Ethereum is arguably the second-best cryptocurrency after Bitcoin both on value and market cap. Created to offer unlimited access to blockchain technology, Ethereum has revolutionised peer-to-peer technology more than any other crypto. It features a smart contract that makes it possible for various use cases like decentralised applications (Dapps), decentralised autonomous organisation (DAO), among other uses.
The several uses have made Ethereum mining such a lucrative venture. Mining Ethereum is almost more profitable than Bitcoin mining. Are you looking to become part of Ethereum mining? Follow through to understand how to mine Ethereum and its profitability.
How Ethereum mining works
Mining has two purposes; it helps create new Ether into circulation and secure the Ethereum network by creating, verifying, and adding blocks into the blockchain.
The Ethereum mining process uses a proof-of-work (PoW) consensus protocol. This protocol involves the various nodes agreeing on the data to include in a blockchain. Once included the data cannot be altered or deleted in any manner. It thus helps keep the network free from attack or abuse.
To verify the blockchain transactions, various computers compete to solve arithmetic puzzles. These computers act as nodes, with the first node to complete the puzzle getting rewards in the form of Ether.
The PoW ensures the release of new tokens in the network. It also avoids the need for reliance on any third party for operations.
Building a rig
Mining Ether requires you to build a custom mining rig. Every mining rig contains a power supply, motherboard and operating system, computer memory, and a GPU.
The mining rig is like any other regular computer, except, you don’t have everything set inside a case. You have to keep it open as the mining process releases a lot of heat.
Creating Ethereum mining rig Australia is possible given the legality of cryptocurrencies use and mining in the country. However, you have to cater to all the associated costs like electricity bills.
In the end, such costs might be too much to get any meaningful gains. That is why most people in Australia join Ethereum mining pools. Ming pools like Mining pool hub Ethereum allow you to include your processing power with other units to increase chances of solving the arithmetic puzzles. You then get rewarded depending on your input in the mining pool.
Joining a mining pool is the most viable way to mine Ethereum for beginners.
Profitability of mining
Ethereum mining profitability depends on various factors, such as;
- Rewards per block – Ethereum miners get rewarded for every mined block as well as transaction fees for verified transactions. Miners currently earn 2ETH per block. The transaction fees however change with demand and transaction type.
- Network difficulty – the difficulty of mining Ether depends on the number of nodes on the network. Ethereum is very popular and attracts several miners, leading to a higher network difficulty hence more Ethereum time to mine.
- Pools – mining pools consolidate mining resources to increase the chances of finding a block.
- Hardware – you need a powerful mining machine to increase your chances of getting the block.
Will Ethereum mining end?
Ethereum rewards have been going down for some to currently reach 2ETH per block. This has led to questions on whether Ethereum mining will end.
But Ethereum mining will not end, instead, the platform is planning a network upgrade to ETH2.0. This will move from the PoW to a Proof-of-stake consensus. The mining power will depend more on token ownership than processing power.