DIGITAL is changing the way of financial activities. Adopting new technologies can increase your risk apprehensions, especially when it comes to your finances.
Today, our private data, passwords and financial information are all largely stored on servers and clouds in other people’s computers. Third party companies like Amazon, Facebook or Google manage these servers. This setup has a number of conveniences when these companies deploy their specialists to help store and secure this data.
People who believe that internet is always meant to be decentralized introduced a new technology- Ethereum. It has an aim to replace internet third parties or decentralized the internet and app stores by using the blockchains. And indeed, when the price of most of the virtual currencies skyrocketed at the end of last year, people realized that it is very profitable to start mining cryptocurrencies.
Here in this tutorial, we’ll explain you with a complete process to mine Ethereum. But before understanding the whole process of Ethereum mining, let’s see what is Ethereum mining-
What is Ethereum mining?
A way to acquire smaller or larger amounts of a cryptocurrency is called Mining. Cryptocurrency mining also supports a coin’s ecosystem by making the network more decentralized. The Ethereum network works on the blockchain and mining. All Ethereum based transactions need to get approved by miners. These transactions have to be verified and put inside the Ethereum blockchain.
This verification process is called proof of work and as a miner, it’s your job to make sure that transactions are valid. When a miner solves the complex mathematical puzzle, he communicates to all of the miners using fancy computer language. This fancy language is nothing, just a fixed-length string of case-sensitive random numbers and letters which is called hash.
Other miners check this hash and if 51% of them give their confirmation that it’s correct, then it added to new blockchain of verified transactions. After it, the miner who found the number will be rewarded in ETH for his work.
How to Mine Ethereum?
In order to start mining Ethereum, it will necessary to have suitable mining hardware and software for set-up purpose.
Ethereum Mining Hardware (Mining Rig):
First, you need to choose dedicated hardware because mining is impossible without a mining rig. Ethereum Mining rig consists of some necessary parts like-
- Graphics Processing Units(GPUs): GPUs are the essential part of your setup. You can also use CPUs, which means using your computer’s processor but GPUs are 200 times faster than CPUs for mining purposes. Here, we’re recommending you to purchase 6 GPUs of at least 3GB-4GB each. After that, you need a solid motherboard with at least 6 PCI slots, 4GB-8GB RAM(DDR3 or DDR4), and a Hard-drive or SSD(minimum 70GB).
Most importantly, you’ll need to consider the hash rate performance by which the math problem will be solved quickly.
Here, we’re providing you a comparative table of some most efficient GPUs-
|Name||Hash Rate||Approximate Price|
|Nvidia GTX 1070||30 MH/s||from $500|
|AMD RX 580 / 570||29 MH/s / 27 MH/s||from $500 / from $470|
|Nvidia GTX 1080 Ti||32 MH/s||from $900|
|AMD RX 480||28 MH/s||from $500|
|AMD RX 470||29 MH/s||from $500|
Ethereum Mining Software (Ethminer):
Before talking about the software, you need drivers for your graphics card. Then you’ll need to download entire Ethereum blockchain to connect your node to the network. For this, you can install Ethereum mining applications like Geth with MinerGate or Ethermine. After connecting the nodes to the network, you should check an approximate hash rate of your device. For this, you can use profitability calculator. Let’s see what is Ethereum mining profitability calculator?
- Profitability calculator: Ethereum mining profitability calculator automatically calculates the potential profits by calculating your hash rate, which is based on the hardware you’re using. It also automatically add the electricity costs of your country.
After this setup, you’ll need to install mining software- Ethminer. It is best Ethereum mining software which makes your GPUs run the hashing algorithm for securing the network.
Setup your Ethereum wallet:
Next, open a new account in Ethereum wallet that contains your payout address. your rewards from pool or blockchain are reflected in this wallet.
Now, add your newly created account and give a mining name.
Once you added an account, it’ll ask for “ADD WALLET”. For that, you need to visit MyEtherWallet.com and create a new wallet.
After that, you’ll have a need to download your Keystore file and save your private key. Then unlocking your wallet with this keystore file and wallet file. you can easily add a new wallet.
Well done! You have successfully set up an Ethereum wallet. Now, let’s see the Ethereum mining ways.
There are three ways to mine Ethereum- Pool mining, Mining alone and Cloud mining. As a beginner, pool mining is best so we’re recommending you pool mining.
Joining the pool size mining is important because it increases the chances of getting rewards. However, a number of people can join the pool, the rewards are getting shared between more people who combine their efforts. You should consider different factors like pool size, minimum payout, and pool fee before joining a pool. Currently, Ethpool and Ethermine is the biggest Ethereum mining pool with huge hashing power.
Using cloud mining is like paying someone else to mine for you. Cloud mining allows you to rent the mining time from other people and in return, they’ll give you all the rewards they can mine. You just need to invest the money in pieces of equipment and buy a certain amount of work from hiring people.
In mining alone, you have to compete with a huge network of people and companies that have a lot of resources. You’ll need 100+ graphics cards, large computing power and also need to get lucky very often. Ethereum mining alone have some disadvantages such as heating problems, noise, space and electricity costs. So we’re recommending you to join pool mining.
The Concluding Thoughts
**Note: Information contained in this guide is not an offer or solicitation to buy, hold, or sell any security. We’re not financial advisors and are simply providing information for educational purposes. Investing in ICO involves a high degree of risk and should be considered only by persons who can afford to sustain a loss of their entire investment.
Investors should consult their financial advisor before investing in ICOs. Furthermore, the SEC has warned investors residing in the United States and other jurisdictions that ICOs may constitute securities.
We hope you find this guide helpful about how to mine Ethereum and also we’ve discussed what is Ethereum mining!
If you run into any issue, please comment below and we’ll try to help.