Simply put, the entire process of mining cryptocurrencies, more or less, involves solving complex mathematical problems. Essentially, cryptocurrency miners are the cornerstone of the cryptocurrency network. They get rewarded for providing solutions to challenging math problems via blockchain technology, as in Bitcoin mining. When it comes to Ethereum mining, it is the miners who design the most essential “proof of work” for the network, thus verifying the entire transactions of Ether, which is the underlying token powering the Ethereum blockchain.
Apart from that, miners are saddled with the responsibilities of creating or establishing new Ether tokens through this same process. In Ether, there is usually a reward to be received as they accomplish the task tagged “proof of work.”
As the entire cryptocurrency mining industry continues to witness the influx of more members, the mathematical problems automatically become more challenging and difficult. This implies that miners need to devote more time and computational power in order to solve these problems, and even the reward becomes more reduced.
However, as the value of Ether continues to surge upward, miners still receive quite a substantial compensation. As a result of this, many people are of the opinion that crypto mining represents an ideological incentive that facilitates a means of offering direct support for the network.
Are you interested In Ethereum mining? Are you a beginner that wants to learn more about cryptocurrency mining, specifically Ethereum? Well, congratulations! In this guide, we’ll be taking you through a step-by-step guide to Ethereum mining. You’ll learn about Ethereum, why Ethereum is mined, as well as the process of mining Ethereum.
What is Ethereum?
Although, frequently associated with Bitcoin, blockchain technology also has numerous other applications that go even far beyond digital currencies. As a matter of fact, Bitcoin is only one out of the multiple applications that utilize blockchain technology in the present world.
According to Sally Davies, a technology reporter, blockchain is to Bitcoin, and the Internet is to email. Blockchain is an extensive electronics system on which applications can be built.
Until recently, building applications on the blockchain network requires complex backgrounds in areas such as cryptography, coding, mathematics, and a few other significant resources. However, time has changed every facet of our lives. The world of technology has witnessed numerous development in the past years.
Unimagined applications like electronic voting are now actively being developed more than before. By equipping software developers with the necessary tools to build decentralized applications, Ethereum has been at the forefront of making all these possible.
Brief History of Ethereum
In 2012, Vitalik Buterin, who was just 17 years, was introduced to Bitcoin by his father. As the year went by, he began to show interest in the technology of Bitcoin. Vitalik began to write for Bitcoin Magazine, and his writings were tailored towards improvements and development of the Bitcoin platform. While the improvements he suggested weren’t put into adequate consideration, he then decided to conduct more researches, thus coming up with his own cryptocurrency.
He came up with designing Ethereum, which was launched in 2015. Since it came into existence in the cryptocurrency world, Ethereum has continued to increase in price. Interestingly, the current market cap for Ethereum has been put at $48.7 billion, and is now considered the second most popular cryptocurrency after Bitcoin.
Why Mine Ethereum?
As we stated, Ethereum is considered the second of the top cryptocurrencies that are being traded in the world today. After all, Ethereum is in second place, right after Bitcoin as its popularity and importance continued to rise on a daily basis. Ethereum is, however, distinct in that it has its own a separate blockchain network.
As an Ethereum miner, you will be required verify the transactions that are taking place within the network. In addition, you will also need to monitor and confirm the relevant operations within the system. This process is commonly known as proof of work.
One of the fundamental responsibilities of an Ethereum miner is to ensure the safety and security of the entire Ethereum network. In order to carry out your primary duties, you’ll be required to solve some complex mathematical equations. And that’s exactly how new blocks are being created on the parent network, which is the blockchain.
Usually, after completing all these mathematical problems, miners will be rewarded with free Ether digital coins (ETH). Currently, when a block is successfully mined on the Ethereum blockchain, the miner receives 3 ETH as a reward.
However, before you can mine Ethereum, you’ll need some computer hardware and software. Apart from that, you will also need to have the Ethereum mining Android application.
Basically, there are three ways to mine Ethereum:
- Pool Mining (Recommended)
- Mining Alone (Not Recommended)
- Using Cloud Mining Services (Not Recommended)
Here, we will only be taking you through one of the methods, which is pool mining.
Ethereum – Pool Mining
One of the easiest and most hassle-free methods of mining Ethereum is through the pool mining method. It involves you working together with other people in order to accomplish a given task.
In pool mining, every participant comes into an agreement that if any of them first discovers the secret number, the rewards will be shared among members of the pool. In this method, the size of the pool determines how often you’ll be able to find the blocks and share the rewards.
However, not all pools are the same. Before joining a pool to mine Ethereum, you should consider the following:
- Pool Size
- Minimum Payout
- Pool Fee
Why Should You Consider the Pool Size For Mining Ethereum?
Well, it’s straightforward. As the number of participants in the pool mining increases, there is also an increase in the chance of getting rewards, and it’ll even be faster. However, as the pool continues to welcome more people, the rewards are also shared by more people as the pool increases in terms of size; this means less rewards for each miner.
However, you can try out different pools before you finally conclude on the one that works best for you. As a bonus, you should consider joining cryptocurrency mining pools with large pool sizes. This is beneficial as you might be getting fewer rewards per block, but you won’t go a whole day or week without any rewards whatsoever.
So, Why Should Consider Minimum Payout?
A minimum payout is considered the smallest amount of Ether you will be required to mine before it gets sent to your wallet. For instance, if the minimum payout is 1ETH, you will have to remain in the same pool for a more extended period before you can get your cryptocurrency.
