Ethereum is a form of open-source blockchain protocol. It utilizes smart contracts that enable other decentralized applications (Dapps) to be built upon the Ethereum blockchain. Ether is the cryptocurrency given to miners who verify transactions and create new blocks. This process is what maintains the Ethereum blockchain.
The Ethereum blockchain utilizes “gas” for internal transactions within the Ethereum network. This “gas” is considered the transaction fuel that gives miners an incentive to include a particular transaction in a block.
While there are countless cryptocurrencies, Ethereum is one of just a few that uses a Proof-of-Work mechanism that can be mined with ordinary GPU power. However, if you plan on mining Ethereum, you need to give careful consideration to doing a solo mine, pool mine, or cloud mine. For most, pool mine or cloud mine may be the best way to go. Of course, there is a lot to consider with regards to mining for ETH.
Currently, Ethereum uses the Ethash Proof-of-Work consensus mechanism. With Ethash 1.0, it’s difficult to use ASIC chips. Meanwhile, there have been proposals made to move Ethereum to a Proof-of-Stake mechanism. This was actually outlined in its original Yellow paper. In the long run, Ethereum will likely move to a fully Proof-of-Stake mechanism, and it’s important to understand that this will no longer be mineable.
Ethereum Mining Requirements
Of course, there is still time to mine Ethereum if you have the right hardware. Now may be the perfect time to mine ETH, as its price potential means there is a great opportunity to turn a profit on it compared to other cryptocurrencies. GPUs remain the best way to mine Ethereum. However, this has caused the demand for GPUs to increase, and naturally, the price of them has also risen.
Mining Ethereum currently requires a graphics card with at least 3GB of VRAM. However, later in 2018, you will need 4GB of VRAM in order to mine Ethereum. You will also need a reliable Internet connection and power supply, a Powered riser cable for each card, an open-air rig for multiple GPUs, and a motherboard with enough PCIe inputs to build a multiple GPU rig.
There are also rumors of several prominent companies like Samsung and Bitmain releasing new ASIC miners during the second quarter of 2018. If these ASIC miners have more hashing power than GPUs, it could make the latter obsolete.
In the meantime, cloud mining is something worth exploring if you have trustworthy pools. Looking at peer reviews is usually the best way to see if any particular pool is reliable. Without a reputable pool, you risk the mining operation shutting down or not receiving payments, so do your due diligence before jumping into anything.
Also, keep in mind that software can be almost as important as hardware when mining Ethereum. Specific software has been created to work with different types of hardware, so you need to mind software that’s compatible in order to get the most out of your mining efforts. With GPUs, software to reduce temperature and your overall energy use are vital. An MSI Afterburner is one option to help accomplish this.
For software that’s easy to setup, consider Claymore’s mining software. With this software, you’ll be able to mine two coins at once, potentially enhancing your profits. You’ll also need an ETH Wallet in order to receive your ETH rewards. A desktop wallet could work if you don’t think you’ll hold onto a large volume of coins at anyone time. Otherwise, a hardware wallet like a Trezor or Nano S would be suitable.
Difficulty Of Mining Ether
Of course, before you start mining Ethereum, you should be aware that the difficulty of doing so has grown over the last year or so. This is a direct result of Ethereum’s growth over that time and the fact that it will likely continue to be a significant force in the cryptocurrency community. Right now, mining with GPUs can be a profitable endeavor, in large part because of its potential to rise in price in the future. However, with the changes that are afoot, you may be best off if you have an ASIC miner.