Ether (ETH), the digital currency on the Ethereum blockchain, has grown to become the second largest cryptocurrency, commanding an aggregate market value of more than $2 billion – behind Bitcoin with a market cap of well more than $10 billion. While people may buy Ether in the open market (for around $225 per ETH currently), others may choose to “mine” for ETH by using their computer’s power to validate and confirm transactions on the Ethereum blockchain, in a process known as proof-of-work (PoW).
These ‘miners’ are rewarded with blocks of Ether – currently the reward is 5 ETH per block, and a block is expected to be found, on average, once every 12 seconds. Bitcoin miners can use specialized hardware known as ASIC chips to solve the mining algorithm, but Ethereum’s mining algorithm is purposefully ASIC-resistant, requiring computer memory as well as processing power.
Ethereum is quite difficult to get mining on personal Windows based computers – although with a bit of help and following the tutorials you can get it up and running and start your own ethereum mining project in an hour or so. You will need to download two programs and need to have a decent GPU (graphics card) with more than 1GB of memory to get the most bang for your buck in terms of mining as Ethereum works on a memory hard hashing technique which GPU’s are best at.
Running a CPU you might be able to generate 0.15 Mega Hashes whilst with a decent GPU with enough memory you could be doing upwards 25 Mega Hashes (used to measure computing power). So in terms of total efficiency, taking into account electrical costs, a GPU is definitely worth it even if it costs you upwards $200.
HOW TO MINE FOR ETHER DIRECTLY
While home bitcoin mining has become quite user-friendly, ether mining using the CPU or GPU on your computer is a bit more hands on. Here is a basic overview of the steps required:
Create an ether wallet. This can be done for free by downloading wallet software, or by creating one via a web wallet service such as myetherwallet. This wallet is your virtual ether account that holds your digital currency and where you can send and receive coins. Amy mining rewards you earn will go to this wallet.
The next thing you will need to do is download a program called Geth, which is program that talks to the Ethereum Network and serves as the relay between your computer’s hardware and the rest of the distributed network. When a block is mined by another computer, your Geth program will receive that information and update your copy of the blockchain. Geth comes zipped and is a command-line program with no windows or graphical user interface.
You will then have to download another piece of software to actually initiate and process the mining activity, known as Ethminer. This is also a command-line only program, and can only be started after you have downloaded and synchronized the entire Ethereum blockchain with Geth.
HOW TO MINE FOR ETHER INDIRECTLY
The easiest way to mine for ether is to do so indirectly, via ‘cloud mining services’ OR by using networks like Computta.com where they join forces with many other users to do necessary calculations on their computers and get cryptocurrency rewards. Computta’s Smart Miner application will actually do everything for you after a simple 2-click install. they will choose the best mining pools, best methods and even best and most profitable cryptocurrency to mine at any give moment, so you get the most reward possible from your device’s computing power. You will see your earnings in real time and can withdraw to your cryptocurrency wallet at any time.
With cloud mining you need to buy into a ‘contract’ to rent their datacenter’s computing power. Cloud mining contracts are generally long-term – 1-year or longer – and come at a fixed cost to the buyer, right now from $35 per MH/s of computing, or “hashing” power. Cloud mining service claim that in the (very) long-run it is profitable for users to rent their mining power. But we are yet to see any real users prove that.
Note that like Bitcoin mining, ETH mining profitability fluctuates based on Ethereum’s market price of course, as well as the mining difficulty, which is a function of how much aggregate mining power is on line.
BOTTOM LINE
If you are really good with your computer and basic programming skills and are ready to be overcoming continuous tech difficulties and hiccups you can try to setup your computer to mine for Ether directly.