It’s hard to ignore the business of mining Ethereum when you are bombarded with news of ordinary individuals making good passive income from it. How do you start, and what do you need to mine Etherium profitably? Here is a quick and easy guide to everything you need to know about ETH mining.
What Is Ethereum Mining?
Ethereum is a blockchain technology that powers digital money like Ether, global payments, and several decentralized applications. Like in other cryptocurrencies powered by blockchain, the transactions are not managed by any central authority. Therefore, the Ethereum network requires dedicated computers around the world to verify the transactions and maintain an updated spreadsheet.
That is where Ethereum mining comes in. Ethereum mining involves using a normal computer or dedicated computer hardware to solve complex puzzles that ensure transactions are safe and uniform across the network of computers.
Miners get a reward for solving complex puzzles. While you can run the mining software on your normal computer, it’s hard to mine profitably due to mining costs. Those who mine ETH profitably usually purchase dedicated mining computer hardware.
The costs of Ethereum mining include:
- Capital for purchasing hardware for a mining rig
- Electrical costs
- Equipment that supports mining, such as ventilation tools and noise cancellation
- Flat fee (if you’re mining in a pool)
Mining Approaches for ETH
Some of the ways you can approach ETH mining include:
- Solo mining — You wil be doing the mining by yourself and may require heavy capital to start and maintain
- Pool mining — You combine your computing power to mine in less time and split the rewards based on power contribution
- Cloud mining — You pay an established miner who has the appropriate mining hardware an upfront fee to mine on your behalf. It’s the quickest way to start mining, but you must also be aware of potential scammers who can take the payment and run
The mining approach you opt for will determine the hardware and software you need to start mining. You’ll typically need:
- A computer or dedicated mining rig
- An Ethereum mining operating system
- GPU drivers
- Wallet
Once you set up your mining operations, your equipment will do the work for you, and you can receive your rewards in your wallet.
