As a newbie in Ethereum mining, you may be unsure of where to get started. For instance, you might think it is all about increasing the circulation of ether. However, is this all it takes or there is more to it? If you have ever thought of mining Ethereum in 2022, the following step-by-step guide will be of great help. Please keep reading.
Read: 7 Things You Need to Know Before Investing in Cryptocurrency
Ether Mining; What Is It?
This is the process where miners solve cryptographic puzzles and add new blocks to the Ethereum network. Notably, there is competition in the whole process with a new block added every 15 seconds. The first miner to successfully solve the cryptographic puzzle is the first one to add a new block to the blockchain.
Additionally, a successful miner gets a reward, ether, (ETH) as compensation for all the work they have done. Currently, the reward is at 2 ether per block with all the priority fees the block contains.
Notably, Ethereum has modified its innovations and ideas from one of the veterans in the industry, Bitcoin. However, unlike Bitcoin which mines on ASIC (specialized mining hardware) entirely, Ethereum optimizes its mining with graphics processing units (GPUs).
How Much Does an Ether Miner Make?
As mentioned previously, miners get block rewards from the Ethereum blockchain. There has been a cut down on the number of Ether rewarded to miners. This is to counteract the possibility of inflation and loss of miners’ purchasing power which could result from continued ether supply into the market. In 2017, it reduced from 5 to 3. Currently, they receive 2 ether per block and it also includes the block’s priority fees.
How to Mine Ethereum
The following are the steps involved in Ethereum mining;
Step 1; Picking the Mining Approach
As an investor interested in mining Ethereum, you can take any of the following 3 approaches;
- Pool Mining
Just as the name suggests, this is where individuals join forces and mine as a group. It’s a simple and easy way of getting started with Ethereum mining. The miners have to agree on sharing the mining rewards depending on the given hash power after a participant solves the puzzle. Importantly, a miner should consider the size of the pool, the pool fee paid to the pool administrator for running the software, and the minimum payout before choosing a pool.
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- Solo Mining
Here, the miner does all the process on his own. If you like independence, this is an attractive approach. What’s more, unlike the pool mining with pool fee charges, you pay no fee here. Furthermore, you enjoy the mining rewards you get as there are no participants with whom to share.
However, you need several GPUs to increase your chances of solving the cryptographic puzzles within a reasonable timespan. Therefore, it suits mining professionals who have their mining firms. So, if you are a newbie, this may not be the best approach.
- Cloud Mining
When you don’t want to join a group, or mine on your own, cloud mining is here for you. You will pay someone else to get the process done. Therefore, you pay for another person’s computing power (labour) and let them do the work for you. This means you don’t have to own or run the mining hardware.
Remember, even though another person does the work, you get the rewards. However, a lot of trust is needed here, especially when it’s an online service. Therefore, to be on the safer side, only opt for a trusted cloud mining platform.
Step 2; Create a Wallet
Ethereum miners need Ethereum wallets to operate on the network. If you don’t have one already, you must create one for yourself. There are numerous options available in the market for you to choose from.
Step 3; Prepare the Hardware and Software
Since mining Ethereum relies heavily on computing power, you need a powerful GPU unit or several of them. Importantly, since you need efficiency, ensure you get the latest GPU version from your manufacturer.
Step 4; Install the Mining Software
The market contains different software for mining ether. Therefore, you can download the one you feel suits you best.
Read: How to Calculate Bitcoin Mining Profitability
Step 5; Choose a Mining Pool
This step is for individuals considering pool mining. As earlier mentioned, ensure you check the size of the pool, the fee, and the minimum payout before you settle on the one to belong to.
Step 6; Collect the Mining Rewards
Ethereum miners get mining rewards after some time of mining. If you pool mine, you can access an overview of your rewards from the pool’s webpage. Getting the rewards manually or automatically into your ether wallet is entirely dependent on your mining pool.
Should You Mine Ethereum?
This is one of the questions probably popping into your mind. Ethereum is a cryptocurrency that has seen growth over the years since its launch back in 2015. Initially, its prices were low, and those involved were crypto enthusiasts and developers who were optimistic about the project. Therefore, back in the days, it wasn’t such a profitable business.
However, thanks to the steady increase in Ether prices, more tech experts in the industry, and the availability of skills to run the blockchain, the story is different. You may be prompted to consider cryptocurrency. It can be a plus if you already have access to graphics processing units (GPUs) that haven’t been in use for some time but you want to make money from them.
However, the major downside of considering investing in Ethereum mining now has to do with the network’s expected to switch from proof-of-work (PoW) to Proof-of-service (PoS) in either Q2 or Q3 of 2022. This move can make it no longer profitable as it is expected to end soon. This would make Ethereum mining obsolete. Therefore, since you can already access Ether staking, you might consider Ethereum staking instead of mining. This way, you get staking rewards, not mining rewards.
As you think about whether to mine Ethereum or not, keep in mind that it is very competitive.
Conclusion
Ethereum mining involves a lot of work. the good thing is that there is a reward at the end of the day. The miners receive rewards, ether, which currently is at 2 with some priority fee. Also, there are three approaches one cat takes towards the process; pool mining, cloud mining, or solo mining. Importantly, the new approach of PoS may make Ethereum mining not a profitable business anymore.
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