After the financial recession of 2008, the concept of digital currency emerged, also known as cryptocurrency. As people continued to lose faith in the banks and other middlemen for the transfer of assets worldwide, a new technology, “BlockChain,” enabled the masses to do transactions in paper currency alternatives like bitcoin and ethereum.
The concept of blockchain and decentralized currency revolutionized traditional banking and finance-related matters. It removed the need for banks as all the records of transactions are available to everyone through a public ledger. After bitcoin, ethereum is the most trusted digital currency asset among people. Conceptually, the addition in any blockchain follows validation through the ethereum network, and each transaction takes 15 seconds.
If you are interested in making your place in this market, you need to know how to mine ethereum.
Basic Concepts of Mining:
There are two ways to fill your bags with ethereum; either you purchase on already working exchanges like Binance, Kucoin, Coinbase or set up your mining machinery and connect with the Ether ecosystem.
Ethereum works similarly to bitcoin. It is, in fact, a decentralized ledger that is updated and verified by its users. A mining algorithm called Ethash is used for mining ethereum. Following is a step-by-step guide on how to start mining your own ethereum.
A GPU (Graphical Processing Unit) is used in conjunction with other hardware and certain softwares connected to the ethereum ecosystem or pools generating blocks of eth as a reward of complex mathematical computations. This specific type of GPU is selected considering many factors like its speed, cost, productivity, hash rate, and power consumption.
A mining device ‘mines’ a coin at a specific rate which is actually known as a hash rate. This so-called ‘mining speed’ or hash rate is very important because all miners are essentially trying to solve complex computational problems to get rewarded for ETH block. There is a direct relation of hash rate with chances of finding ethereum. Sometimes miners combine their mining capabilities and set up a rig. A rig is where several GPUs connect with increased hash rate chances of successful mining are increased many folds. It is also referred to as a pool.
After purchasing specific hardware, it is now time to set up your mining machine. The particular softwares used in mining are drivers that are provided with GPU or available online. Now you can connect your machine with the ethereum blockchain by choosing a specific network node. Certain online services like Geth can be used.
Continuous attempts are made by Geth until it finds some peers. After successful installation and connection, mining can start. A user can build decentralized apps, send transactions, deploy smart contracts, and much more.
Test your mining capabilities:
As its name suggests, during testing, a user only tests the limits and functionality of his network. Eth mining can be tested on a private network easily prior to actual mining being commenced. Your home desktop is enough for the testing part. A service like Geth or similar is used.
Join Mining Pool:
If you join a pool, your machine’s computational power combines, and your capabilities of solving cryptographic puzzles are increased. This inclusion in a mining pool actually helps accelerate earning of ethereum rewards. As soon as a pool solves some puzzle block, the reward is shared between the pool equally as per share of individual computational power.
Install Ethminer and Get Paid:
Once your machine is connected with an established network a software named “Ethminer” is required to be installed. This software acts as an interface between mining pools and you. Ethminer is a simple command-line program that can be used easily on platforms like Windows or Linux. As soon as you mine an ETH block, your reward will be paid to you. This reward is transferred to the Ethereum wallet linked to the miner’s pool. You can check out the online profit calculator tools to estimate how much you would need to invest in machinery, softwares, energy consumption to successfully mine an ethereum block.
A new algorithm called “Progressive proof of work” is now the main agenda of ethereum’s core team. The purpose of this new algorithm is to make mining more accessible. However, there are no concrete plans for this algorithm’s implementation, but developers hope that this will make mining with GPU more profitable in the future.
At present, almost 78 days are required to mine a single block of ethereum. It is expected that mining will become obsolete in 2022. It is due to the higher concentration of miners around the world joining in and reduction in reward block.