By Guest Contributor
The following article was originally published on Reliablecoin’s website.
What is Ethereum Mining?
Mining Ethereum is sorting through data blocks from peer distributed cryptocurrency networks to find information that can be used to solve challenging math problems. Successful Ethereum miners can earn crypotocurrency in in exchange for their work.
Ethereum mining requires a lot of intensive computation work, time and lots of processing power. Ethereum is a platform with several applications that are helpful for users trying to do a variety of everyday tasks very simply. Results generated through digital mining is referred to as proof of work system.
The process of getting cryptocurrency tokens of Ethereum from blockchain networks requires having computers programmed to run a hashing algorithm non-stop. The hashing algorithm condenses a large amount of information into fixed length string of numbers and letters. Ethash, the hashing algorithm employed by Ethereum, hashes metadata drawn from the most recently available using a nonce. This binary number is able to create a unique hash value.
With every new block contained in the blockchain, a new target hash value is set by the network. All miners on that network attempt to guess which nonce will result in the desired value. The miner that discovers the right nonce is awarded the block and receives 5 ether. The process begins again following a cycle which occurs about every 12 seconds.
Ethereum Mining How To Guide
For people interested in doing this type of mining, it is important to get an Ethereum mining how to guide that will walk through every possible step, explain the process in detail and make you aware of any tools and training you will need beyond the scope of this article which provides the high level methods you can use to mine ethereum and the pros and cons of each. A how to guide can also help you master the skills you will need to get good results consistently. With the right mining how to guide and some practice, it is possible to gather the information you need to solve even the most complex mathematical problems and be able use mining applications with your existing computer hardware.
There are many a Ethereum mining how to guide’s available on the internet. The key is to find one which explains the process to your satisfaction and best prepares you to make money by becoming involved in this industry that is growing in popularity almost daily. Several companies offer how to guides that are clear, concise and easy to understand and enable using to begin earning Ethereum cryptocurrency almost immediately.
Ethereum Mining Hardware
Working as a miner looking for Ethereum requires a specially prepared computer set-up or rig that has the necessary processing power from mining hardware. This includes Graphics Processing Units (GPUs) used for video games with 3D graphics. Although Central Processing Units (CPUs) can be used in mining, GPUs are optimized for running similar operations repeatedly. This makes them ideal when it comes to hashing activities on the Ethereum blockchain.
A motherboard and a power supply unit capable of running all your GPUs simultaneously are the next pieces of hardware you need. Each GPU requires between 100-250 watts of power. For optimal function power supply units should run at about 75% of their load capacity. The number of GPUs your rig uses will determine the load capacity of the power supply unit you need.
Powered risers are the next piece of mining hardware you need. This will enable you to connect the a large number of GPUs into the mother board. The power risers lets you suspend the GPUs your mother board contained in your case. This will help dissipate heat, plus let air flow through the rig. You will also need a processor for your Central Processing Unit and a stick for your Random Access Memoryn (RAM). When mining Ethereum your computer won’t need to do much multitasking. Therefore, inexpensive CPUs and RAM will suffice.
The final piece of hardware needed to complete your rig is the case. You will have to get one custom made so it can hold all the graphics cards. There are pre-made mining rig cases available online or you can build one yourself. It can be made with some aluminum angles, wooden boards to mount the motherboard, some screws and a power drill.
Ethereum Mining Software
Installing the right operating system is the first software step when building a rig for mining Ethereum. People with advanced technical skills can use Linux Ubuntu because it’s free and offers more options. However, for most miners, Windows is the best choice because it automates the process of installing drivers to allow your computer to communicate with all the components. Downloading EthOs, an APP specifically designed for mining Ethereum, can help you have a bespoke mining system to manage your rigs and GPUs. It’s a simple plug and play solution for data mining rigs.
With your graphics drivers and the Geth program downloaded, you can implement commands your Ethereum node. Download the blockchain, point you rig to your wallet on Mist and you are ready to start mining.
Ethereum Mining Rigs
This is the machine you will be using to mine Ethereum. It is made up of a motherboard with lots of slots for GPUs or graphics cards to increase hashing power. Using one with 3 PCI Express slots will suffice. The rig then needs an efficient GPU that can hash a lot without using too much power. You will also need a GPU riser for your rig. Next comes a hard drive. One with a moderate size and standard SSD drive should be enough unless you plan to download huge blockchains.
If you plan to be part of a pool that mines Ethereum, adding a smaller SSD drive to your rig should be enough. About 4GB of RAM should be all your rig needs. Add a Power Supply Unit and a case and your rig is complete unless you plan on building a mega rig. In that case you made need more than one power supply unit. Be sure to choose a well-ventilated place for your rig to prevent it from overheating.
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Ethereum Mining Pools
Many people find that mining Ethereum as part of a mining pool is the best way to mine. This ensure you will get a steady stream of Ether. In pool mining a group of miners work together to ensure steady returns and eliminates the need to download an entire blockchain. This system only requires miners to share between 1% and 2% of their winnings. By working together, the miners have more hashpower and improve their chances of finding the right nonce faster. They also get rewarded based on the amount of work they have done.
