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How To Mine The Gold Of The Crypto World- Mining Ethereum

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10 Apr 2022
4 min read
TWN In-Focus

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Cryptocurrencies are often referred to as the new age gold, and just like gold, even they require mining. Hence this blog will discuss how can you mine one of the most popular cryptocurrencies Ethereum, and how can you earn a profit by considering this business. #TWN

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What is Ethereum?

Before getting into how to mine Ethereum, let’s first understand what it actually is. Ethereum is a platform that is based on blockchain technology and is used known for its native cryptocurrency, ether. Ethereum network aims to enable decentralized apps, which will include a marketplace for NFTs.

Transactions are done through this platform and other platforms following the same concept, are distributed publicly, and do not require a central authority for governance. The Ethereum network needs a brilliant computer system to verify every transaction batch, known as blocks, and the chain of these blocks is known as the blockchain.

What is Crypto Mining, and who are Crypto Miners?

Miners are individuals who use the computing power of specific hardware in order to solve complex digital puzzles. Along with allowing the network to function, this process also protects the network from hacking and malware. Miners receive a transaction fee for every successful mine.

How To Mine Ethereum?

The Ethereum network uses an incentive model called proof of stake (POS). If you are interested in exploring Ethereum Mining, here is a blueprint you can follow:

Mining Approach

There are three mining approaches for Ethereum mining:

  • Solo mining
  • Pool mining
  • Cloud mining

Pool mining is the most direct approach to mining ether, especially for those who don’t possess much hardware. It is because; mining Ethereum has become much more difficult and consumes a lot of time nowadays as a lot of coins have entered circulation. In pool mining, a lot of miners work together to solve Ethereum blocks in less time, which eventually results in rewards. The reward is distributed among the group based on the number of efforts.

Solo mining, as the name suggests, is mining done by an individual all by himself. To solve puzzles in a limited time, a miner requires a farm of mining rigs which requires power from dozens of graphics cards. Well, if you went on this route, you will require a lot of financial and spatial implications. The equipment itself will cost you thousands and ten thousand of dollars and don’t forget the cost of ventilation, electricity, physical space, etc. Solo is not preferred if you are a beginner as it requires a significant capital investment. 

Cloud Mining is considered to be the easiest way to enter the mining world as in this type of mining you hire a professional miner to do the work for you. However, this type of mining contains a lot of risks as you fall victim to scams and frauds, as miners might run away with the money you pay them upfront.

Open a crypto wallet

Although cryptocurrency is digital and doesn't have to worry about losing them but still, you require something to stow your holdings, and here comes the role of crypto wallets. Crypto wallets store your coins just like bank stores your money for you. There are two types of wallets: Software wallets and Hardware wallets.

Hardware wallets are physical devices like a hard drive, which are often referred to as “cold wallets.” They store the crypto account’s private keys stored

Software wallets are digital platforms that are utilized to store your crypto. Generally, they require an internet connection. These wallets are capable of providing both public and private keys.

Arrange the required software and hardware

Before you start to mine, you will be required to set up your infrastructure. Mining crypto requires a lot of power from computing. You require a very strong computer known as a “rig”- if you want to earn profit by mining ether. Your hardware setup completely depends upon the mining method you choose.

If you want to do pool mining, you will require:

  • A computer with one or more GPUs.
  • An Ethereum mining operating system. These vary from person to person, depending upon the terms of functionality and operating system.
  • GPU drivers to enable communication between your graphic card and operating system.
  • A wallet, which may be in a physical or digital form to store your awards.

On the other hand, if want to do hardcore mining and pursue the solo mining path, you will have to arrange a very expensive setup, and you will also require a great physical space. Always Keep in mind solo miners have to manage everything on their own and, hence, you will be required to invest a lot at the beginning, but in the long term, solo mining can earn you tons of dollars.

Choose a Mining Pool

If you want to save tens and thousands of dollars, go for mining pools. But it’s still a concern for wanna be miners to review their pool before moving forward. Pools come in all shapes and sizes, Ethermine has more than 400,000 active miners, but this is not the only pool available in the market. You can use PoolWatch to compare Ethereum mining pools.

The following factors can be the basis of your comparison:-

  • Pool Size
  • Minimum Payout
  • Payout Method
  • Fees

Reap your rewards

Time for all the hard work to pay off. Once all the mining operations are done and, you have configured a wallet, you can start collecting ether. Let’s assume you are a member of a mining pool, you will receive payouts based on the success rate of you or your group. Most of the mining pools have dashboards that can be assessed by the miners to measure their performance i.e., their efficiency and yield.

Tips for Mining Ethereum 

Though Ethereum is a popular cryptocurrency, there are some pros and cons which require to be paid attention. This platform has made its reputation mostly because of the development of its NFTa marketplace, and that is the reason why NFT has grabbed the attention of both miners and investors. But if you want to bet on the future of NFT, investing in NFT is best recommended rather than mining it.

It is important to be updated about the Ethereum protocols. Although Ethereum is not a centralized platform, its developer still updates its mechanics frequently, which may impact your profitability.