Complete in Depth Guide About Ethereum Mining!
Much like other cryptocurrencies on the market, the Miners play a key role in maintaining the Ethereum network. Be that as it may, the role isn’t immediately obvious. Since the 2017 price shock for bitcoin, investors eyes are beginning to focus on altcoins. As a result, many newcomers to cryptocurrency often believe the sole purpose of mining is to generate cryptocurrency without a central issuer. This remains true with Ethereum, but there are more important roles that mining plays. For example, Ethereum generates tokens through the mining process at a rate of 5 Ether (ETH) per complete block.
Each block of transactions has a mathematical puzzle that only miners that apply their computational power can solve. Miners take each blocks unique metadata (including a time stamp and software version) through a hash function. This hash function generates a fixed-length string of random numbers and case-sensitive letters. This string is a hash. If the miner finds a hash that is a match with the current target, the block is successfully mined and broadcasted to the whole network. After this, other nodes on the network can validate and add the transactions to their copy of the Ethereum blockchain.
Though bitcoin still reigns supreme on the cryptocurrency market, it still faces with problems on the network. The ever-increasing centralization of Bitcoin mining is one of these problems. When the bitcoin network first emerged, solo mining with a powerful enough PC or laptop was enough. Nowadays, ASIC mining rigs are the only entities able to make a profit mining bitcoin. Huge mining firms are in possession of vast mining rigs requiring lots of power to operate. With Ethereum, this process is different. Ethereum miners are rewarded based on the PoW (proof-of-work) algorithm called Ethash. This algorithm encourages decentralized mining for solo miners, with no support for ASIC miners. Be that as it may, building a computer powerful enough to mine competitively is very expensive, and you will see a rise in your electricity bill.
Welcome to the future:
— Evan Van Ness (@evan_van_ness) November 4, 2018
The Ethereum Network
Ethereum transactions work differently to Bitcoin transactions. With Ethereum, ‘Gas’ is the entity that powers transactions and every operation on the network. As a result, any changes made to the blockchain requires some Ether. Gas is calculated based on how much storage is needed, the complexity of the action and the amount of bandwidth required. Bitcoin, on the other hand, limits transactions based on the maximum block size (currently 1MB) and they compete with each other equally.
But the main difference may be the fact that Ethereum boasts it’s own Turing. Complete with internal code, Ethereum is able to calculate almost with enough time and computing power. Bitcoin doesn’t have this option. Though while there are definitely advantages to have a Turing-complete code; certain security complications surface as a result of the complexity. These security flaws contributed to the infamous DAO attack, as well as the hard fork of the network that followed.
Ether is the token of the Ethereum network, which is focused on disrupting contract law. – Cameron Winklevoss
Before you can begin mining, you’ll need to decide on the hardware you’ll be using to configure your computer system for full-time mining. When using hardware for Ethereum mining, there are two main options; Using a CPU (Central Processing Unit), or a GPU (Graphics Processing Unit). GPU mining is more efficient, but it will also cost you a large sum of money to get started, from around $450+.
It may be important to note that nowadays, Ethereum mining with a CPU is not profitable or worth the expense. Most entry-level GPUs are around 200x more efficient than CPUs for mining purposes.
|Name||Hash Rate||Approx. Price|
|nVidia GTX 1070||30 MH/s||around $400|
|AMD RX 580||29 MH/s||around $250|
|nVidia GTX 1080 Ti||32 MH/s||around $700|
|AMD RX 480||28 MH/s||around $250|
|AMD RX 470||29 MH/s||around $200|
Once you’ve chosen your hardware and installed it, you’ll need to install some mining software. First, update all your drivers on your computer, prioritizing your graphics card. If the updated drivers didn’t come with the card itself, go to the manufacturer’s website. Once that’s done, you’ll need to configure your node and connect it to the network. In order to do this, you’ll need to download the entire Ethereum blockchain (currently over 20GB and steadily growing). After that’s finished downloading, you can connect to the network in several different ways. If you’re familiar with command lines, you can install Geth. Otherwise, Ethermine will sate your needs.
Private Test Network
Once you feel as though you’ve set everything up correctly, you can set up a private test network. This tool is extremely useful for testing public contracts, developing new technology or simply just testing your mining capabilities. With a private test network, you are the only user. This means that you are solely responsible for finding all blocks, validating all transactions and operating smart contracts. This gives you your own Ethereum sandbox. Currently, services like Geth provide these services with command lines.
If you at least know the approximate hash rate for your computer system’s hardware, calculating your profits will be much easier. There are many cryptocurrency mining profitability calculators online. These calculators will automatically calculate your hashrate based upon your hardware, and tell you if you will make a profit or not. Profitability calculators factor in your electricity costs as well as any pool fees in order to give you a (somewhat) accurate representation of what profit you’ll make.