had an impact on the economies of various cryptocurrencies by investing in ASIC farms. Ethereum, on the other hand, is not included in the list of cryptocurrencies.
Cloud mining: Cloud mining, along with pool mining, is widely considered to be one of the most effective methods of mining Ethereum. It is a process in which miners pay a third party (typically a large corporation) to rent out their mining rigs. This is usually spelled out in an agreement whereby all of the profits generated by the mining rig are transferred to the miner’s cryptocurrency wallet.
Cloud mining services typically have large mining facilities that are comprised of several different mining rigs. With this combined computational value, they can provide mining services on a large scale that are superior to their competitors. Individuals who do not have sufficient funds to invest in mining rigs themselves can take advantage of this service to mine cryptocurrency on their behalf.
Although cloud mining has some advantages, one disadvantage is that you must pay the money upfront, which means that if the price of Ethereum drops, you will not receive your money back. You will also be unable to make any changes to the hardware or software provided by the cloud mining company to you.
Mining Alone or Solo: Mining Alone or Solo appears to be the most plausible method of mining at this time. However, because of the large number of participants in the network, there is a high level of competition in the market. This method is only profitable if you have the necessary resources to establish a significant presence in the network. Take, for example, a mining farm with more than a hundred graphics processing units (GPUs).
A mining farm, on the other hand, comes with several drawbacks that must be considered. They can be afflicted by problems with the heating and ventilation. Maintaining multiple mining rigs also means that you will be spending a lot of money on electricity, especially if you plan to install more than ten graphics cards on each machine.
Mining pools (recommended): Ethereum can also be mined through the use of mining pools. A mining pool is formed when a group of cryptocurrency miners band together to pool their computational resources. This increases the likelihood of them discovering a block, resulting in greater profits for them.
In this case, ETH is awarded to the participants in the pool for successfully discovering a block. You always have the option of either mining solo with your dedicated servers or joining a mining pool with other miners to pool your hashing output and increase your overall output.
Consider the following example: combining 6 mining devices in a pool can generate 335 mega hashes per second, which is equivalent to 2 Giga hashes of mining power.
Which mining method is the most appropriate for you?
Several important factors will influence your decision, including whether you are willing to own a mining rig and how much money you intend to put into it at the outset. It will be particularly dependent on the following factors in particular:
The amount of money you wish to put aside
Whether you want to mine with a rig or not is entirely up to you.
If so, what kind of rig do you have?
Cloud mining and GPU mining are two of the most popular methods of Ethereum mining. ASIC mining is unpredictable these days, and mining with a CPU is not financially viable at this point.
However, according to experts, one of the most effective ways to mine Ethereum is through the use of an Ethereum mining pool. You can reduce the volatility of your payouts by participating in a pool mining Ethereum. This is accomplished by providing you with smaller but more frequent payouts rather than a single lump-sum payment that is received only after a block has been solved successfully. Always make an effort to select a mining pool that charges the lowest fees and has a reputation for being dependable.
Requirements for Mining Software and Hardware
As a result, before you begin mining, you should review the software requirements as well as the operating system requirements. You will need
Ethereum’s mining application makes use of the Ethash algorithm. As a result, the mining software that you select should be optimized for the algorithm.
The address of the mining pool
Graphics Card: A GPU with 3GB of RAM that is capable of mining Ethereum. We always recommend that you use the desktop version of the software. However, because of their high-end graphics cards, there are gaming laptops that are capable of mining Ethereum.
Drivers for graphics processing units
Cryptocurrency wallets: To receive the ETH, you will also require a cryptocurrency wallet.
Windows XP (or later) is the operating system. Windows 10 should be your operating system of choice (64bit). Alternately, you can make use of one of the many Linux distributions available. But it is not recommended in this case. You can easily configure Windows to start your mining process as quickly as possible.
Before making a final decision on Ethereum mining software, consider the following considerations before making your selection:
Hash rate at its maximum: Selecting your mining software should be done after determining the capabilities of the mining hardware you have.
Type of mining: The software requirements will vary depending on the type of mining you choose. Type of mining:
How to Make Money Mining Ethereum
Concerning all of the different types of mining methods discussed above, it’s pretty clear that GPU, CPU, and ASIC mining are no longer profitable in the same way they were in the past. As a result, joining a mining pool is the most efficient method of increasing your earnings while mining Ethereum.
Make sure you have all of your graphics card drivers installed before we begin the pool mining process.
Drivers for graphics cards are being installed.
The following step entails installing a graphics card driver on your computer. If you have an AMD graphics card, you can obtain the necessary drivers from this website.
Alternatively, if you have an Nvidia graphics card, you can download the most recent version of their drivers from this website.
To begin your pool mining operation, follow the steps outlined below.
Step 1: Choose a mining pool to participate in.
The first thing you should do is sign up for a mining pool to get started. A mining pool allows you to share resources and thus lower the cost of running mining rigs by sharing resources. If the mining group is of high quality and well-structured, your chances of finding a block are significantly increased.
A few of the most popular mining pools are F2Pool, Sparkpool, Nanopool, and Ethermine, to name a few examples. We chose Ethermine as the mining pool for this guide because it is arguably the most well-known in the community. It has several unique features, including anonymous mining, a real-time PPLNS payout scheme, and a low 1 percent transaction fee.
All you need is your wallet address to participate in the mining pool. There is no requirement to register, which allows you to mine in complete anonymity.
