Mining cryptocurrency tokens, such as Ethereum, involves using computing power to solve mathematical problems, which in turn facilitate transactions on the network. The miner whose computer finds the correct solution to the problem is rewarded with a token of the value corresponding to the computing power required to facilitate the transaction. Mining was conceived as a kind of crowdsourcing of computational power, which allows the Blockchain network to sustain itself and grow.
Ethereum Mining Hardware
Becoming an efficient and competitive miner of Ethereum requires two things: specialized hardware and mining software. In terms of hardware, GPUs (Graphics Processing Units) are believed to be the best option for their increased computing power. Classic CPUs (Central Processing Units), like a regular laptop, can also be used, but usually, lack the computing power to work fast enough. Miners usually prefer to build a mining rig, consisting of six or more units. Having enough power to solve the math problems faster than other miners is essential to success. When purchasing the components of a rig and determining what equipment you’ll be using, research is key. For instance, consider not only the cost of the units, but electricity, storage, and casing. Electricity costs in relation to prospective earnings will be especially important to calculate.
Ethereum Mining Software
Once you have your mining equipment, you will need to first open an Ethereum digital wallet and then install the necessary software, which is widely available online. You may decide to mine independently or join a mining pool. Pools combine the computing potential of numerous units in hopes of increasing results for all involved. Joining a pool can be an excellent way to begin, and be competitive immediately before you invest in a larger rig.
Is Mining Ethereum Worth It?
Ethereum has seen an enormous and almost constant value increase since its 2015 inception. However, as the Blockchain grows, adding new blocks has become more difficult, which means rewards received by miners have shrunk. The miner responsible for generating a new block on the network is awarded 3 Ether. Under current conditions, it may take months before a new miner breaks even on their investment because adding new blocks requires more power, and mining is more competitive. Also, it is expected that the network will soon be switched to a Proof-of-Work model. This change is likely to decrease the role of new miners.
In early December of 2017, the website Motherboard ran an article claiming that "It Is No Longer Worth It To Build An Ethereum Mining Rig". The author, Daniel Oberhaus, claims that the increasing difficulty of mining Ether and the decreasing payoff, combined with the dramatic increase in interest in cryptocurrencies, has made it difficult for the average miner to break even on their investment.
If you focus only on Oberhaus’s thesis, prospects may sound grim, but it’s surely not the whole story.
For one thing, the price of Ethereum, like Bitcoin, has seen an almost constant increase, which means the Ether received from a successful mine, if harder to come by, will be worth much more. Some believe that the value is only going up from here, so those who mine and hold onto their coins now will be able to reap immense rewards as the value continues to rise.
Secondly, cryptocurrency does not only represent value. It also represents a philosophy. Mining is still a good place to start for those impassioned about the cultural and technological changes that cryptocurrencies are coming to represent. Mining serves an important role in the Blockchain. It is a key aspect of the social theory behind Blockchain, ensuring that control over the functionality of the network is shared democratically.
Thirdly, the death knell of crypto mining has been sounded before. Yet in recent years countless new miners have started rigs with a great deal of success. The money may not be as easy to come by as it was for the earliest adopters, but there is still plenty of money to be made as cryptocurrency blossoms into a mainstream phenomenon.
Note: If you want to start mining Ethereum, then you must know how to it works and what is Ethereum triple halving.
Takeaways
We are in the midst of an unprecedented increase in public interest in cryptocurrencies, which has led to a sharp rise in value for coins like Bitcoin and Ethereum. Ethereum is second only to Bitcoin in terms of market cap value. Buying Ethereum has already proven to be a remarkable investment for short-term gain. Time will tell whether Ethereum itself will be a long-term phenomenon. Given its multiple potential applications, most predictions are positive. Owning Ethereum by all means still looks like a viable long-term investment. However, mining Ethereum effectively requires time and investment. Increased interest also means increased competition for miners. We, therefore, recommend considering all the pros and cons and doing your due diligence before starting to mine Ethereum.
