Nov 2, 2018 17:30 UTC
Nov 2, 2018 at 17:30 UTC
Ethereum Mining Explained
You’ve reached here. This indicates that you are interested in mining Ethereum, right? Well, many congratulations! You’ve landed at the perfect place. By following this guide, you will come to know everything that you need to know about Ethereum mining. We expect that you already know What is Ethereum? And, How to buy them? Because that’s not what we are focusing on over here.
Let’s start by analyzing what is the need of Ethereum mining…
So where does Ether come from and where does this mining take place? Well, to start with, your computer is solving mathematical problems to ensure no one makes false transactions on Ethereum network. When your computer solves these math problems, you get rewarded. And, this whole process is called mining. The best thing about mining is that anyone can solve these problems to claim rewards.
A Brief Explanation on Ethereum Mining
The Ethereum network widely known for having its own blockchain. Thus, all the transactions made using Ethereum need to be approved by the miners, in the first place. That is the reason why it takes a while before the Ether that you send to someone reaches them. The transactions need to be verified and put inside the blockchain. This process of verification is known as Proof-of-Work. As a miner, it’s your job to make sure that no one cheats.
To make sure that the transaction is valid, miners are solving complex mathematical problems. As and when miner solves this mathematical problem, he/she communicates this to all of the other miners in the network using a fancy computer language.
All of the other miners in the network check whether this number is correct or not. If 51% of them agree that it’s correct, a new block gets added to the blockchain. This newly added block contains all of the transactions which are now verified by the miners, and that they found that the number is rewarded! After that, the miners begin to solve a new math problem for verifying another block of the transactions.
Top 3 Ways To Mine Ethereum
Now that you have this out of the way, “How do you start mining Ethereum?” That is the question. Well, there are three ways you can do this.
- Pool mining
- Mining alone
- Using Cloud mining services
Pool Mining for Ethereum
Ethereum mining in a pool considered as the fastest and the easiest way to get started. Here, you work together with people. All of the people who are mining inside a single pool agree that if any one of them find the secret number, then they will share the rewards with everyone working with them. How often do you find blocks and share the rewards? This is what depends on the pool size. Though, the fact is that not all the pools are the same.
The things you should consider before joining a pool –
– Pool size
– Minimum Payout
– Pool fee
Mining alone seems to be a great idea for Ethereum mining. As the name suggests, in Mining Alone, you don’t need to share any rewards with anyone. You simply need to turn your computer on and let the money pour in.
If you think so, it’s not the same. When it comes to Ethereum mining alone, you compete with other people to get rewards by solving the math equations first. Since you are competing with a large network of people and companies in here, you would often have to get very lucky.
Mining along becomes profitable only when you have a lot of resources at your service. Having a lot of computing power comes with some disadvantages too, which you need to worry about.
Heating Problems –
In case your equipment gets way too hot, it will result in the breakage. Once your equipment gets broken, it’s often not worth it to repair it again. You would require to spend more money on replacing your mining rig for fixing the heating issues.
For keeping everything working perfectly, you would require to have a lot of fans moving air promptly to avoid the problem discussed above – Heating Issues.
All of the fans which are moving and cooling your equipment down would surely make a lot of noise making it very laund and fast. You will often need a remote location to keep everything working properly.
Electricity Costs –
Indeed, having so many equipment will require much power to use at the same time. For instance, you would be spending approximately 3 to 4 dollars with just ten graphics cards per day. Envision ramping up to 100 cards, because you want to stay competitive. The cost to power those cards would add up to 30 to 40 dollars per day in electricity costs alone.
Of course, having a place to store 100+ Ethereum mining rigs isn’t easily available to most of the people.
Ethereum Cloud Mining
At the time you are using cloud mining, you are actually paying someone else to mine for you. Yes, that’s true. The way this mining works out is that you’re renting some mining time from the other people, who will give you all the rewards they can mine in return. Well, crypto cloud mining may seem to be a bit dumb.
The advantage of Ethereum Cloud Mining –
When doing Ethereum Cloud Mining, you are not responsible for any equipment that could break anytime. You simply buy a certain amount of work that needs to be done by paying someone to mine for you. And you don’t have to take the headache of all the repair costs. However, you need to be a bit careful as some companies will make you pay for electricity and repair costs. So do read the contracts carefully to avoid this.
The disadvantage of Ethereum Cloud Mining –
The disadvantage of Ethereum Cloud Mining is that you pay the money up-front. In case the Ethereum price gets down, you will not get a chance to get your money back. Also, you get stuck with the mining work you bought.
With Ethereum Mining you help this cryptocurrency stay decentralized and get rewarded in its mining process. You should look at Ethereum as a valuable asset to trade. Both Ethereum network and blockchain technology have already proven their worth. Don’t forget to check our our post on “Will Ethereum Outperform Bitcoin?”