A lot has been said about the Ethereum technology and how it works, but are you curious to know how to become a miner of ether. Mining sounds like a Stone age term but what it has to do in this Digital Age? No, we are not digging up earth to mine gold here but yes, we are digging software puzzles to get cryptocurrency Ether in return here. There are numerous ways to become a part of this network, let’s first precisely and briefly know what mining of ether will actually mean?
Concept of mining
Miners perform solving of computationally complex problems and are rewarded Ether in return for their effort, time and processing power of their computers. Its basically like how you used to play video games and after winning each level, the next level gets unlocked. Similarly, the game here is mathematical puzzles and new levels are blocks in the blockchain.
The Process of mining is essential to decentralized Ethereum network as it is used in smooth functioning, verification, and propagation of blocks, apart from an increase in the number of circulation of Ether. Ether is rewarded as an incentive for more people to join the blockchain and increase the network width.
How to perform Ethereum Mining?
Ethereum Mining rig requires certain specifications on the hardware as well as on software side. In order to mine ether, you need to have a computer with Graphics card/GPU or CPU. GPU’s have a higher hash rate, i.e. they are much faster in solving problems and are therefore 200 times faster than CPU. It is wise to use GPU for your mining and there are also mining rigs being done in which hardware containing 6-7 GPU’s together are built to provide faster performance and more power.
Ethereum mining hardware is thus, very crucial in terms of usage and require a large amount of electricity at the same time. Therefore, in choosing efficient Ethereum mining hardware, we would have to look into the factor of cost, how much power does it take and also higher hash rate i.e. the speed of solving and completing an operation, and thus striking a balance between them.
Next step is to connect your hardware (your PC) to the Ethereum Platform. This can be done through software applications acting
as a communication link between them.
Mining Ether using Geth
If you have knowledge about command line on your OS, you can install the Geth application.
1. Download and install Geth Application.
2. Move the application to your Hard drive i.e. (C: ).
3. Run command prompt (a black coloured screen appears) and go into your directory where you copied Geth.
4. Open a new account on Geth by typing command >>geth account new.
5. Enter the password. This password acts as the private key to keep Ether safe and secure.
6. In order to get Geth program to enter the Ethereum network, type >>geth –rpc. This process is a little lengthy and can take time depending on your internet speed. Your hardware is getting in sync with Ethereum Blockchain.
Mining Ether using EthMiner
Mining software which is used to provide hashing algorithm run by your CPU or GPU. Ethminer is one such software.
1. Download the software and install it on your PC.
2. Open another window of command prompt and go to Program Files folder.
3. And then type >>cd cpp, then press tab and keep on pressing Enter key until C:\Program Files\cpp-ethereum opens up.
4. To start mining, type >>ethminer -G and press Enter. This process takes 10 minutes and creates a DAG file.
5. If your GPU memory is used up, you can use CPU memory. Type >>ethminer again and create another DAG file.
6. You can also know hashing power by typing command >>ethminer -M(for CPU mining) and >>ethminer -G -M (FOR GPU mining).
Ethereum mining profitability
This depends on various factors like hash rate, electrical cost and mining algorithm difficulty.
As more miners join the network, the mining difficulty increases, and therefore you receive less Ethereum for the amount of energy spent to solve one problem. As data suggests, Ethereum block difficulty increased from 171 TH/s(1 Trillion hashes per second) to 1714 TH/s in 6 months in 2017.
Time is also a factor, as the coin matures and is more widely known, it becomes less profitable. Hence, keeping in mind all these factors, you can calculate the profitability of your mining. There are online calculators and programs to do so.
Well, there is no direct relation to how much you can mine using PC in particular amount of time as it depends on a lot of factors. If you are interested in mining using your standard PC, then the amount of ether mined will not be profitable enough as it takes up a lot of electricity.
For proper mining, separate hardware needs to be dedicated to integrating higher hash rate GPU’s. On top of the list best performance, video cards are of AMD and NVIDIA GEFORCE. The AMD Radeon R9 295X2 gives the performance of 57.6 MH/s but the power it consumes is a lot and care need to be taken in that way. AMD Radeon RX 480 and Radeon RX 580 are best value performers with 25-27 MH/s and power usage can be reduced using some tweaks.
So, putting together 5-6 such hardware, taking into the cost of each one of them and also looking at energy costs, if we mine enough coins to be profitable, it’s a win situation.
If using Standard GPU system with around 50-57 MH/s hash rate, then it could take a few months (around 6 months) to mine a single ether, however, using standard CPU it’s not even possible to mine one ether. Mining calculators can be used to do the reverse calculation as to how much ether is to be mined and accordingly how many GPU’s are required.
There are many miners who are doing mining rig using cheap electricity due to geographical advantage like in China, Iceland etc. Using this with an efficient number of GPU’s increases the chances of mining ether faster and more in number. However, as more common people are getting into this network, time to mine per ether has increased vastly and thus, profitability depends on numerous factors.
Ethereum mining Pools
As mining requires a lot of computing power, Ethereum mining pools are much beneficial in terms of acquiring a lot of ether. In mining pools, miners come together to pool their resources and then mine together.
The profit is then divided depending on the power contributed by each miner. It is a simple process to join a pool, by signing up on a website and then meeting other miners.
Ethereum uses Proof of Work (PoW) concept, which means you as an ether miner need to solve complex equations to become a part of the network and earn ether. As more and more miners are joining the network, it is becoming difficult to solve problems.
Hence, it is reported that Ethereum is changing to Proof of Stake framework later in this year, in which mining of ether is irrelevant and works on Consensus algorithm different from current Dagger Hashimoto algorithm.
We will have to wait and see what all changes are implemented by the company but for now, you can mine ether and earn profits by selling them which are claimed to be much profitable than the buying of ether itself as a currency.