For many, the concept of Ethereum mining is very strange. How can you dig a digital currency? Why is that necessary and how do you start it?
In this chapter we will tell you a bit more about how Ethereum mining works, why it is essential for the network and finally how you can start with the mines of Ether.
How does Ethereum mining work?
Within a Blockchain there is no central point where everything is kept in terms of transactions. This means that there must be a verification process within the network to check all incoming transactions for correctness and fraud.
This verification process is what Ethereum mining means. All miners within the Ethereum network use their computational means to decipher and control every new block cryptographically. This deciphering process is nothing else than that their computers always gambling the answer until one of the miners gambles the correct answer.
Each attempt is also called a Hash and at the moment the hash corresponds to the current block, the miners receive a reward from Ether for his trouble and power costs. This is then processed within the network. Suppose Miner 1 and Miner 2 are both busy with a block, and then Miner 1 is the first to solve. Then Miner 2 stops with the current block and immediately continues with the next block.
This process is often called “proof of work” and is impossible to cheat. Because finding the right Hash demands a lot in terms of computational power, but checking a Hash costs virtually nothing in terms of computational power.
This process must be done every 12-15 seconds within the Ethereum network. The income as miner is therefore a mix between luck and their total computational power minus their electricity costs!
TIP: within this article we often use the word hashrate. That is the computational unit to indicate the speed of ether mining.
Difference with Bitcoin
The Ethereum network’s “proof of work” is virtually identical to that of Bitcoin. The only exception is the speed of the network. A block lasts 10 minutes at bitcoin, while that at Ethereum lasts 12 to 15 seconds. The reward of each block is at Ethereum tripod (5 Ether per block) while at Bitcoin there is a halving every 4 years.
Finally, Ethereum uses its own algorithm called Ethash. This algorithm is designed to have a heavier need for memory than with Bitcoin. What this means is that the use of expensive ASICs at Ethereum does not make much sense.
Start with Ethereum mining
Do you also want to start by mining Ethereum? Then you can tackle it in two ways.
The first method is more suitable for people with a more technical background. With this you work your own hardware to minate Ethereum.
The second method is much better for people who do not have a very strong technical background. Then it is better to use an Ethereum Cloud mining service. The disadvantage of this method is that you can not carry out optimisations yourself on your rig.
Do not underestimate that freedom! The mining of cryptocurrencies is nothing else an optimisation game, where you want to minimise as much energy as possible.
STEP 1: CHOOSE THE RIGHT ETHEREUM CLOUD MINING SERVICE
Cloud mining is a very new sector within the business world, but one that is growing tremendously every year. It is a very attractive deal for most people who would like to benefit from the extraction of Ether. But do not have the technical knowledge or ability to draw up your own mining rig yourself.
In addition, a Cloud service in a country such as the UK is automatically attractive, because our electricity prices are still on the higher side; completely compared to America.
The use of an Ethereum Cloud mining service is very easy to explain. A mining provider offers, as it were, their computational ability to rent. In other words, you can sign a contract with them for a certain period of time (such as a year), for a certain amount of Hashrate. After initial setup, which is actually nothing other than connecting to your personal Ethereum wallet, you can get started. Then you will gradually see the Ether appear in your wallet.
You can calculate how long you have to minate with your cloudminer to get your investment out and make a profit by using this calculator .
Our recommended Cloud mining providers are
STEP 1: CHOOSE THE BEST ETHEREUM MINING HARDWARE
In order to assemble your own Ethereum mining rig, you first need a set of efficient graphics cards. With efficiency we mean a card that has a high hashrate, but low energy consumption. You do not have much on a card that has a huge hashrate, but its use is more than its revenue.
- Radeon R9 295X2 – Hashrate: 46.0 MH / s
- Radeon R9 7990 – Hashrate: 36.0 MH / s
- Radeon RX 480 – Hashrate: 25.0 MH / s
- Radeon RX 470 – Hashrate: 24.0 MH / s
You can use the hashrate along with your energy costs of the GPU to find the most optimal GPU for you with this calculator .
When it comes to RAM memory you really need the minimum amount for an ethereum miner. You have more than enough to 4GB. RAM is important at the beginning when you are syncing with the blockchain. After that, it no longer has an important function.
Because our miner works on graphics power to minimise, the processor is not that important for its task. We do not recommend buying the cheapest processor. The processor helps you with the setting up of the mining rig. It also speeds up possible reboots.
STEP 2: CHOOSE THE BEST ETHEREUM MINE SOFTWARE
After you have chosen the best hardware for your ethereum mining rig, it is now time to install the correct software on the rig.
Geth is the original software of the Ethereum team. If you are planning on ministering alone, then Geth is your best option. Geth works via the command line, and therefore requires some experience to work with cmd. Furthermore, Geth itself is a very simplistic piece of software, which in addition to mining also enables you to create your own wallet.
However, it is not suitable for beginners because it does not have an interface / GUI to work with.
At the moment Claymore is one of the most popular softwares when it comes to mining. Not only is it easy to install. It offers you many useful extra options that do not offer many other similar softwares, such as fan management.
In addition, Claymore can extract 2 coins at the same time, which, according to the experience of many often results in up to 10% extra income.
Minersgate is not really the software that you install on a dedicated mining rig. But just one that you install on your computer or desktop; so that you can just miniaturise Ether in addition to your use of your pc.
Minersgate has a simple GUI that can easily be used. You can get started right away and start with the extraction of Ether. It does take a% of your mining as transaction costs! So keep that in mind.
Do you want to dine online besides gaming, online surfing? Or are you just curious how all that mining works at all? Then this is the software for you!
STEP 3: CHOOSE A MINING POOL
Once your Ethereum mining rig is ready to mine, you can choose to join forces with other Ethereum miners. Such a group is also called a mining pool and it is an optional step .
A mining pool is a group of Ethereum miners who combine their hashrate together to solve a block. Then they share the reward fairly among themselves, based on the hashrate delivered. Unless your rig has an enormous amount of Hashrate, it is always advisable to join yourself to a pool.
A number of Ethereum mining pools are:
- Ethereum pool – 0.8% fee, 2 times a day payout.
- Dwarfpool – 2% fee, 4 to 6 times a day payout.
- Ethpool – 0% fee, confirm payment after 10.
- Nanopool – 1% fee, 2 times a day payout.
- Alpereum – 0% fee, payment every 30 min.
STEP 4: MAKE AND CONNECT YOUR ETHEREUM WALLET
The final step, and also the most important step, is creating and connecting your bitcoin miner with your Ethereum wallet. In one of the previous chapters we discussed what the best Ethereum wallet is, what an Ethereum wallet is.