Ethereum Mining: All You Need to Know

Ethereum (ETH) is an open-sourced and decentralized platform backed by blockchain technology designed by Vitalik Buterin, Gavin Wood, and Joseph Lubin. The decentralization refers to complete immunity from any outside interference and no control of any sort by any single authority. It is basically focussed at distributed applications (dApps) by facilitating smart contracts. Ethereum’s major innovation is Ethereum Virtual Machine, which enables anybody to run and participate in the programme. The person can participate irrespective of the programming language. This innovation has saved enough time and memory for stakeholders on Ethereum network. Ethereum network issues digital currency with the token name ETH, which is the 2nd largest crypto coin in the global market.


Cryptocurrencies are heavily dependent on the mining process. Mining is nothing but solving complex mathematical problems. The time and energy utilized for the solution work as the ‘proof of work’ for the Network. Ethereum network is also operated this way. It should be noted that the mining process is the force behind the creation of new Ether tokens as Ether tokens are distributed as rewards after completion of a proof of work task. But this process is not as simple as it seems. With many more miners joining in the network, the mathematical problems become tougher to solve and it ultimately needs more time and effort in the form of computational power.

Before going into the details of mining Ether, we must be aware of some basic and unique things about the Ethereum’s Blockchain Network. Many market experts draw a line stating the similarity between Ethereum’s blockchain and Bitcoin’s blockchain. But there are some fundamental differences between these two.


Block addition on Ethereum blockchain is faster than block addition on Bitcoin platform. On Bitcoin, blocks can be added every 10 minutes whereas a block on Ethereum blockchain is added in every 15 seconds. The credit should rest with Ethereum’s Ghost Protocol.


On Ethereum blockchain platform miners are rewarded with 3 ETH along with fees for code processing. This is known as GAS on Ethereum Network. There is also a possible bonus system on this network.

Internal Code-

Ethereum is one of the few crypto networks having its own Turing complete internal code. With enough time and computing power, anything can be calculated. Bitcoin lacks here.


For mining, a crypto network needs an efficient algorithm. Ethereum uses a hashing algorithm known as Ethash. On the other hand, Bitcoin relies on its own hashcash.


Ethereum’s Ethash is not supported by the special hashing hardware (ASIC) created by Bitcoin. Bitcoin’s creation is more inclined towards memory-hard algorithm, and Ethereum’s Ethash is basically best supported for GPU mining.

Requirements for Mining-

Mining Ethereum needs many perquisites like all other cryptocurrencies. Here are the details of the most important factors for making mining possible.


There are two kinds of hardware that can be used for mining Ethereum coins. One is the CPU (Central Processing Unit), and another one is GPU (Graphic Processing Unit). Mining through CPU means mining using your own PC or Laptop. And mining through GPU means mining after attaching an expensive external Graphic card. It should be noted that mining through GPU is more profitable as calculation becomes 200 times faster with Graphics card.

There are certain things which need to be kept in mind before getting a new Graphics card. These cards are expensive, and they are on the higher side as far as energy consumption is concerned. The GPU at the face also shows the value of hash rate performance; it means how fast the mathematical puzzles can be solved.


After choosing the right hardware, all you need to do is installing the right software. The perquisite drivers for the software can be found with the Graphics card itself. Once the software is installed, you will need to set up your node before connecting it to the network. Setting up the node will require downloading the entire Ethereum blockchain, which is more than 20 GB in size. Once your nod is connected with the network, you can start mining coins, deploy your own contracts, build decentralized apps and enforce transactions.


Many expert miners suggest setting up a private network before going for full fledge mining. It comes handy to understand the nitty and gritty of the network platform. The test network also helps to make you aware of the mining capabilities based on your hash rate. There is also an option to know your estimated earnings using the hash rate calculator. In the private test network, you will be the sole user. It implies that you only will be responsible for finding blocks, validating transactions and even executing contracts. As of now, this test network is done through a command line.


Once all the background works are done, you need to install the mining software, Ethminer. Ethminer is the software for Windows users. There are other variants for other OS users as well. This mining software helps the GPU or CPU working in a secure environment.

These are certain things which you will need before starting mining. But there should one natural question that having done all these, how you will get paid. We will try to explain this briefly.

Getting Paid-

The income from mining is heavily dependent on the hash rate of your computer. The more quickly your CPU or GPU can process the problem, the more income you will be entitled to. As per the rule, by successfully mining a block, one can win three ETH coins as a reward. Along with these ETH coins, one will be getting fees associated with the transaction. These fees work as a remunerative incentive for the miners to work more. The reward along with the fees gets credited to the Ethereum wallet instantly. There are multiple Ethereum profitability calculators which can give you a rough idea of the profit one can yield after investing huge on the GPU and electricity consumption.

Mining Pool-

Mining Ether on your own will be really tough or next to impossible. That is why people join a mining community to pool their power of computation for solving the puzzles. By pooling, the group can solve a greater number of puzzles that they could have conventionally alone. After mining, the profit is distributed amongst the miners as per their computational and power contribution.

Before joining the mining pools, one needs to be aware that the pooling community works on a changing mode. One needs to be always on his toes and be aware of all the happening to be there at the right community. There are some websites which provide this facility with different commission percentages. But joining a mining pool should be a cakewalk in comparison with the other tasks you have completed.


There are always clouds of doubts looming over the potential miners whether it is still profitable to dive into mining. It should be noted that the cost of mining is on the rise since its inception. But the case with Ethereum is a little different. The cost has slightly dropped in recent times, and the increasing value of ETH tokens has compensated the low rewards.

But the case is not going to be this simple forever. The crypto world is now subject to many big changes. Before investing such huge, one should be aware that Ethereum is planning to move the whole network from proof of work algorithm to a ‘proof of stake’ algorithm framework. This new framework will not need any new miners. Even some experts have said that the recent decrease in the reward has been done to give a hint of the paradigm shift about to happen in the near future.

David Cox

David is a finance graduate and crypto enthusiast. He projects his expertise in subjects like crypto and Blockchain while writing for CryptoNewsZ. Being from Finance background, he efficiently writes Price Analysis. Apart from writing, he actively nurtures hobbies like sports and movies.

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