How to Mine Ethereum – Quick Guide | CoinCasso Exchange

After Bitcoin, Ethereum rules the cryptocurrency landscape. In fact, Bitcoin is so far out expensive for most individual investors that owning an ETH has become a default, achievable.

Now we all know that Ethereum is gearing up for the big MERGE or the DOCKING to change its underlying operational and technological model. It is moving from the Proof of Work (PoW) to the Proof of Stake (PoS) model!

A bit on PoW and PoS first.

Cryptocurrency and blockchain are based on decentralized and foolproof ‘consensus mechanisms’, which are key to confirming or validating transactions that take place on the blockchain. It is a system that ensures no one spends the money twice.

Proof of Work and Proof of Stake are two different ‘consensus mechanisms’. In PoW, miners compete with each other to solve a complex math puzzle. The winner gets to update the blockchain and is rewarded by the network with crypto coins. Bitcoin is the best and first example of this model.

Proof of Stake (used by Cardano) uses staking to achieve consensus. A network participant is selected to validate and add a new block based on how much crypto they have staked or invested for a chance to participate.)

So, where does the upcoming Merge leave Ethereum Mining and its loyal (and would be) miners?

Well, the short answer is exactly where they are now. Ethereum 2.0 is slated to hit sometime in 2022 (keeping in mind Ethereum’s usual pattern of roadmap delays, some pundits are predicting 2023). This allows people to mine Ethereum as usual till the switchover to Proof of Stake kicks in. They can continue mining Ethereum as before; however, we do recommend newbies to exercise some restraint.

So let’s get started!

A Quick Intro To The Basics Of Ethereum Mining

The Ethereum network has its own blockchain and its own programming language, called Solidity. ETH blockchain is a decentralized public ledger for verifying and recording transactions. This means that for Ethereum to work, transactions are verified via miners who use their GPU power to solve complex mathematical problems. Several miners do this simultaneously, and the first one to get the correct answer, which is verified by 51% of the miners, gets the block and is rewarded in Ether or ETH.

Now, to the actual question – How to mine Ethereum?

There Are Three Ways To Start Mining Ethereum

1. Mine Ethereum on your own

You could try solo mining, but only if you have deep pockets and the ability and the interest in setting up and running a full-fledged mining rig. We wouldn’t recommend solo Ethereum mining as rewards are few and far between, and you will likely not manage to mine much – if any, ETH – at all before the Proof of Work system disappears. Also, with solo mining your chance of actually solving a block is pretty low at the start. Even with a mining farm, it could take months, if not years, before you actually get a block, and profit only depends on solving the block successfully. You will have a much better chance of success with mining pools.

However, if you do decide to start on your own, the actual process is fairly straightforward. All you need to do is set up an Ethereum wallet, download the Ethereum blockchain and attach your mining farms or mining rigs with your ETH local node.

Cryptocurrency Mining Machine Close Up

2. Join Ethereum mining pools

Ethereum mining pool is the simplest and quickest way to start with mining Ethereum. It is basically a group of miners working together and sharing rewards equitably if one of them finds the secret number. Working with a pool of Ethereum miners provides miners with a constant stream of income instead of searching randomly for a whole block. Some popular Ethereum mining pools are SparkPool, Nanopool, and F2Pool. You must consider these factors while picking an Ethereum mining pool to join.

Pool size

More people in an Ethereum mining pool means more power to get and solve blocks, but it also means the rewards will be shared amongst more wallets.

Minimum payout

Minimum payout is the amount you have to mine to get rewarded. A high minimum payout will keep you in a mining pool for a long time, and ideally, flexibility and more frequent payouts are preferable.

Pool fees

Ethereum Mining pools charge a fee for joining and working with them, and these payments are usually a percentage (between 1% and 3%) of the cryptocurrency mined.

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3.  Use a mining software or service

 Here you have two options to mine ETH:

  • Rent/lease your device’s hashing power to other miners and get paid in crypto. A good entry point for this is NiceHash which is a mining software that has been around since 2014 and makes it super easy for mining novices to get started. Mining software usually have a tiered system of fee payments and can be quite profitable as they usually mine the most profitable coins.
  • Or you can use cloud mining, i.e., pay others to mine for you. You outsource your mining to mining rigs, and it is usually a hassle-free way to dip your toes in the mining world.

