Mining cryptocurrency is the core of the essential processes in the cryptocurrency industry. It is the responsibility of cryptocurrency miners to solve complex problems, generate computing power, and verify cryptocurrency transactions. This applies to cryptocurrency transactions done with Ethereum. Miners are also tasked with the responsibility of creating Ethereum tokens which are bought by investors who need the tokens. Working as an Ethereum miner comes with benefits. You will be paid for your work in Ether.
Mining Ethereum involves completing Proof of Work, PoW, tasks. These are processes that work with the hash functions, which is encrypted data created through an arbitrary input, or you could use the standard encryption option for your work. The hash function differs from the standard encryption option because the transaction is linear, which creates the need to match several input combinations if you want to determine the particular input used to generate the hash. Finding the input can be complex, especially if there have been changes in the data used.
Your job as an Ethereum miner requires completing PoW tasks, as mentioned earlier. This is done by selecting a list of hashes suitable for the process. Your job as a miner is to combine different parameters such as the block hash previously used to identify the most suitable hash according to the difficulty settings. Identifying hashes requires much energy; however, you have the choice to regulate energy requirement by increasing or lowering the difficulty settings.
Miners try multiple combinations per second. This task is organized by setting a hash rate. However, the race to determine suitable hashes creates competition among miners. When the number of miners working at a given time is high, you may experience more challenges in recreating the network for other parameters.
Why Ethereum mining is important
Miners are responsible for securing the network. So many investors trade Ethereum every day, which makes the job of miners essential. In addition to securing the network, miners also make a lot of money. For every block achieved by the miner, they get paid a reward, in addition to fees paid by people for transactions completed. Many Ethereum miners became rich during the financial boom in 2020, which also made Ethereum popular.
There are committed Ethereum miners who have dedicated their focus to securing the network rather than gaining profits. This is another reason why people decide to become miners. External investors who do not wish to invest directly can secure Ether from miners.
Also, in colder countries, miners have relied on the heat generated from computing systems to stay comfortable. The mining computers already consume much energy, generating huge bills, so the heat generated is an additional benefit to miners in countries with low temperatures.
Does the proof of stake process threaten Ethereum mining?
Ethereum miners have expressed worries about the rollout of the Ethereum 2.0 program, which involves the use of proof of stake. The proof of stake is a consensus algorithm that could reduce the need for many miners because it extends the time to receive rewards after investment. However, miners can continue using the PoW mining methods, which are still operational until 2023.
Miners do not need to be worried because the Ethereum 2.0 launch will not immediately stop the current mining methods. It is expected that there will be options for miners to continue working profitably, even after phase 2 is launched.
There is no certain date for the completion of Ethereum 2.0, which gives miners time to recover a large percentage of their investment.
How profitable is Ethereum mining?
Several factors must be considered before calculating the final profit from mining Ethereum. For example, the mining process involves huge energy consumption, which means your bill is higher.
To make a significant profit from mining, your income must be enough to sort out accrued bills such as energy consumption, feeding, and other essential expenses, leaving you with a profit after settling these bills. Miners have indicated that what they gain after comparing their profit and the capital is not very significant.
To make more money from mining Ethereum, you can consider migrating to a part of your country where electricity charges are lower. These are places with industries where electricity has been subsidized. Many professional miners have made this move, and it has been rewarding.
For beginners, you can start mining Ethereum from your home. You will need a consumer graphics card developed by AMD and NVidia. To determine the profits you could earn in your region. Please consider using any of the following calculators – Crypto Compare, Whattomine, and Miningbenchmark.net.
The calculators are programs designed to help you determine the profit you could earn after mining Ethereum for one day. The energy consumption of your devices should also be considered. For example, your computing setup should include computers and other necessary devices with low electric consumption ratings.
To get ahead as a miner, you need high performing mining software which determines your hashrate. After analyzing the computing systems, you need to use, and confirming your electricity consumption will not erode profits, you should focus on your hashrate next. You can get an estimate of your hashrate with applications such as Etherscan, which shows hashrate, block times, and your financial rewards. For Ethereum, the average block time is about fifteen seconds, and you stand the chance to earn 2 ETH for each block. The number of ETH blocks per day is 6,339.
You can earn so much money from mining Ethereum if you find a way to increase and maintain your hash rate. To get it right, you should ensure that the mining hardware you use works excellently.
Are there better alternatives to mining Ethereum?
The creators have made it quite easy to mine ETH. All you need is a consumer graphics processor and the mining hardware. It is different from the Bitcoin mining process, which requires special devices created for only mining Bitcoin. However, many miners argue that mining Bitcoin yields more consistent results because the devices designed for that purpose work more efficiently when compared to generic systems used to mine ETH.
There are ASICs for ETH and BTC. However, the ASICs for BTC is notably more effective than for ETH. The ASICs for ETH were launched in 2018. It is called Ethash, especially for mining ETH. Miners have been researching ways to make their processes devoid of ASICs. However, it is difficult to avoid the ASIC, which complements the ETH mining algorithm.
The FPGA is also an alternative for mining. It is an acronym for Field Programmable Gate Array. Using the FPGA gives you an option to permit configurations that are better than the GPUs for particular computing tasks.
While so many device options exist for mining ETH, it should be noted that not all these options can give good results. Many of the devices are not as effective as the GPUs, and they are expensive. New users may find it difficult to harness all the features of the devices, leading to a poor yield.