Pools that have a large minimum payout may not be beneficial to you. You should find the ones with small minimum payouts. This is a surefire way to be getting paid as soon as possible without having to wait a long time to commit yourself to a single pool. More so, the flexibility to switch between different cryptocurrency minimum pools is also an essential factor you should consider.
Every pool has an associated fee. Usually, it is required to pay a small amount to be a part of the mining pool. This payment amount is automatic and as a result, there is not need to worry about it. The payments are based on percentage and are calculated considering the amount of cryptocurrency you are mining. Usually, the pool fees differ from 1% to 3 percent. When in search of a pool to join, you should look for one with a 1% fee as there are even more reliable pools with 0% fees.
So far, we have discussed pool mining as one of the recommended ways to mine Ethereum, and we have also revealed a few tips to consider when choosing a pool. It is best to now move on to the step by step process of pool mining Ethereum.
Step By Step Process to Mine Ethereum Using the Pool Mining Method
Of course, you should know that your computers play the most significant role in Ethereum mining. In order for your computer to be efficient in mining Ethereum, there are essential tools required in order to be successful.
- An Ethereum wallet for your newly earned cryptocurrency rewards
- GPU (graphics processing unit) Drivers
- A Mining Application (For example, Claymore miner)
- A mining pool address for mining within a mining pool
- A graphics card (GPU) with at least 3 GB of RAM
- A compatible operating system (Windows 7 or 10 64bit).
Let’s take a look at the step by step process of mining Ethereum:
Create a Digital Wallet
Before you begin Ethereum mining, there is a need for a digital wallet. Of course, in real life, you would have a wallet to keep your physical money.
Cryptocurrency works similarly. So, there is a need to create a digital wallet where you keep your Ether.
Installing Your Graphics Card Drivers
After you have created your digital wallet successfully, the next step is to update your computer software. You’ll have a profitable experience with this mining process if your hardware is running all of the latest updates. So, there is a need to update your drivers.
For AMD Graphics Card Users, you can check online to download the latest drivers for your cards. For users of Nvidia Graphics Card, you should also consider downloading and installing the most recent drivers based on the specific graphics card you are using.
Installing the Ethereum Mining Software
- Download and install the latest version of the Claymore dual miner application.
- Click and install the latest version for Windows. It’s best to download it as a zip file. Wait a while for the download to finish. Then, you can save the file on your computer’s desktop page for subsequent easy access.
- The next step is to extract the latest Claymore file you have downloaded to a folder on your Desktop for easy and hassle-free access.
- Then, open the extracted folder to view the files.
- Right-click on Start
- Click Edit
- Edit the Start.txt file and input the following lines:
Choose your preferred pool from one of the available Ethereum mining pools.
Note: The pool addresses displayed above are for the Europe region. If you are a resident of the US or Asia, you might get better results, probably from the addresses that are near to your area. All you need to do is to visit the pool site to discover if the pool supports your region.
Instead of (Mining_Pool_Address), you should type in your pool address
Instead of (Your_Ethereum_Wallet_Address), it advisable to type in your wallet address.
Once you have completed this step, your computer should display something similar to this:
Strictly note that the wallet address displayed in this picture is only an example and shouldn’t be copied. Use your own wallet address.
Save Start.txt with your values by going to File- Save as
- Rename the file to Start.bat
- For Saving as Type, you can choose All Files
- When asked if you want to replace the existing file, Click Save and Click Yes.
- Double Click Start.bat in order to start mining.
- If you have followed the step correctly, you should see something like this on your screen:
That’s all; these are all the steps of mining Ethereum using the pool mining method. In this example, we have used both 2 Miner Pool. However, there are also other wallets and mining pools available online for you to use.
Ethereum CFD Trading
There are two primary forms of trading Ethereum, and each of the forms has its own benefits and disadvantages. One is CFD (contracts for difference) trading, while the other is buying/selling directly from an exchange.
When it comes to Ethereum CFD trading, many people imagine the buying and selling of Ethereum tokens. However, with CFDs, you are not actually purchasing Ether tokens.. All that is required is to purchase a contract, which makes you qualify for the value of the purchased Ethereum. This simply means that you can trade Ethereum without having to own the cryptocurrency itself. You are simply making a prediction of the direction that the price of the cryptocurrency will move. If you predict correctly, you make a profit.
The Profitability of Mining Ethereum in 2019
As we’ve mentioned earlier, Ethereum seconds the list of the top cryptocurrencies available in the market. Though there are reports that the value of Ethereum was subject to a significant change in the past year, that doesn’t influence the benefits that Ethereum mining offer.
However, there are certain factors you should consider before mining Ethereum. One of the significant factors is the mining cost. Considering the mining costs will help you to determine if the economy is viable enough to mine cryptocurrency or not. This means taking into consideration the electricity costs as well as any costs incurred for upgrading your computer equipment.
Frequently Asked Questions (FAQS)
How Much Does it Cost to Mine Ethereum?
Of course, you should know that there is volatility in the prices of Ethereum and other cryptocurrencies. So, the cost of Ethereum varies on a frequent basis. Considering the electric costs and purchasing power of 1ETH, the cost of mining 1 Ethereum can be calculated accordingly. There are many Ethereum mining calculators available online
What are the Tools Needed to Mine Ethereum?
The tools needed to mine Ethereum include an Ethereum wallet, an Ethereum mining pool address, a mining application, and an Ethereum mining GPU that has at least 3GB of RAM.
Can I Mine Ethereum With My Personal Computer?
Yes. You can mine Ethereum on your personal computer if the necessary hardware and software are available.
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