Ethereum Mining: How It Works

By MintDice on Altcoin Academy

How Does Ethereum Mining Work?

  • Miners run a block’s header metadata (which is different for every block) through a hash function which subsequently returns a string of numbers. This string is typically scrambled and fixed in length. All that changes is the nonce value, and this directly affects the resulting hash value.
  • When a miner finds a hash that matches the current puzzle answer, they are rewarded in ETH and allowed to broadcast the mined block across the network for every node to validate separately while adding it to the version of the blockchain they have stored. This process is fast and only takes a few seconds. As soon as one miner finds the correct hash, other miners abandon that block and begin working on a separate block.
  • Where Ethereum mining is concerned, it is difficult for a miner to cheat the system and initiate double spending. The blockchain cannot be corrupted without tipping off all the others. The only way around the Proof-of-Work method is to do the necessary work, and at the end, block with the most work done is chosen.
  • A miner finds a new block every 12 seconds on average. If anything threatens this set time, the difficulty of the puzzle adjusts, to ensure that the process falls within the appointed time. This difficult adjustment either makes the process of finding a hash value slower or faster.
  • Mining profitability mostly depends on luck and the amount of hash power a node has. The ETH earned by miners is gradually distributed within the markets and contributes to the sustenance of the coin.
  • Ethereum is currently in the process of transitioning from a Proof-of-Work system to a Proof-of-Stake one. A PoS system will allow users to benefit from using smaller, and more affordable devices such as GPUs.

Ethereum’s Move to Proof-of Stake

Tools for Ethereum Mining

Benefits of Mining Ethereum

  • Ethereum can be mined at home, as a full-time job or something on the side. It takes very little time and has fewer users and thus, fewer miners than the Bitcoin network. This reduces the amount of competition on the network and increases a miner’s odds of mining the next block.
  • The platform offers security and immutability.
  • Miners get the opportunity to secure a platform which has many different decentralized apps on it. This exposes them to more projects that they can potentially benefit from, depending on how strict their mining constraints are.
  • There is currently speculation among investors that Ethereum will rise in value again over the next few years. If this happens, miners will be able to earn more in the form of block rewards. For example, right now, the value of 1 ETH is about $120. If the block reward is 5 ETH, that translates into $600. However, in a case where 1 ETH is $500, the same reward becomes $2,500.

Final Thoughts



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