Creating a cryptocurrency wallet is the second step.
If you do not already have a cryptocurrency wallet, you will need to create one to store your ETH. Your wallet can be either software or hardware, depending on your personal preferences. When selecting the best Crypto wallet, the most important consideration should be security. You can use any cryptocurrency wallet that supports Ethereum to store your funds. Coinbase was selected as the platform for this guide.
Go to https://www.coinbase.com/ to learn more.
It is recommended that you download the Android or iOS version of the application. After you have downloaded the App, you should open it on your mobile phone.
To begin, click on “Get Started.” Following the appearance of the option to create a wallet, you will be provided with several security recommendations.
Make a strong pin code for your Coinbase wallet to protect your funds. You can also use facial recognition or fingerprint authentication to verify your identity.
Wait for your account to be generated, after which you will be able to log in and use it.
Step #3: Choosing the right mining software
The next step is to choose the mining software that will be used. EasyMiner and Ethminer are two excellent examples of such programs. For this guide, we will be using Ethminer, which you can easily obtain from the Github repository.
Creation of the BAT file (Step #4)
You must first create a BAT file to begin the mining process. ETHminer comes with a default configuration that is suitable for the majority of Graphics Processing Units. Use that setting if you want to do so. Begin by copying it directly from the website.
Navigate to the directory where you downloaded the Ethminer software from Github and extract the contents. Create a new text document by simply selecting New> Text Document from the context menu of the directory you want to work in. Start by naming the file startmining.bat and responding affirmatively to the prompt that appears.
Select “edit” from the context menu of the file by right-clicking on it. Paste the information from the website that you previously copied into the batch file.
After that, choose the server that is closest to your location as well as a backup server.
For this guide, Asia will serve as the primary server and Europe will serve as the backup server. Copy the information from the website as shown above and paste it into the BAT file as shown in the example below.
After that, enter your Ethereum Wallet address, which will be used to receive your mining fee. This is followed by a dot and the name of your mining machine.
To begin mining, save the file and run the batch file that was created. Step #5: Commencement of the mining operation
It will take approximately two minutes to begin mining after you have executed the batch file. When you see the hash rate displayed on the console, you know that the process has started.
Ethereum mining with a graphics processing unit
Even though pool mining is the most profitable method of mining Ethereum, many people prefer to mine with their graphics processing units (GPUs). The information in the following guide will assist you in getting started with GPU mining.
Step 1: Downloading and launching the client software
There are a plethora of mining clients available for download. For this guide, we’ve chosen the game MinerGate. Downloading it is simple and can be done directly from their official website. After the installation is complete, run the program to begin using it.
Create an account by clicking on “create account” in the top right corner and entering your email address and password. Then, to begin the mining process, click on the Register button.
Step #2: Perform a PC benchmarking exercise
Always perform a performance test on your computer before beginning the mining process. This dispels any doubts about the machine’s ability to mine Ethereum at its current processing speed. Then, in the top bar, select the “benchmark” option, which is followed by the “start benchmark.”
Step 3: Commencement of the mining operation
To begin the mining process, select the “miner tab” located at the top of the screen and press “enter.” Select Ethereum from the list of cryptocurrencies that MinerGate can mine from the drop-down menu. When the Ethereum option is selected, click on “Start Mining.”
Make sure to always select “view” from the drop-down menu and that all other cryptocurrencies other than ETH have been deselected before continuing. MinerGate will now begin loading a DAG or Dagger Hashimoto file that has been previously saved. It’s a 1GB file that contains a representation of the PoW algorithms that are required to mine ETH blocks to be successful.
Once the mining process has begun, you can access your current balance by clicking on the “Miner” tab, which is a representation of all the ETH you have mined up to that point in time. Your current hash rate can be determined by visiting the GPU Mining section. In the GPU mining section, you can use the drop-down menu to select the number of graphics processing units (GPUs) you wish to dedicate to the mining process.
Withdrawing Ethereum from your account to your wallet
To request a withdrawal of your ETH from MinerGate, navigate to the “Wallet tab” and select “withdraw.” If you prefer, you can go to the Dashboard and click on the Withdraw button next to the ETH amount. Set the desired amount of ETH in the appropriate field. You can leave the field empty if you want to remove all of the finds.
Insert your wallet address into the address bar and press the withdraw button once more to initiate the withdrawal process.
Calculating Profits and Losses
Using an Ethereum mining calculator, such as bitinfocharts.com or cryptocompare.com, you can get a reasonably accurate estimate of how much money you will make mining Ethereum.
Simple as opening up your miner and checking your Mh/s, you can calculate your profits. After you have opened any of the calculators, you must enter the cost of electricity and the amount of electricity consumed. It will retrieve the average results based on the value of one ETH at the time of retrieval.
For this guide, the GPU is capable of delivering 32.258 Mh/s; its power consumption is 120 watts, and its memory bandwidth is 512 Mh/s. The cost per KWh is $0.10. The 2miners pool fee is one percent of the total cost.
As a result, we obtain the following outcomes:
Profit daily: $3.66
Profit per week is 25.59 dollars.
Profit per month is 109.68 dollars.
Profit for the first six months: $658.08
As Ethereum’s mining difficulty increases, coupled with a global shortage of graphics processing units (GPUs), it is becoming increasingly difficult to find alternative ways to mine to keep the cost of mining under control. It’s a good thing that pool mining Ethereum is one method that allows you to accomplish exactly that.
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