Ethereum is the second most popular cryptocurrency behind Bitcoin. The mining process is almost similar in both Bitcoin and Ethereum. The PoW algorithm that Ethereum is based on is called Ethash Like bitcoin, Ethereum mining uses the proof of work(PoW) method to write transactions in a new block which on successful completion will be added to the blockchain.
However, ethereum is now in a transitory stage and using a hybrid PoW/PoS method and is working on migrating to the PoS (Proof of Stake). PoS is a process of consensus mechanism where the nodes participate and vote. It will eliminate the need for energy-intensive mining. Ethereum is ASIC resistant.
How to Mine Ethereum:
Create a Wallet:
When you successfully complete a transaction, you will earn cryptocoins. Since these are all digital transactions, you must create a digital wallet to store the Ether coins. You also need a wallet address. This is where people will send the rewards you have earned.
The Software You Will Need:
The Ethereum mining software will facilitate connecting the mining hardware you use to the mining pool and ethereum network. It is important you secure your connection with a strong anti-malware solution to protect against any online frauds and malware attacks.
Hardware:
GPU is Graphics Processing Unit that can be installed on your computer and lowers the load off the CPU considerably. Ethereum mining like every other cryptocurrency mining, was possible via the CPU. But with the increasing competition, need for fast and power efficiency led to the designing of graphics cards. A GPU with 3GB or 4GB is the basic requirement.
How to Select a GPU:
Before you invest in a GPU, use the Ethereum mining calculator to see if it will be profitable to you. It basically depends on the hashing power and energy it consumes.
Want to Mine Alone?
Mining alone sounds lucrative since you will get the complete 100% rewards into your wallet. However, it is not that simple. You will be competing against numerous other miners and the reward will go to those who solve the puzzle first. There will be people mining together who can complete faster. You will need the newest technology machines and can still face issues like your computer getting heated up, require proper cooling, ventilation, bear with the noise generated from the fans, and the power bills. You must have sufficient space to store the rigs.
Join a Mining Pool:
It is highly recommended that you join an Ethereum mining pool. A mining pool is where miners work together and agree to share the rewards as per their contributions once the puzzle is solved. You must consider factors like the size of the pool, minimum payout, and the fee charged by the pool. The rewards are not 100% for you but will be more consistent than when you mine solo.
Cloud:
Ethereum mining can be done on the cloud. Choose a reliable service provider, buy hashing power, pay the subscription fees and rest everything is done by your host. You have great savings on power and do not have to worry about infrastructure and its maintenance.
