Table of Contents
WHAT IS ETHEREUM MINING 5
WHY DO PEOPLE MINE ETHEREUM? 6
GETTING STARTED MINING 10
WHAT HARDWARE IS NEEDED? 10
WHAT SOFTWARE IS NEEDED? 15
MINING APPS 18
ELECTRICAL COSTS FOR MINING 20
HOW TO SET UP AN ETHEREUM MINING OPERATION 21
HOW TO CALCULATE ETHEREUM MINING PROFITS 23
OTHER ETHEREUM MINING OPTIONS 25
CLOUD MINING 25
MINING POOLS 26
RISKS AND REWARDS OF ETHEREUM MINING 28
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Why do people mine Ethereum?
As the trend of Ethereum mining gathers momentum, more and more people have decided to join the bandwagon of miners and claim their stake in the cryptocurrency boom for Ethereum. In 2017, the value of the Ethereum (ETH) currency increased over 13,000%, and it is still climbing.
Just as BTC can be easily sold for cash, mining Ethereum is a good way to earn some cash for yourself. You can sell your ETH directly on major exchanges like Bitfinex, Kraken, Coinbase, BTC-e, and Gemini. Asides from its potentially astronomical profit generating capabilities, there are several other reasons why people mine Ethereum.
Also, and as earlier pointed out, Ethereum was introduced to improve upon Bitcoin by offering smart contract features. That reason, however, is just a tip of the iceberg. There is a very high likelihood of Ethereum switching from its current Proof of Work mining phase to a Proof of Stake. Therefore, mining ETH and building on your coins now can give you interest on your holdings in the event Ethereum switches to a Proof of Stake. Mining is like the glue that holds Ethereum’s decentralized app store together, making sure that it adapts to each change effected to any of the applications (dapps) running on the network. Mining works to verify and validate transactions with the Ethereum network.
One other major reason is that, while Bitcoin was introduced with the objective to disrupt PayPal and online banking, Ethereum was introduced with the goal of using blockchain to substitute for internet third parties. This includes those that store data, transfer mortgages, and monitors complex financial instruments.
Ethereum is currently being traded for Bitcoins (BTC), and it provides a cheap way to gradually build up a holding position in Bitcoin. If Ethereum is able to continue on this constant growth path, it is set to become the aspired ‘world computer.’ This means that it would decentralize and as some would assert, democratize the existing client-server model.
For example, it is obvious that the services provided by apps in your app store are currently being governed by third parties as to the specific apps that you’re able to download. However, if the concept for which Ethereum was created fully materializes, the control of the data in those apps and the creative rights would go back to the author, thus eliminating the need for third parties.
Another reason why people mine Ethereum is that while the Bitcoin blockchain is used to track the ownership of the cryptocurrency, Ethereum is more concerned about running the programming code of any decentralized application. The creator of the Apache Web Server, Brian Behlendorf, recently argued that the internet from the onset was always meant to be decentralized. There have been movements for this cause around using new tools, and that includes blockchain technology, to help achieve this goal. Ethereum is one of the latest tools that have subscribed to this vision and is actively pushing for the decentralization of the internet.
Some people also mine Ethereum to gain a cheap entry ticket into the Ethereum markets. Traders love the Ethereum markets for its high volatility. If you play your cards right or perhaps if you’re fortunate enough, you can maximize your profits. You can also leverage on mining to subsidize acquiring a new, high-end GPU (or more even).
Another noteworthy characteristic of the Ethereum platform and why people mine it is because of its guarantee of longevity. The majority of Bitcoins have already been mined as of today. However, it is estimated that by the year 2021, only half of Ethereum coins would have been mined. This singular factor ensures the longevity of the Ethereum platform and is enough reason why people choose to mine Ethereum over Bitcoin and other cryptocurrencies.
Also, even though mining Ethereum today may be unprofitable, people continue to mine it because they believe that Ethereum will be worth more in the future. Ethers are currently worth around $300-$350, but in 5 years’ time, there’s a belief in the possibility that they might be worth $3000-$3500.
Ethereum also has a reasonable block time and uses the Ghost protocol. This simply means that its transactions are faster and are completed much quicker than Bitcoin’s. Miners get to enjoy more flexibility with Ethereum, courtesy of the Turing complete internal code, with which you can calculate practically anything provided there’s sufficient time and power. Bitcoin, on the other hand, does not offer its miners this incredible functionality.
Finally, mining provides the appropriate avenue for you to lend your support and gain a voice in the Ethereum network. The failure of the Decentralized Autonomous Organization (DAO) and the skepticism surrounding the viability of Ethereum’s approach can be further dismissed if you believe in the Ethereum concept and this can be easily achieved through mining.
Getting Started Mining
What hardware is needed?
Before you get started mining Ethereum, you need to choose your desired mining hardware which you will dedicate to full-time mining. By making use of properly functioning and highly efficient Ethereum mining hardware, you will significantly reduce your electricity bills and cut down on your operating costs.
It is important to note, however, that before you acquire mining hardware, you first need to have an Ethereum mining software, an Ethereum hardware wallet such as the Ledger Nano S for securely storing your Ether, and an Ether mining pool to join. Not only that, you also need to bear in mind that Ethereum mining incurs a lot of setup costs and requires some technical knowledge to properly get things going. That being said, you will also need to brush up on your knowledge of which manufacturer you should purchase your Ethereum mining hardware from. The two major Ethereum mining hardware manufacturers you should consider are AMD and Nvidia.
AMD cards were initially the torchbearers at the beginning of GPU mining, especially in terms of performance. However, recent models of Nvidia cards like for example, the Titan range have taken over the scene, matching and even outstripping AMD cards for their performance strength.Other Details
- 10 Articles (PDF)
- 1 Ebook (PDF), 31 Pages
- Posters, Infographic, Checklist, Mini Report
- Year Released/Circulated: 2018
- File Size: 4,788 KB
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