Why Mine Ethereum?
Selling mined ETH is worth it in the long-run for the very simple fact that it earns you more than you spend on electricity*, as long as you use a GPU (graphics processing unit), rather than a regular processor, and you’re willing to opt for pool mining rather than doing it solo.
ETH can be sold for bitcoins (BTC), which can, in turn, be sold for cash or traded for goods. ETH itself can also be sold on sites like Bitfinex, Kraken or Coinbase. Mining enables you to enter the ether markets, which are highly volatile.
The Basics of the ETH Blockchain
As with other cryptocurrencies, such as Bitcoin, transactions in ETH are encapsulated in discrete blocks, much like the transactions sent over by banks. They happen every 15 seconds or so, and they can be identified by the variability in height, which peaks at the current block.
Mining means listening to the transactions that take place on the network and amassing the ones that are valid in terms of fees, codes and other data. To hash the blocks, you spend electricity through your GPU, and every successful hash contributes to a blockchain. You get 5 ETH per block, along with transaction fees, code-processing fees and bonuses for any uncles included (alternative blocks at the same height, but orphans).
The ETH price has been rising rapidly since January 2016, and the network hashrate has followed the trend closely. In fact, the hashrate has been rising at about the same rate, despite the fact that more and more Etherium rigs are being set up, which would logically lead to faster mining. The 15-second block time has been kept constant over the course of the past year due to the fact that the computational difficulty of solving these blocks has increased proportionally.
How to Calculate the Profitability of Ether Mining
To begin with, look for a reliable mining calculator with up-to-date ETH price, hashrate and block time. The netweork hashrate is measured in GH/s (Gigahash per second), which is equivalent to billions of calculations carried out per second.
Then copy the data into a more sophisticated calculator like Cryptowizzard. This will help you determine your profitability based on the electricity costs you set. The hashrate value needs to be converted from GH/s to MH/s (millions of calculations – not billions – per second).
Once you select the type of graphics card you’re using from the drop-down list or by entering your own data manually, move on to entering your electricity costs. You’ll find these on your utility bill. The calculator will then automatically reveal your daily mining costs.
You’ll then be able to calculate your monthly and yearly profit, but you should also subtract the cost of your hardware and your mining pool costs, including the 1 ETH pay-out fee.
Keep in mind that the price will fluctuate, and that ETH will eventually stop being mineable, when it switches from the Proof of Work to the Proof of Stake model. Also, GPUs depreciate in value, so you may not be able to recoup any of their cost by selling them when you’ve finished mining.
What You Need to Start Mining Ethereum
Before you set up your Ethereum mining rig, you’ll need to put together a list of hardware parts and then configure your software. Building the rig is similar to assembling a gaming computer out of parts, except you’d need six graphic cards supported by rising cables and a frame.
In other words, you’d need to find a 6 GPU motherboard with 6 Nvidia or AMD GPUs, a dual core CPU with 4 GB RAM, a riser cable 6-pack, a 6 GPU mining case, a solid-state drive (SSD) for the mining software, an operating system (Windows 10 or Eth OS, depending on graphic card compatibility), gold or platinum rated power supply and peripherals for the initial setup.
To set up the rig, you’ll need to:
- assemble the mining case;
- install the processor and the RAM memory on the motherboard;
- plug in the riser cables;
- insert the motherboard in the mining rig case;
- connect the motherboard PSU connector;
- plug in the hard-drive;
- connect the riser cables, fastening them to the case;
- connect the peripherals and any internet cables or Wi-Fi adapters;
- plug everything in;
- power up;
- install your operating system (to use an OS with mining software pre-installed, check out http://ethosdistro.com);
- start the mining software and adjust the settings as needed.
There you have it! Your Ethereum mining rig is up and running, and you can mine to your heart’s content.
*Correct as of July 2017