Cryptocurrencies are slowly but surely changing the way payment system and financial world work. Ethereum, the world’s second most popular cryptocurrency, has attracted many interest from prospecting miners. If you are looking to mine Ethereum and earn passively an income every month, continue reading our guide on how to mine Ethereum.
Ethereum Mining Hardware
Before you start mining you will need a computer (CPU), or graphic card (GPU) to dedicate full-time to mining. GPUs have a higher hash rate, meaning that it can solve algorithms faster. For Ethereum, the average time a video card generates a block is every 15 seconds. Meaning that at every 15 seconds, the miner gets rewarded by the network 5 Ethereum (ether).
You will probably want to set up a mining rig, a machine that is comprised of a number of GPUs, to have a better hash rate and therefore more profit. But to build such rig requires time and some tech skills and knowledge.
Mining profitability calculators show you how much ether you can make at a given hash rate, and takes into account how much electricity you used and if you made a profit.
ASICs for mining Ethereum are not available.
*At some point in the future, Ethereum will change from their proof of work protocol to proof of stake with their Casper Fork, making mining obsolete.
After you have selected your mining hardware, you now have to install some mining software. First you need to install a client that will connect you to the network.
You’ll need to install geth, a command line tool which runs an Ethereum node that is scripted in ‘Go’ language, or any of a number of clients. You can find and download Geth here, along with instructions on how to run them on your operating system (Windows, OSX or Linux).
Once installation is complete, your node is connected to the Ethereum network. Along with mining ether, you now have an interface that lets you implement your own smart contracts and make transactions by using the command line.
Smart contracts or decentralized apps require the use of tokens. But you can test these activities with ether on a test network.
Now that you’re connected to the network, you need to install the software that will actually mine you ether.
There are various mining software such as Etherminer, Nicehash, MinerGate and many more. Before installing and running the software, it is necessary you have a wallet address. Some have their own built in wallet, but for security reasons, it’s best you have a secure wallet.
Download the appropriate version for your operating system and follow the instructions on the software’s site.
Joining a Mining Pool
Mining alone is not profitable, so joining a mining pool is necessary.
A mining pool is where miners gather their computing power to have a bigger hashrate, therefore vastly increasing the chances of finding a block. Then the profits are split proportionally to how much power each miner contributed. This will allow you to receive a steady payout from the pool, even if you never find a block.
There are a few factors that you have to take into consideration when you join a mining pool, such as overall hashrate, fee structure, payout structure, and how long the pool has been around for.
Mining pools will require you to go through a signup process on their website, after which you can connect to the pool and start mining.
The mining world is an ever-changing environment. The hardware and software that you use today might be useless in a year, with mining pools disappearing while others pop up.
You have to also consider any variable costs that might incur, like electrical costs, maintenance costs, pool fees, exchange fees etc.
Ethereum is a good investment in the long run for people that want to get involved in cryptocurrency and have less risks that result from the market’s volatility.