There have been cases where people have left their full-time jobs and sold off their property to mine for cryptocurrencies.
Before we proceed, let us quickly take a look at what Mining is -
Mining is basically the process of finding blocks on the blockchain making use of the computational power of the device you are using combined with electricity. Mining is the process of verifying and approving transactions on the blockchain. The reward that miners are given in exchange of doing this is that of Cryptocurrency tokens (Coins). In case of the Bitcoin Blockchain, the reward is Bitcoins. In case of the Ethereum Blockchain, the reward is Ether - the Ethereum Cryptocurrency token.
After the boom in the pricing of Bitcoins, a large number of people began to mine for them. However, after mining for some time, they realized that the process was at times slow and the hardware needed a lot of maintenance while the electricity consumed was a lot. They began looking for alternatives and this is how mining for Ether boomed.
Interestingly, one of the biggest differences between mining for Ether and Mining for Bitcoins is the fact that you can use dedicated mining hardware for Bitcoins but you cannot do that of Ether.
The Ethereum network ensures of an ‘ASIC Resistant’ Framework. This ensures that users cannot make use of a dedicated device to mine Ether. Unlike Bitcoins, which you can mine using ASICs - (Application Specific Integrated Circuits), you cannot do so for Ether. This has been done to keep the competition stable and that no one has an unfair advantage. Most of the mining for Ether is done over GPUs.
However, similar to how those with more investment capability can create better and bigger rigs for Bitcoin mining, those with a better investment capability can buy high-end GPUs and assemble a stronger rig than with those who don’t have that amount of investment power.
While Mining for Bitcoins using a regular CPU is not practical, Ether can be generated. However of late it has been rendered slow and no-productive too. Unlike Bitcoins which are no longer suitable for GPU mining, Ether is still being mined with the help of GPU based Rigs.
Convenience: Since mining for Ether does not involve high-end devices or hardware that might blow a hole in your pocket, it can be done easily and even at home. The energy requirements for mining for Ethereum are lower than that for mining for Bitcoins.
Profit: Because of the convenience in mining for Ether, it is also more profitable. There is some initial investment, but that is much lower compared to what you may require in the Bitcoins business. Moreover, Ether has shown a stable and sturdy growth in the markets. Having started 2017 at about $8, Ethereum touched its peak at $398 this year.
Mining for Ethereum is different yet similar to mining for Bitcoins. The only major difference being the fact that there are no dedicated hardware devices for this. The four basic elements that are needed to mine for Bitcoins are also needed when it comes to mining for Ether. You would need the following:
Ethereum Mining Hardware
Ethereum Mining Software
Ethereum Mining Pools
These are the same four components which were needed when it comes to mining for Bitcoins too. However while most of the process remains the same, there are slight technical differences when it comes to mining for Ether. Let us take a quick look at all four of them. This will give you a quick idea about the four components needed for mining Ethereum. We have dedicated chapters for all four where we will discuss in depth about each aspect of Mining Ethereum.
As we mentioned above, it is not possible to mine for Ethereum using ASICs. As of now you can only mine for it using CPUs and GPUs. CPU based mining used to be effective in the early days of Ethereum but as of now the mining difficulties have increased and you would need a rig comprised of GPUs to mine for Ether.
In order to choose the best GPU - you need to consider three things:
Performance (Hash Rate)
As a general rule of thumb when it comes to mining, AMD GPUs tend to outperform NVidia GPUs. The Graphic card that you choose should have a minimum of 3GB of RAM. While there are some NVidia cards that perform well too, AMD is usually the preference. We will take a detailed look at some of the best Graphic Cards for mining Ethereum when we move on to the chapter dealing with Ethereum Mining Hardware.
The second thing that you need when it comes to mining Ether is a place to store it - an Ethereum Wallet. These wallets are similar to Bitcoin wallets, but again with a few technical differences.
There are a number of ethereum wallets - they can be differentiated on the basis of Hot and Cold Wallets, similar to how we see it with Bitcoin wallets. Moreover, there are some wallets which require you to download the entire blockchain, some don’t. There are different categories and types of wallets but they all serve one common purpose in the end -
Wallets provide you with a space to store your Ether. They provide you with a public address which you can send to people so that they can pay you and you get a private key which acts as a password to your wallet.
Read More to know about a detailed comparison of the best Ethereum Wallets.
The third major component required when it comes to mining for Ether is that of Ethereum mining software. The software acts as a link between the hardware and the user. It gives you various statistics when it comes to mining and how hot the GPUs are.
Similar to the bitcoin mining software, there are a vast number of Ethereum Mining Software too. However one difference here is that it is not advised to mine for Ethereum over a Mac. There are a number of tools for Windows and Linux based PCs.
Here’s a detailed look at the best Ethereum Mining software.
You can use our Ethereum Mining Calculator to calculate profitability.
The final step in the process - once you have the hardware, software and the wallet ready, it is now the time to join an Ethereum Mining Pool. It is critical to join a pool because mining takes a lot of electric power and processing which is impossible to generate for a single user (Unless they have a room full of Graphic processors running for the sole purpose of Ethereum Mining which is impractical and costly).
Joining a Mining Pool is the only solution to get quick and timely returns based on the work you have done. Here’s a detailed look at the best ethereum mining pools.
Let’s Go Mining!
Once you have all four of these set up and ready, you can start mining. Start off your Ethereum Mining software, provide you pool’s address to the software, provide your wallet’s address to the pool and get going!