Ethereum is in the middle of a mining conundrum. Right now it’s a proof-of-work (PoW) crypto, but the main developers are creating a proof-of-stake (PoS) protocol, so Ethereum can transition to a staking system.
But, that transition will take a long time and Ethereum will be a mineable cryptocurrency for at least a few more years. And anyone wanting to mine the second most popular crypto can do so.
What’s more, with new protocol updates looking more likely, it seems like Ethereum will become a lot more popular with the mining public.
What Is Mining?
Mining is basically a computer that works alongside thousands of other mining computers, all working to validate transactions on the Ethereum blockchain.
They all hash transactions into a block before competing against each other, when they then try to be the first to solve a cryptographic puzzle in an attempt to win the ETH block reward.
The block reward is 2 ETH for every block added, and each block is added roughly every 12 seconds. All transaction fees and code-processing fees are also rewarded to miners. The transaction fee on Ethereum is known as Gas, but it’s essentially ETH and miners are paid out in ETH.
Ethereum Mining Hardware
Although the Ethereum mining algorithm Ethhash was designed to be ASIC resistant, there are ASIC mining rigs now that mine ETH, and they are more competitive than their GPU counterparts.
An ASICs mining rig is the most powerful computing machine that’s designed especially for mining certain cryptocurrencies. So an ETH ASICs mining rig is designed to mine ETH only.
ASICs mining rigs are easier to get started, they use less electricity and generate higher hashpower than GPUs, but they cost more money than if you were to set up your own GPU mining rig.
However, investing a lot of money in an ETH ASICs rig, could turn out to be a bad investment, as there’s an ongoing debate about the democratization of mining ETH, and the Ethereum core devs are looking into limiting the influence ASICs can have.
ProgPow To Democratize ETH Mining
There is serious debate going on among the Ethereum main developers, and it should be announced in the coming months that Ethereum will implement to the ProgPow algorithm.
ProgPow is an extension to the Ethash algorithm, and when it’s introduced it will reduce the mining efficiency of specialized hardware like ASICs mining rigs over less powerful devices like GPUs.
This has split opinion among many in the crypto space. One side says it should be left alone, and that if the main devs interfere, it shows how centralized Ethereum is. Whereas, the other side would like ProgPow integrated, so it will allow anyone with a GPU to be competitive.
Basically, ProgPow rules out domination by the bigger mining companies, and gives anyone a chance of mining ETH.
Building your own GPU mining rig isn’t too difficult, either, and is much cheaper than buying expensive ASICs rigs. And of course, your ASICs rig will not have an advantage anyway, so investing in a GPU mining rig is the best way if you’re wanting to mine Ethereum.
What is the Best GPU for Mining Ethereum?
There’s not much difference in the hashrate of each GPU per
- Radeon R9 295X2 is probably the best ROI, and has an excellent cooling system, but the drawback is that it’s pretty expensive.
- AMD Radeon RX 480 is the most cost efficient of the Radeons and will give you an excellent ROI, even if your daily return will be less.
- Geforce GTX 1080 Ti is next-gen mining according to the manufacturers. It has an excellent cooling system and is probably the quietest GPU. Although the ROI will be less than the above Radeons.
- For an excellent and in-depth review on Best Ethereum GPU Mining Hardware
- For an excellent step-by-step guide on How to Build a GPU Mining Rig
Is Mining ETH profitable?
The main thing about mining profitability is the price of ETH. Of course this fluctuates and is down quite a bit from its all time high, but prices will go back up.
Well, you’ll want to build a rig with at least 4-6 graphics cards, and it will probably cost you a minimum of $2500. So your initial outlay is quite high.
Other things you need to consider when working out if mining Ethereum is profitable, is the electricity costs in your jurisdiction. Of course, they vary around the world, so before you purchase your GPU rig, try and work out how much it would cost to run the amount of GPU you want.
Cost of Running a 6 GPU Mining Rig
The amount of electricity a mining rig uses is based on all the components used to build it. GPUs are responsible for the lion’s share of the electricity consumption, however.
All GPUs consume different amounts of power, but the average is about 130W. So, if you have 6 GPUs, you’re going to use about 780W. The rest of the set up including the CPU, motherboard, cooling fans etcetera will draw about 70W.
That’s a total of 850W an hour, so obviously it depends on the price of electricity in your location.
Mining profitability calculators are decent for working it out, but they can never be accurate, because the hashrate will always differ, but it will give you a rough guide to how much you might earn.
Once you have your mining rig ready, you need to download the mining software and join a mining pool.
As a solo miner, you’re highly unlikely to be able to mine and earn ETH, so joining a mining pool is necessary. With a mining pool, you’re pooling all your hashpower together with thousands of others will give you a better chance of earning ETH.
The one you choose depends on your personal choice. Some of them are better for mining at a higher hashrate, such as Claymore and CG Miner, whereas pools like WinETH are probably the easiest GUI for any beginner. Then there’s Minergate, which allows you to mine different cryptocurrencies, and will tell you which is most profitbale at any given time.
Profits in the pools are paid out differently, so check which best suits you, but you will be paid out proportionally. Meaning, if you’re mining with 6 GPUs efficiently, and someone else is mining with 2, you will earn 3 times more ETH than the other miner.
Different mining pools have different payout structures, and charge less or more for certain things, like a percentage fee. It’s always important to do some research when deciding which mining pool to join, as we all have different preferences.
Ethereum will evolve to a PoS consensus mechanism in the future, but for now it’s a minable cryptocurrency. The profitablility depends on a few things, but is a very popular cryptocurrency to mine.
With the Bitcoin halvening almost upon us even more people will be priced out of mining BTC. And with Ethereum making mining even more democratic with the introduction of ProgPow, ETH will become a much more attractive proposition to the GPU miner.
Your choice of software and mining pools is that: your choice. Some are easier to work with, some are better for running at a higher hashrate, while others are more versatile. Always do some research and discover what suits you best.
Mining can be technical, but it’s not as difficult as it seems. There are many great articles and videos on the Internet, and you will learn how you go on, and the only to really learn is to start mining.
Author: Tommy Limpitlaw