The ETH ASICs have been quite successful. However, there are limitations in practical use. Many miners claim that the ASICs are only suitable for mining ETH, and a few other coins that use a similar algorithm for hash rates. On the other hand, the GPUs can be used to mine a wide range of coins, and they have a significant lifespan, which means you can resell your GPU after using it for a while and it is then used for other tasks such as building PCs for gaming purposes. The difficulty in sourcing ASIC also discourages many miners who can hardly find affordable rates in the market. And when orders are placed, you may need to wait for a long time before it is delivered.
The issues stated above have made miners more focused on using GPUs, which are more flexible and delivers acceptable performances.
Challenges in finding good mining software
To enjoy your job as a miner, you need the best mining hardware. Your choice depends on three factors: the chances of getting high hash rates, energy consumption, and the price. The goal is to mine ETH and earn a significant profit. However, your goal may not be possible if you do not consider the factors above.
It is not advisable to spend so much money to buy mining hardware because you may need to replace it soon. These devices fail over time, even though the GPUs have a reputation for being durable. Some miners claim they had used their GPUs for up to five years before they experienced faults.
Another challenge miners face when using mining hardware is that their systems could become obsolete. Miners who rely on ASICs and GPUs with high power consumption will find it difficult to break even with profits after mining ETH. You should consider the potential ‘payback’ period for mining hardware before you start using it. The ‘payback’ period is the time it takes to earn your ROI after investing in mining software.
All miners should strive to calculate financial investments and rewards for mining ETH. This can be done with published financial parameters. However, it is a challenging task because the devices used for mining ETH yield different hash rates.
Also, calculations do not include the fees you have to pay while mining ETH, such as electricity bills.
The differences in results obtained while calculating potential financial profits when using different mining software could also be due to the period when the calculation parameters were created. If these parameters are created when the market is bullish, the results will be different if you use the calculators in a bearish market. Generally, many of the parameters for calculations are not dependable, and the fluctuation in mining revenue makes it difficult to predict the daily profits accurately consistently. To perform profitable mining activity, you should focus on reducing operating costs.
Here is some information about commonly used devices for profitable ETH mining.’
The A10 Pro ASIC
This is a good option for miners who need to lower energy bills. The system is energy efficient, and it does not require additional ASICs because they develop faults quickly and are expensive.
NVidia RTX 3080
This powerful system is excellent for beginners and professional miners who need a durable, low-energy system to perform progressive mining activities.
SQRL FK 33
This model is in the FPGA category. It is highly energy-efficient, and durable. However, you need to pay a lot of money to purchase it, which is a drawback. There are fairly used models for people who do not want to spend so much money.
You can get maximum value from mining without spending up to your budget if you go for the refurbished GPUs such as the AMD RX Vega 64, NVidia GTX 1060. However, there is no guarantee that your system will not fail in the nearest future.
Guidelines to setup your Ethereum mining farm
To get the best results, you should consider all the aspects of mining before setting up your mining farm. The high energy consumption of these farms presents a risk of fire outbreak. This should be your first concern when planning to set up a mining farm.
If you decide to start mining ETH at home, please avoid using systems that will put a strain on your power grid. Ensure that you get only computing devices that require power within the power grid threshold. Hire experienced contractors to inspect your home wiring system to evaluate whether your mining activities can be safely done.
Take steps to protect your computing devices from a power surges. You can avoid power surges with special electric gadgets. Also, buy the best power supply equipment to be installed in your home.
Mining farms that feature GPUs and FPGA devices will need to meet the standards for mining ETH. These standards include providing the requirements for key hardware, high-quality motherboards such as Asrock X370 Pro BTC+, and the Gigabyte GA B250 Fintech. These motherboards have been particularly designed for mining cryptocurrency. Your motherboard should have features that can accommodate as many as 14 GPUs effectively.
To get excellent results and a better mining experience, you should ensure your motherboard is backed by sufficient RAM. Your RAM should be as high as 8 gigabytes, and you can get up to 16 gigabytes for more power. Also, your storage space should not be lower than 256 GB. Mining ETH requires a lot of memory usage, and you will need up to 4GB for every GPU in your mining farm. There is a way to achieve high mining performance without compromising performance. You can use a page file caching system to permanently store data on more affordable storage systems. However, this system requires a GPU with up to 6GB to accommodate increment in the DAG that supports the Ethash algorithm.
DAG is an acronym for Direct Acyclic Graph. It is a vast dataset needed to compute hashes while mining ETH. Your mining software must be able to store the DAG data, which increases at the rate of 1GB every two years when you mine ETH. It is expected that the 6GB cards may become difficult to use by the end of 2024, while, currently, you cannot use the devices with 4GB storage.
CPU system for mining
You may not need to invest much money on the central processing unit for your mining farm since it has no impact on the GPU mining process. Instead, focus on getting a suitable adapter to connect your GPU to the motherboard. Also, create enough space in-between the devices to promote the circulation of air.
Choosing your operating system
You can achieve good results with Windows and Linux operating systems. However, if you choose to mine ETH with Linux systems, you need to create a channel for extra command-line interactions. Also, features of your GPU such as the memory settings, clock speed, and power consumption need to be optimized.
As a beginner, you can start your experience in mining ETH by becoming a member of a mining pool. These groups welcome new members and create an opportunity to help you earn regular income while mining ETH. To participate in these pools, you need to have mining software such as Ethminer, Phoenix, and Claymore. Some mining pools include F2Pool, Sparkpool, and Nanopool.
It is essential that you perform routine cleaning on all devices in your mining farm. Clean computing devices work better, without clogs of dust in the system. With the information above, you can begin the process of creating your mining farm. However, please note that you may need to make additions or tweaks as you proceed because new methods are introduced every day, which could be more effective for you.