Dennis Y.Tue, Aug 10, 2021 3:00 PM
Minefield: What Does Ethereum Mining Before 2.0 Look Like
In the next article in this series on mining, we talk about ETH mining: pools, solo, rigs, hardware, and software. Also, we remind you about Ethereum mining calculators and talk about profitability. Let's dig deeper.
What is cryptocurrency Ethereum mining?
As you remember, mining is the process of making a blockchain run on the Proof of Work (PoW) algorithm. Such blockchains are Bitcoin, Ethereum, Dogecoin, and many other cryptosystems. In mining, the network is maintained using the processing power of video cards or ASICs. Holders of such systems are rewarded for each transaction made.
The highest reward will go to the miner with the highest processing power, leading to an "arms race”, high power consumption, and a shortage of new video cards on the market.
In the upcoming months, Ethereum will complete the transition to Proof-of-Stake (proof of ownership or staking) instead of the Proof-of-work or mining method previously used, which required video cards and miners. Because of this, mining is associated with high anti-ecological energy consumption. This is why mining has been criticized by Elon Musk and his followers.
The Ethereum Foundation declared in its main blog that changing from mining to staking will reduce the energy expenses of all transactions managed by the blockchain by 99%.
The staking model depends on the number of cryptocurrency coins in a special user account and, unlike mining, does not require large computing power. Users are rewarded in proportion to the share of the cryptocurrency coins belonging to that participant from the total number of coins.
Today, most cryptocurrencies use the PoW method, and some use both (PoW and PoS) at once.
Digiconomist appraises that Ethereum miners burn about 55.44 TWh each year.
Ethereum mining consumed approximately 125.11 kWh per transaction, which was slightly more than the average American family consumed in four days.
The ways to mine Ethereum
- Ethereum cloud mining and other ways
How to solo mine Ethereum
To mine Ethereum, you need a Mining Rig. Its main components include a power supply, motherboard, operating system, memory (RAM), and video card (GPU). And nice cooling, for sure (as long as Ethereum hasn't switched to PoS).
Here you can find a good video about how to build the best Ethereum mining rig.
What about the influence of the Ethereum mining model on GPU shortage?
The interesting fact is that NVIDIA announced the limitation of Ethereum mining abilities on the new GeForce RTX 3080, RTX 3070, and RTX 3060 Ti graphics cards (which can be considered as the best cards for Ethereum mining today) just a day before the Ethereum Foundation’s declaration.
Yet, no doubt, nor NVIDIA's limitation nor Ethereum's transition to the new model will influence the lack of video cards. All things considered, most cryptocurrencies actually utilize the PoW algorithm and miners just need to switch to mining another digital currency. But the prohibition of mining in China had a tangible impact on the appearance of a huge number of used video cards on the market.
Best Ethereum mining pools
Here is a chart of pools distribution, according to ETC.BTC.сom — Top Miners by Blocks (24h).
Other ways to mine ETH
Ethereum cloud mining
You have to be careful here. There are many fraudulent projects in this area. About 93,000 users paid for 172 non-working Android applications for cloud cryptocurrency mining. This was reported by Lookout specialists.
How to mine Ethereum with NiceHash
In addition, the way of mining through NiceHash has been known for a long time. NiceHash was founded in 2014 and is currently the world's largest broker of crypto-mining capacity and provider of Ethereum mining software. The easiest way is through NiceHash QuickMiner.
That is how NiceHash ecosystem workflow looks like:
Ethereum mining profitability and Ethereum mining calculator
The main profitability factors of mining fully apply to Ether as well. We have analyzed them here.
Traditionally, there are a lot of mining calculators, and we have talked about them in the first parts of our reviews. Here are just a few examples:
Ethereum mining is one of the most well-known mining areas. With a good understanding of the processes, it's really profitable and promising. In the following articles, we will talk about the specifics of mining other cryptocurrencies.