With the Ethereum price USD chart rising by 5.62%, it seems like the time to build an Ethereum mining rig is now. As of 2019, cryptocurrency mining is celebrating its tenth year of existence, further cementing its relevance and viability in the eyes of investors.
Today, crypto mining is no longer the fad people once thought it was, yet it is still not the most popular practice. However, the concept of mining cryptocurrency using high-end computer hardware has made its way into mainstream consciousness after a decade of testing.
If you need more proof, look no further than the scarcity of AMD and Nvidia graphics cards and the pricing inflation that has affected retailers worldwide. You may not be aware that crypto mining technology is not only limited to the graphics cards consumers use.
It has become known to many tech aficionados that there are now PC games that have a crypto-mining function. These mining games allow users to mine digital currency while away from their computers and use it to purchase new games.
There are even new mobile games reminiscent of Pokemon Go on app stores where you can hunt for cryptocurrency outdoors. While mining games are a fun way to earn digital currency, real money comes from Ether mining.
Ether Mining Explained
Similar to Bitcoin, Ethereum is a decentralized blockchain with its own network, which receives updates and verification from its participants. Mining Ethereum is the only method to add new blocks to the blockchain.
The term “mining” comes from the borrowed analogy of its physical counterpart, which is the extraction of precious metals or minerals from the ground. This process typically takes a tremendous amount of surveying, labor, and energy costs.
Similarly, mining for Ethereum requires computer systems scattered across the world wide web to solve cryptographic puzzles at the price of energy and processing power. The miner who is the first to succeed in solving these cryptographic puzzles can add a new block to the blockchain.
In return for their effort, the miner receives ether or ETH as their reward. These rewards function as compensation to the miner for network security, transaction verifications, and adding new blocks into the blockchain.
Ethereum Miner Earning Potential
What differentiates Ethereum from Bitcoin is that it was initially an inflationary currency by design, with the supply of either never being fixed. Because of that, the Ether supply grows annually through the block rewards used to pay miners.
Despite the increase in supply, a steady inflow of digital currency into circulation would gradually pressure its price. That is why some investors fear that ether might constantly inflate and lose purchasing power as time passes, similar to the fate of fiat currencies.
Because of this concerning situation, Ethereum made block reward cuts from five ether to three either per block in 2017 as a countermeasure. By 2019, the block rewards received another reward cut from three ether to two ether per block.
It was not until 2021 that Ethereum deployed an update that spelled a fundamental change in the digital currency’s tokenomics. The update stated that miners could receive two ether and all priority fees the block contained. However, the base fees users paid were burned by the network. As a result, ether has the potential to become a deflationary currency.
The adequate earnings for ether miners ultimately depend on hardware cost, the provided hash rate, and the price of electricity. If you need to calculate your profit potential, mining calculators can assist you by analyzing your specs.
Ethereum Mining 101
Setting up a mining rig can be exciting for most investors looking to make passive income through digital currency. However, most users do not know how to set up the actual rig in an organized manner to avoid mistakes. Here are the steps to setting up your own ether mining rig.
Step 1: Select and understand your mining approach
Before purchasing the hardware and setting up the actual mining rig, you must establish your mining approach. Ether mining has three different methods: pool mining, solo mining, and cloud mining.
Ether mining in a pool is the quickest and most straightforward way to start among the three mining approaches. It involves collaboration with other ether miners. All miners joining the collection agree on which members are responsible for solving the cryptographic puzzles.
They must then reach a consensus on how the rewards will be split among them in accordance with the hash power provided. The pool’s size, measured in hash power, dictates the average number of blocks the group finds.
Ether mining on your own seems like the better alternative to pool mining. For starters, there are no pool fees to pay, and the miner does not need to share the rewards. However, solo mining requires a massive number of GPUs to realistically solve one cryptographic puzzle within a reasonable timeframe.
For that reason alone, solo mining is typically for professional miners with the resources and knowledge to run mining farms independently.
Cloud mining means paying another person to mine the digital currency for you. Instead of purchasing and operating the mining hardware, you rent another person’s computing power and hire them to run the mining operation.
Step 2: Create a wallet for your ether
If you do not already have a wallet to secure your ether, you must create one. Luckily, plenty of cryptocurrency wallets are available to you on the market. The two most popular digital currency wallets are Trust wallet and MetaMask.
Step 3: Step up your mining hardware
As mentioned, mining takes a tremendous amount of computing power to make a profit. Right off the bat, an efficiently functioning Ethereum mining rig requires at least one powerful GPU. The typical mining rigs today connect to several GPUs to pump out more ether in a shorter amount of time.
It is also critical that mining rig GPUs have the latest updates installed to work at maximum capacity. That is especially vital if the GPU manufacturers are Nvidia or AMD.
Step 4: Install your mining software
There are various types of software specifically designed for mining ether. Before installing any of them, ensure that you conduct meticulous research on each to determine what works best for you.
The most popular Ethereum mining software available in the market are Go Ethereum, Cudo Miner, and Ethermine.
Risks versus Rewards
Almost anyone can start their own Ethereum mining operation. The only question is whether it will spell profit or loss for the miner. Following the steps in this guide boosts your chances of maximizing profits.
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