For as long as it has existed, Ethereum has been a proof-of-work chain.
This has meant that Ether tokens have been paid out to miners based on the more processing power that they contribute to the system. For some, this has been immensely profitable. However, this is all about to change and the window to mine Ethereum is almost closed.
Ethereum’s Mining Difficulty
Ethereum’s hashrate has dropped dramatically over the last month. The sharp decrease in price, as well as the upcoming switch to proof-of-stake, means that mining Ethereum is the easiest it has been since December of last year.
However, this is the last chance that you have to mine Ethereum. Once the network switches to proof-of-stake, Ether will be released based on how many tokens an account has staked and mining will be a thing of the past.
With that in mind, we’re going to give you a quick rundown of how best to get into mining Ether.
How To Mine Ethereum
- Choose Your Approach
There are three different ways to mine Ethereum.
Firstly, you can join a pool. This is a collection of individuals that share an Ether they mine. The amount you received is proportional to how much processing power you contribute to the pool. As well as sharing, you will also need to pay a pool fees to the administrator for running the pool
You can also choose to mine solo. However, unless you own professional mining equipment, which can cost upwards of $10,000, you will rarely solve an Ethereum block and therefore you will seldom receive any rewards.
Finally, you can also cloud mine. Instead of owning and running mine equipment hardware yourself, you can instead rent other people’s processing power. This is a good way to avoid having to pay for costly mining equipment. However, you need to have trust in the institution that is providing processing power. Sse A reputable organization to ensure that money you pay is indeed spent on mining.
- Create An Ethereum Wallet
You will need an Ethereum wallet to store any of the rewards you receive. There are many different wallets on the market. Software wallets, like Metamask, can be downloaded to your computer for free. Meanwhile, hardware wallets like Ledger, which are more secure, can be purchased online.
- Prepare Your Rig/Choose Your Pool
If you’re mining solo, now is the time to get your hardware ready. You need a lot of processing power to do this, so several GPUs can be connected together to create one mining rig.
If however, you want to join a pool, now is the time to select which one. You need to consider the pool size, the payout, and the pool fee. There are many different pools to choose from including 2miners and Ethermine.
- Download Mining Software
Now you need to install Ethereum mining software. This will facilitate your rig adding processing power to the Ethereum networks.
- Collect Your Rewards
Once you’ve mined for some time, there’s nothing left to do but collect your rewards. Some pools will automatically collect your tokens for you, whereas some you will have to do it manually. Once collected, you can either sell them immediately or wait until the price of Ether rises again.
You can still make money from mining Ethereum, but time is running out. The final Merge to proof-of-stake is expected to occur at the end of the summer.
One last thing you have to consider, is that if you invest in mining equipment it will be more difficult to sell once Ethereum transitions to proof-of-stake, as there will be a lot less demand for mining equipment in the market.