Ether is a sought-after digital currency by crypto traders worldwide due to its increased popularity and growing prices. Nowadays, acquiring a fraction of one ether is easier using crypto exchanges like Binance and Coinbase. However, instead of buying crypto cash from brokers, one can mine for ether. Ethereum mining is necessary for creating new coins and keeping a log of existing ether transactions.
How Ethereum Mining Works
Ether mining is similar to bitcoin, where miners use computing skills to verify all ether exchanges before adding them to a blockchain. Ether’s blockchain is Ethereum, and every successful addition to the public ledger creates a permanent, verifiable record that no one can alter or erase.
When logging exchanges to the blockchain, miners run a computer programme to compute millions of math equations. When computing the math problems, they compete against other miners around the globe to verify the transaction. The first person to verify their block of transactions receives ether coins. With millions of miners around the globe, someone verifies a block of transactions every 13 seconds and receives the newly minted crypto.
Mining can be a profitable venture depending on the resources available and expenses. For instance, building a custom mining rig can be costly, consuming a lot of power. That is why many people join a mining pool to combine their resources and lower mining expenses. If you want to venture into the mining business, here is the step-by-step process.
Steps for Mining Ethereum
1. Create a Wallet
Before mining, you need a secure wallet to store your Ethereum coins. You can choose between an online wallet and a hardware wallet, depending on your needs. The online wallet is a convenient storage option that can safeguard your coins. Unfortunately, their connection to the internet makes them vulnerable to security breaches. If you want a hot wallet, you can open one from any cryptocurrency exchange and set it up within a few minutes. If you are always on the move, you should consider a mobile wallet, an application on your phone that lets you access your Ethereum from your phone. The downside of mobile cryptocurrency is the vulnerability to hacking and the risk of losing your coins if you lose your device. For extra security, many people use hardware wallets to store digital currencies. The external hardware is similar to a USB device not connected to the internet, and you can carry around your crypto without worrying about hackers.
2. Acquire the Necessary Hardware
As earlier mentioned, Ethereum mining involves solving complex mathematical problems and registering them in the ledger to receive ether. That means you need hardware tools to assist in the mining process. For instance, you need to build a mining rig using a motherboard, GPU, RAM, Hard Drive, and a power supply unit. The motherboard is the base of your rig and determines the GPUs you will use. If it has limited GPU slots, it will reduce your hash rate and slow down your mining process. You also need a powerful and efficient GPU with computing power to solve complex math problems and provide ‘Proof of Work’ to verify ether tokens.
Your hard drive provides storage space for your operating system and mining software. Since you will download the whole blockchain, you need sufficient space. Besides, the RAM should have adequate space for fast calculation and computation. When determining the power supply you need, sum up the power consumption of each GPU.
Aside from the hardware tools required to build the mining rig, mining software is crucial. You can use any operating system that will mine the ether. The ethos is designed for Ethereum mining, and you can download the app and use it to control rigs and monitor the process.
3. Start Mining and Withdraw Ether to Your Wallet
Once you set up your mining farm, you can start mining for ether. However, Ethereum mining requires planning to avoid risks. Computers are fire hazards, and mining requires high energy output which increases the risk of a fire outbreak. You need to avoid overloading the electric grid, ensure your mining devices and the sockets can handle the maximum power input or output. Wiring can also overheat, causing a fire hazard. You can avoid most of the hazards by investing in high-quality power supply units and specialised motherboards. With the proper setup, you have a chance of getting ethereum and storing it in your wallet.
Join a Mining Pool
Gathering all the Ethereum mining hardware and software is tedious and expensive. Besides, you cannot be sure if you will mine any ether coins. However, miners can join a mining pool to simplify the process, share resources and minimise costs. Also, mining pools guarantee a constant income stream. Select a mining pool with favourable payout schemes and low fees like Ethermine. However, other pools like Nanopool, F2Pool and Sparkpool also provide favourable terms. Most pools require only a wallet address and allow anonymous mining. That means you don’t need to signup to join the action.
Conclusion
Ethereum’s similarities and differences with bitcoin make it a practical cryptocurrency. Mining ether can be lucrative if you mine your crypto and sell them at the market price. Unfortunately, breaking even during mining can take time and requires a lot of resources. However, if you reside in a place with low electricity bills, Ethereum mining can be a profitable venture to try.
