September 18, 2020 |James Messi
To simplify the concept, ethereum mining is a method by which one solves highly complex and advanced mathematical problems. Miners are of great importance as they dedicate an intensive amount of time and effort to solving mathematical problems in order to provide a consensus mechanism. This mining process works in a work-for-reward structure. After solving the problem, new ether will be added to the system, and the miner will automatically receive a virtual coin for the rendered service. Thus, miners are essential as they serve as the base on which the whole cryptographic network stands.
However, cryptocurrency mining is a tight competition since an increased number of miners will result in increased level of difficulty. This indicates that a long time, more advanced computational skills, and mathematical intelligence are required. To note, a higher volume of participants also entails a decline in reward’s value. However, ether still treads upward as it ever so consistently increases in value. And despite a large settlement of miners, participants still acquire competitive returns. This only denotes that the majority heavily view mining as a way of mutually supporting the system in return for substantial compensations.
A single cryptographic transaction leads to the development of another block. After this, miners will then try to solve this block composed of a math puzzle. Using a string of random characters called a hash, miners seek important metadata information in order to unbox and successfully mine the block. Once the hash comes in parallel with the current target, a successful mining process is confirmed. The transaction will be relied on across the network up for validation and archiving.
Generally, there are three available methodologies in order for one to participate in the mining process. These are:
- Pool mining
- Independent mining
- Online mining services
This type of mining is composed of numerous participants that work together. This came to be the most efficient and less-complicated method of mining as there is a collective effort from different individuals aimed at solving mathematical problems. Also, there is a collective consensus within a particular pool that if one gets the code, everyone will benefit from it. Note that pools are not definite and may vary according to rules. Thus, it is smart to do a review and assessment of a specific pool, including the size, the minimum payout, and the overall pool fee.
What makes pool mining an advantageous setup is the larger margin of profitability. As there is a combined force working to solve the formula, the less-complicated things will be, and the easier it is for the solution to be formulated. However, the only downside that pool mining poses is the dependence of share according to the number of participants. An increase in number entails a decrease in shares.
After knowing the setback of pool mining, one might want to resort to independent mining wherein returns aren’t shared, and gains can be enjoyed all to oneself. However, this poses a higher level of competition since it holds one against other miners or group of miners. Independent mining can only go well once an individual gets to solve the problem before other miners do. But if not, it will only lead to failed mining.
More often than not, individual miners don’t thrive well as they compete with large groups equipped with powerful resources. And stating the obvious, one can only go far without the help of advanced resources, including graphics cards and other equipment. More so, the utilization of such may clock in other problems, including high electricity charges, malfunctions, noise, and allocated space.
Online mining services
In this kind of setup, one pays for the services of other people. It compensates people that mine virtual coins only for them to redirect all the acquired rewards to those who pay for their service. This mining structure does not make any sense at all, nor project a solid rationale mainly because it brings out a series of arguments.
For one, an individual can straightly mine for themselves instead of acquiring profit in mining for others. Second note, they can directly allocate the money for equipment instead of paying someone. And lastly, an exchange is always an option if one wants a virtual coin. It questions why there is a need to complicate things and hire someone when they can straightly resort to exchanges should there be a need to possess a cryptocurrency.
Though this method is illogical, it poses several advantages, including unaccountability, once a mining equipment malfunction. In the event that a system crashes, one does not have to shoulder repair charges. More so, one is spared from the noise of large equipment.
The most important thing that mining requires is stable and secure hardware. This leaves miners with two choices to pick from:
- CPU- It stands for a Central Processing Unit or more commonly known as the processor of a computer or desktop.
- GPU- or Graphic Processing Unit comes in the form of graphic cards that function with optimum speed and solution.
Ideally, the latter works more efficiently, more secure, and more conducive compared to the former as CPUs don’t do much in raking profitability nor support the overall mining activity. In line with this, GPUs have a high level of processor that 200 CPUs are needed to outperform one base-level graphics processing unit.
Before purchasing a graphics card, one must need to assess and review the specifications of such including overall price, electric consumption, and the hash rate performance or the speed of mathematical calculations. If the hash rate of a single graphics card does not appeal much to the demand of a miner, a mining rig is a next resort that combines multiple graphic processing units to maximize the hash rate and provide a larger margin of profitability.
Next, after purchasing hardware, the software must be installed. The initial requirements of this process are the drivers that will modify the graphic cards. These drivers are often provided on the manufacturer’s official site or incorporated in the card itself.
After finishing such, one is now ready to join a network through node setup. This will require the miner to download the whole ethereum blockchain. After successfully downloading the entire archive of ethereum, the personal node can now be connected to the network. This step may be executed in different ways, and the most popular is the installation of Geth, Ethermine, or MinerGate. A confirmation will pop out, revealing that the installation is successful, and this indicates that an individual can now engage in any mining methodology of choice.
The growing traction that ethereum gains over time is just a manifestation that this virtual coin is continuously growing and becoming more and more popular. Recent postings have it that ethereum is set to unveil changes and developments in their system. This means that the protocol and the virtual coin are in the process of expansion with the promise of staying for long term. Thus, ethereum remains to be one of the most viable cryptocurrencies.