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How to Mine Ethereum? Why you should really mine Ethereum?
Listed below are few reasons why you should really mine Ethereum
The terms which are bolded in the above cases need further explanation for the beginners in the cryptocurrency. We can begin from the Ethereum blockchain; which is the circulated digital ledger which we really mine.
Read on: How does Ethereum work?
First of all, let’s start with a short introduction. Ethereum is a very popular cryptocurrency that is based on a software which runs on a network of computers. The way transactions in crypyocurrencies, including Ethereum and Bitcoin, work is by being stored into blocks. The way to understand these blocks better is by comparing them to the mass of transactions used by the banks, which are sent between them. The only notable difference would be that when it comes to Ethereum, these transactions are made about each 15 seconds. The way we identify blocks generally is using their “height”. This height starts with 0 and goes up until it eventually reaches the current block.
Moving on, you might have also heard about the term ‘mining’ which is associated with cryptocurrencies, and it’s no different when we’re talking about Ethereum. This term is related to the mining of precious metals, such as gold for example, which in their first version are scarce. The same principle applies to Ethereum too.
How does mining Ethereum help anyway?
Mining is actually very important, because firstly, it is the only way to actually increase the total volume of the Ethereum. Then, it’s also really useful because it helps secure the network. So by mining Ether, in this case, you’d secure the network which means that the computation would be verified.
There is a specific way in which the process of mining helps to create, verify and then record the blocks. Firstly, it is typical for miners to listen for all transactions on the network, gathering everything they think it’s valid into blocks (taking into consideration the code, fees and the accounting history of those who control different coins).
Secondly, miners use their GPUs (namely their processing power) in order to utilize electricity hashing the block. The unique Proof of Work (PoW) proves that a miner worked on a specific block. That is what is called a successful hash result.
Moving on to the third part, when the hashed block is considered valid by the network, then the block is immediately into the permanent consensus when it comes down to all valid transactions. This is called the blockchain.
Last but not least, the miner is given 5 ETH, along with the transaction & code-processing costs, known as gas, that is apart of the their block. They may also receive a bonus in the situation that they include any uncle.
These two use a different algorithm for their hashing, which means that Ethereum is not compatible with the hardware that is specially created for hashing and is called ASIC, that was specially developed for the mining of the Bitcoin. Ethash is the name that was given to algorithm used for Ethereum. This is called a memory-hard algorithm. While it is perfectly suited for GPU mining, this algorithm is made to be against the development of the ASICs and resist it.
The total network hashrate has taken a major dip when the news about the DAO crisis came out, however ever since then it has quickly recovered and it’s been raising very quick since Q2 2016. Etherscan’s chart can be used to find out more:
There are many people asking a rather tough question: given the fact that there’s more and more hardware that is specially designed for Ethereum mining, what is the reason why the blocks are not being mined quicker, and the average of 15 seconds for each block hasn’t actually decreased?
That is because of the difficulty. Each Ethereum blockchain has the ability to keep its 15 second intervals, by adjusting the computational difficulty. It’s important to note that the difficulty and the hashrate and closely related;
Now that we have a much better understanding and knowledge about the Ethereum blockchain, along with other important notions such as the difficulty, we are finally able to do some calculations:
The first thing to check out is the Etherscan Mining Calculator, which is really useful whenever we want to check the updated current prices, block time and hashrates (which have their measurement unit in Gigahash per second, or GH/s; this means billions of calculators per second).
Then, secondly, we’ll make use of the Cryptowizzard Mining Calculator, where we’ll copy our previous figures into. This is an improved calculator which gives us the ability to set other important factors such as the electricity costs. These are also very important, even critical, whenever we calculate the profitability. The downside of this calculator however is that it does not retrieve all the needed information for us automatically (such as the price, hashrate, block time), but instead we’ll have to paste those into the calculator by ourselves.
Moving on, we get to choose the Graphics card that will be used for mining. There’s no need to worry about the hashrate, along with the power consumption, because the calculator will handle all that and it will enter the correct values for them. In case the current graphics card which you use is not on the list, or it has modified performance, then the values will need to be entered manually, by choosing the ‘Custom’ option beforehand. Another important thing to keep in mind when doing this is that the GPU hashrates which you have to write in are calculated in Megahash per second (MH/s), which means that there are millions of calculations being done per second.
The last step includes entering the electricity price, perhaps by using your previous bills, or by using specific existing lists. Then, the results will appear.
So let’s consider an example where we get 109 ETH per year. Selling it at the current price, after the electricity costs have been taken out, the profit would be $1045.
And from that profit, we will still need to take out even more for additional costs: they include mining pool costs (this is usually around 1% + the payout of 1 ETH), the price of a Radeon HD 7990 (this would cost around $700). Moreover, a new Power Supply Unit (abbreviated as PSU) which runs the hardware may be needed, depending on the desired setup. Even though a PSU which is electrically-efficient may cost more at first, it still is a good investment because it saves money on power costs in the long run.
Warning regarding the profitability
One thing to consider is the difficulty which is probably going to continue on the already existing rising trend, with possible spikes whenever newer and better GPUs are released, with an extremely unpredictable price. There is a certain possibility for issues regarding the price if the market doesn’t agree with the solution adopted by Ethereum to the ongoing DAO crisis. Moreover, Ethereum is also going to switch the model it uses to Proof of Stake, which is going to make it no longer mineable. There isn’t a set date for this as of yet, though.
