How to Mine Ethereum – Plus Whether It’s Worth Doing or Not
Wondering whether or not it’s worth mining Ethereum? Our article will give you the ins and outs of how to do so and whether or not it’s worth your investment.
Mining Ether (Ethereum tokens) is a little different to mining bitcoin. While the two cryptocurrencies share a lot in common, there are some fundamental differences in how they’re put together. Mining Ether is actually easier than mining bitcoin because the difficultly levels (while still very high) aren’t quite as insane. The cryptocurrency is also designed to be easier to mine on CPUs rather than mining rigs.
Fundamentally, mining Ether is the same as mining bitcoin. You set up your CPU to solve complex math equations in order to verify transactions made with Ethereum. As each transaction goes through, all the computers on the Ethereum network race to solve the equation that comes with it in order to process and verify that transaction. The computer that gets there first is rewarded for its efforts with some Ether.
This means that the more computer processing power you have dedicated to mining, the more money you’re going to make. That being said, the upkeep for such an operation can be incredibly high – you’ll need to buy the hardware to begin with, then pay for the electricity to keep it running. If you’ve not got enough power to mine deep, then the costs can quickly outweigh the returns. It’s important to consider what your profit margin will be (if any at all) before you begin a mining operation.
In this post, we’ll cover what Ethereum is, how to mine it, and whether it’s worth doing so.
What is Ethereum?
Ethereum is an open-source and decentralized platform for apps to run on that is backed by the Ether cryptocurrency. Ethereum uses blockchain technology to allow developers to build apps that function exactly as they are programmed to without any possibility for hacking or fraud.
This means that apps dealing in property contracts, intellectual property, gambling, and even voting can now be reliably built and implemented. This is revolutionary from the perspective of the tech industry.
While blockchain is generally known for being the backbone of bitcoin, it actually has many other purposes. An example is to compare bitcoin to email – if bitcoin is email, then blockchain is the internet. It’s capable of running all kinds of apps and services beyond just email. In the same way, blockchain is capable of running all sorts of services.
Ethereum uses the Ether tokens which are publically traded in a way similar to bitcoin – this is why many people assume the two are similar. But beyond this, the similarities begin to slow down.
Ethereum is a platform for decentralized apps and users can purchases Ether tokens to trade within this network, as well as to pay for services within it. If they want, they can also sell these tokens for real cash. In this way it works like a publically traded company, only it’d be more like buying shares of the internet than of a company.
If you’re still confused, then watch this video explaining what Ethereum is in more detail.
How to mine Ether
To start mining Ether, you’ll need to get some computer processing power behind you. Mining any cryptocurrency on the blockchain network requires you to solve complex math equations each time a transaction is posted on the network.
When a group of transactions are added to the blockchain (the backbone of any cryptocurrency), all the computers on the blockchain network race to verify that transaction. The first one to do so (by solving the complex equation) will be rewarded for their efforts. In the case of mining Ethereum, those who verify transactions will be rewarded with a small amount of Ether which they can later trade for cash, other cryptocurrencies like bitcoin, or services within the Ethereum network.
Miners are rewarded 3 Ether for mining a block. This works out around $500. While a block on the bitcoin blockchain is mined every 10 minutes, with Ether it’s every 15 seconds. The difficultly of mining Ether fell in 2017 after the price crashed and while it’s increased since, it’s still a good time to start mining.
You’ll need to buy a GPU as using your CPU will not make you any money. A GPU runs about 200 times faster.
To mine Ether, you’ll need to follow some steps first.
- Set up an Ether wallet. You can’t mine without this.
- Buy a GPU – they go for around $500 – $1000 for a good one.
- Download the drivers for your graphics card (get from manufacturer website).
- Download the Ethereum blockchain (around 20 GB).
- Download Ethermine, MinerGate, etc.
- Connect your node to the network.
- Start mining.
The Nvidia GTX 1080 Ti – a good GPU for Ether mining
Is it worth mining Ethereum?
In short, yes. It depends how much you’re going to invest though. If you were planning on leaving your laptop on overnight then frankly you’ll just burn out your CPU and you won’t make any money in doing so. If you’re willing to invest in a GPU, then mining Ether isn’t a bad idea.
Things is, you will have to consider the exchange rate, your processing power, and your electricity bill (which will rise a lot if you’re mining). Consider all these variables before you start mining to ensure that it’s profitable. Also, bear in mind that while your profit margin might be small now, the value of Ethereum could skyrocket in the future, meaning your Ether could later be worth a small fortune.
The price of Ethereum has been stable for a while now and this trend looks like it’ll continue in 2019. The Ethereum price today is around US$130.00. Do more research and make sure you follow the news with a skeptic’s eye to judge future trends with Ether. Good luck.