How to Mine Ethereum
Ether mining is a great way to decentralize record-keeping as much as possible. It also reduces the possibility of someone cheating the system and getting an advantage against other miners. All miners of a particular cryptocurrency must agree on the transaction history while preventing fraud from taking place.
The blockchain technology underlying the mining process ensures that things like double spending of ethers or other cryptocurrencies does not occur.
Ether mining is very similar to bitcoin mining and is almost like playing an online game. Miners are essentially the players and they use their computers to repeatedly and quickly try to solve different puzzles. Whoever solves the puzzle first wins and is awarded with additional ethers. The mining process is as follows:
- The miner runs a block’s unique header metadata through a hash function. During this process, the miner changes only the “nonce value” which affects the hash value. This process will produce a string of numbers and letters that are a fixed length.
- In order to win, the miner must find a hash that is exactly like the current target. If this is the case, the miner is rewarded with additional ethers and an “announcement” is made across the network for each node to validate and the other miners will add their copies to the blockchain ledger.
- Once a miner solves the puzzle, all other miners stop working on that puzzle and move on to the next puzzle. The entire puzzle-solving process usually takes between 12 and 15 seconds to solve. This means that every 12-15 seconds, a new puzzle is generated and the opportunity for winning ethers is renewed.
All miners have the opportunity to “win” and the outcome is a combination of luck and computer power. The more powerful the computer that is doing the mining, the greater chance the miner has of “winning”. It therefore means that a successful Ethereum miner needs to invest more in the power of the computer that they use for mining.
How to Choose Mining Hardware
For ether miners, the only available mining hardware is a GPU. GPUs are able to solve these blockchain puzzles at a faster rate than CPUs. It is advisable to establish a GPU mining rig to increase success rate. A mining rig is simply a group of GPUs that are dedicated to mining.
The costs to bear in mind when mining Ethereum include electricity costs, hardware and set up costs. In order to be profitable, the value of ether won must exceed the combined costs of hardware, electricity, setup etc. Mining profitability calculators can help miners to predict the amount of ether that can be earned given a particular hash rate and amount of ethers.
Once the hardware is selected, the miner needs to install a client to connect to the network. The geth software runs an Ethereum node and may be installed and run on different types of operating systems including Windows, Mac OS or Linux. Once the software is installed, you can download Ethminer. You will need to join a mining pool in order to mine Ethereum successfully.