Etherum Miner Cryptocurrency Business

Setting Up For Ethereum Mining – Things To Keep In Mind

Hardware

Mining Ethereum requires careful planning and budgeting to become profitable in the long run. You will need to invest in mining GPUs and good hardware to turn a profit. However, do consider key points like maximum possible hash rate, energy consumption, and purchase price before purchasing your setup.

Along with pure Ethereum mining hardware, you will need to figure in costs of fans, ACs, risers, adapters, memory capacity, and external power supply units.

Software

Some of the well-known Ethereum mining software are Ethminer, Claymore, and Phoenix. It would be recommended that you test a few before picking the fastest one for your specific configuration.

Profitability

To measure actual profitability, one must add overheads to the CAPEX costs as well. These include electricity charges, obsolesce or depreciation, mining fees, and insurance.

Before launching, it is advisable to map out how long you would take to break even with Ethereum mining. These are simple calculations around hash rate, difficulty rate, and electricity price.

Risks

All Ethereum miners must always account for, and be ready to, face physical and market risks.

Fire hazards and costly breakdowns can pose a grave problem in the real world, while the virtual world can be equally lethal to the wallet. The crypto market is notoriously volatile, and it is not uncommon to see expensively mined coins turn worthless in a sudden crash.

Keeping a stringent check – both on the equipment and on market trends – can be the first line of defense against these mining risks.

Is Mining Ethereum Profitable?

Not if you are planning to start now.

If you already have a Ethereum mining setup, then continuing on till the ETH Merge is a good move. However, investing in hardware, software, and a new setup is not worth the trouble at the moment. You would actually gain more by buying Ethereum from a licensed seller.

A mid-sized setup would need close to a year to reach the break-even point, and once you factor in the cost of the equipment, power, and other overheads, the ROI remains fairly subpar.

And then, there is the environmental cost of mining Ethereum; According to Digiconomist, the Ethereum network uses around 70 TWh per year and 160 kWh per transaction. This is valued at around $19 million per day. At some point, one must ask oneself whether this is sustainable for the community and the planet.

If you want to get some ETH without mining cryptocurrencies, create an account on CoinCasso and buy some Ethereum.

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So, How Can You Join the Ethereum Network?

A better way to get in on the action is to use your money to buy Ethereum on a crypto exchange and get ready for the Proof of Stake model to come up. Once PoS is up and running, you can sign up as a validator and stake your Ether to earn more. However, only a small number of new validators are being allowed on board, and the waiting list is a long one.

Similar to PoW and pool mining, if you have less than 32 Ether (the minimum limit for staking), you can also use staking exchanges, join staking pools, and Validator as a Service (Cloud Staking); to join the Ethereum 2.0!

To get in the game, do visit our crypto exchange CoinCasso and start building your ETH portfolio today.

FAQ

How long does it take to mine 1 Ethereum?

It depends on how much processing power you bring in. However, according to Coinwarz, at the current difficulty rate and a hashing power of 750MH/S, it will take you 82 days to mine 1 ETH. A better metric to consider would be how fast you can break even on your investment and the mining profitability. The profit and loss calculation is more relevant than mining time.

Is ETH easy to mine?

Well, yes. You do need to invest in a mining rig, but the rest of the process is fairly straightforward. You have to download the right software, open an Ethereum wallet and point your mining rig towards your local node. The process is easy, but the main effort is putting up the money and installing the right setup.

Can I mine Ethereum for free?

No, you will need to pay the requisite mining or transaction fees if you are using any software, service, pool, exchange, or wallet. Naturally, the cost of mining Ethereum, whether done via a pool mining or solo, must also factor in the big upfront investment in equipment and, of course, the big mining power bills of that are sure to land on your doorstep.

Is Ethereum mining profitable?

Whether mining Ethereum is profitable depends on an array of factors. The important ones are the electricity rate in your area, the transaction fees, the efficiency of the hardware, and the difficulty rate of the blockchain.

 

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