Choosing the right mining pool is very important. You must consider how they distribute the block rewards and their pool management fees, 1%-4% is standard.
There are many types of payment systems. They include the Pay Per Share method where money is given to the miners even if the pool hasn’t successfully mined the block. This type of pool charges a 10% fee. Other payment methods include:
- Pay Per Last N Shares
- Double Geometric Method
- Pay Per Share
- Pay Per Share with Recent Backpay
- Equalized Shared Maximum Pay Per Share
- Pay On Target
- Pay Per Last N Groups
- Recent Shared Maximum Pay Per Share
- Shared Maximum Pay Per
Some of the other things budding miners have to consider is the type of currency they will be mining, whether the mining pool allows for Merge Mining, Multi-Pool Mining, the location of the server and the Variable Difficulty of the shares.
Ethereum Mining Contracts
Mining Ethereum on a standard computer is very difficult. People that lack the time, powerful computer or computer skills to mine Ethereum on their own, but want the cryptocurrency can pay others to do it for them through Ethereum contracts. The person that accepts the mining contract actually does the mining. The person that offered the contract simply gets the resulting Ether.
Cloud mining on the other hand, is a new business concept which allows users to buy a share of the mining power from hardware located in isolated data hubs. The miners can earn additional income, get more frequent payouts and take fewer risks. Ether currency continues to stimulate the Ethereum project. It’s one of the smart contract platform’s crucial elements. For people that prefer investing in mining Ethereum while not having to manage the hardware and software themselves, cloud mining offers the best option. It ensures a low entry cost, negligible risk and less expenses. Conventional mining approaches, on the other hand, require special hardware as well as lots of maintenance.
This new cloud mining method is offered by several reputable providers. They can set up contracts for mining Ethereum where people simply pay and they can begin mining Ethereum. Most importantly, the miner doesn’t have to maintain the mining rig themselves. This saves them time and trouble.
Ethereum Cloud miners are able to get a better deal for two reasons. They buy in bulk. This lets them get their graphics cards at discount prices. Plus, their mining machines are in Iceland and other low cost locations. This reduces operating costs and those savings are passed on to the miners. Companies also offer 100% guaranteed uptime, use green energy and provide 12 month mining contracts for one set fee. It’s part of an avant-garde financial and technological revolution.
Is Ethereum Mining Profitable?
With Ethereum’s price at around $800, some wonder if people can still make money mining it. Miners use this proof-of-work coin to network transactions. Ethereum’s profitability varies based on three important factors. They are electrical costs, mining difficulty and hash rate. If electricity costs are low and the mining rig is efficient, that increases profitability. The more difficult it is to mine Ethereum the less profitable it is. The faster the hash rate, the more Ethereum a contract miner can get in a day. However, miners with the fastest hash rate charge more.
Generally speaking, mining Ethereum is still profitable if done on a large scale with the right hardware. People can use Ethereum mining cloud, do Ethereum mining on android or Ethereum mining with Raspberry Pi and make money by simply following one of the detailed, comprehensive guides available. They are easy enough that even not very advanced miners can understand and follow them and earn lots of Ethereum cryptocurrency. Google Play even has android apps that can help make an Ethereum mining profit.
Mining Ethereum isn’t a way to get rich quickly. It takes a good deal of time and effort, especially for people that are working alone. Mining Ethereum requires more than just adding to the amount of Ether that is available. It is also required for making sure the Ethereum network is secure as it creates, publishes, verifies and propagates the blocks in the blockchain. There is only a finite amount of Ether. In the 2014 presale it was decided how much ether and network operations there would be. Only 18 million Ether is issues annually. That’s about 25% of the amount first issued. It’s a system designed to reduce inflation.
It is possible to mine Ethereum from your home using a personal computer with a graphic card that has 2 GB of RAM or more. All that’s required is script writing combined with some knowledge about the command prompt. Once you break the process into manageable steps, mining Ethereum becomes easy and exciting. However, using GPUs is the best way to go because they are hundreds of times faster than CPUs. Plus, Nvidia cards are not as efficient as AMD cards. The hard drive on your computer system must have lots of free space. It requires about 30 GB for the blockchain and other needed software.
All you have to do is download Geth to use as communications hub to link to the Ethereum platform as you coordinate your set up and report new developments requiring you to take action. And you are ready to make money mining Ethereum. Right now Ethereum uses a system called Proof of work. This supports blockchain technologies like Ethereum and bitcoin. Proof-of-work is the process of solving the complex equations that is the basic requirement a miner must meet to clear in order to have their block added to the blockchain. The system has been analyzed to reduce the electrical costs and environmental damage it generates. By using the Dagger Hashimoto algorithm, however, Ethereum has created a method that allows home computers to efficiently mine with little expenditure necessary.
Ethereum plans to replace the concept of mining with Proof of Stake. This is a new mechanism that has been updated to get its power from a consensus algorithm. The impact of the Ethereum network with its long string of computer maintained connections is undeniable. The profit that can be gained mining Ether is significant. Many people think mining will come to an end with the consensus algorithm’s implementation. They advise people that have a interest in mining to do so now.