It is actually heavily recommended that before putting any large amounts of money into this cryptocurrency, everyone should do research regarding Ethereum’s prospects, because they will give a better insight on the future of it. Once the GPUs are done doing their job mining Ethereum, they can be used for mining different coins. Reselling them isn’t exactly an option because their prices rapidly go down (this is mostly true for GPUs which are used for mining).
Tips for choosing the best GPU Hardware
The most important aspects to look for in a perfect GPU are the price performance and the power performance. A very important thing to remember is that the NVidia cards are being outperformed by AMD cards, when it comes to the mining of cryptocurrencies.
The requirements for a card are minimum 2 GB of RAM, otherwise it won’t have the ability to mine Ethereum.
Important tips: looking into the option of the AMD R9 and others in this range, especially the HD 7950 that is already available. Getting it from gamers instead of miners is the best idea, and it’s even better if it comes with a warranty too.
AMD have already announced that they are going to introduce a new 14 nm (nanometers) RX 480 card, with an incredible price of $200. The dimension of this card gives it a very good performance and alsoa lower power consumption. It is believed that the RX 480 will become the new best card to be used for Ethereum mining.
Even more great news is that because of AMD’s anticipation of very high sales, they will produce a high quantity of such cards, which means that it will be available at a pretty decent price as soon as it is released.
The best idea right now is to wait for this card’s performance testing to be out to the public before buying any other cards.
Getting the latest Geth application (‘go-ethereum’) is advisable because it lets you, along with your miner interact with the rest of the Ethereum network, although you need to know some things about the command line interface, and this also requires some knowledge in the programming field.
However, if you prefer not to have anything to do with the command line, then you should download Mist. A simple Ethereum wallet, along with a browser that can be used for various different things (messaging, etc.) is contained into this package.
Regardless of the method which you prefer, you will must wait until the blockchain is done downloading and being synced. Then you’re ready to start mining!
If you are a miner with just a graphical user interface (GUI), then you should go for the Aleth One mining software. After you install it, you’ll need to wait around 10 minutes while the miner sets about “building a DAG.”
The setting up of the pool mining is the next step. The solo-mining isn’t likely to make you any Ethereum. At least not unless you can afford many GPUs.
Assuming you don’t know too much about Ethereum mining and you’re just interested into mining from your PC, we will make an assumption that you are running a Windows machine, so we will talk about mining this currency on Windows.
If you want to buy many GPUs and run them from just one controller, then you should probably do so by using the Linux and its command line. The environment on Linux is much better than on any other operating system, when it comes to apps regarding the mining and monitoring of the cryptocurrency.
The Microsoft Visual C++ is the first thing which you will need to have installed. This is available on Microsoft’s website, where you can choose between different versions, depending if you have a 32 bit or a 64 bit system.
It would be a good idea to keep in mind that the 64 bit version is recommended, since with the other one you may be experiencing many different errors while mining.
Assuming that you don’t have the necessary knowledge about the command line, which is known as the ‘DOS mode’, then once again it’s better if you download Mist, which has a friendly and very simple to use user interface.
Important things contained into the Mist package include the Ethereum wallet (here you get any profits you might make from mining, the Ethereum browser which has great functionality. On this browser you will find many tips and tutorials which you can make great use of. If you experience any problems with this, you can always ask someone, and you’ll get help in just about no time!
After you’ve done the previous two steps, now it’s time to wait while the Ethereum blockchain is being downloaded and synced. This process is probably going to take quite a while, given that it’s over 10 GB.
Once the process is completed, you should probably take a couple of minutes at least to look over the app and get familiar with it. It’s interface is very simple and easy to be understood, so you shouldn’t have too much trouble.
Moving on, next on our list is the opening of the Ethereum wallet, and the creation of a new account, along with a wallet based on a contract.
Since Mist also contains Geth, which is a known and quite often preferred command line interface. There is also the option to only get the latest Geth app, which can perform everything that Mist can(and not only) using its command line. Moving on to Geth, which stands for ‘go-ethereum’, allows you, along with your miner to interact much easier with the rest of the Ethereum network, however this app certainly requires some knowledge in the field of programming. This is usually not used by new people, but instead by those who are more experienced. The better you get at Ethereum mining & coding, the more useful this app will prove to be for you.
Now depending on which GPU hardware you currently have, you will need to go to either AMD or Nvidia, in order to download the latest file from there.
If you’re not an advanced and very experienced miner, and you’re instead just a simple one with a GUI, then mining software called AlethOne is probably your best bet. You can download it for both Windows and Mac. This app runs in relation to the Visual C++ Redistributable Packages that should’ve been installed by now. An important thing to note here is that 32 bit systems are likely to have issues running the AlethOne app.
Once the installation is completed, you will get to the part where you need to wait around 10 minutes until the DAG is being built. What exactly is this DAG? The DAG is basically a 1GB+ data file which is stored in the GPU’s RAM. This makes the algorithm become memory-hard (which makes it resistant against ASIC).
As soon as the DAG is completed, you should try solo-mining in AlethOne, in order to make sure that everything runs as it should!
This next and last step includes the setup of a pool mining. This is recommended because you are quite unlikely to make any money using the solo-mining, unless you have lots of GPUs which you can use at the same time. Then, you will get to select an Ethereum mining pool, out of which Nanopool is a great idea, although there are plenty of pools to choose from.
Read on: How can you use Ethereum?
6 October 2017
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