In the previous chapter, we explained how bitcoin mining works. We explained that bitcoin miners buy ultra-powerful, specialized computers. They run bitcoin mining software on their computers, leave their computers running, then generate a small amount of bitcoin every few days.
In this chapter, we’re explaining everything you need to know about Ethereum mining, including how Ethereum mining works, how it’s different from bitcoin mining, and how you can start mining Ethereum today using any ordinary PC.
How Does Ethereum Mining Work?
Ethereum, like bitcoin, uses the proof of work (PoW) consensus mechanism. At the most basic level, this means Ethereum, like bitcoin, requires significant computer processing power to verify transactions. That means the Ethereum mining process is very similar to bitcoin mining: people run Ethereum mining software on their computers, and that software uses the computer’s processing power to verify transactions while cryptographically securing the Ethereum network.
Ethereum miners, like bitcoin miners, use their computer’s GPUs to mine the blockchain. However, as you’ll learn below, there are several major differences between the two mineable cryptocurrencies.
What’s the Difference Between Ethereum and Bitcoin Mining?
The first and most obvious difference between mining Ethereum and mining bitcoin is the reward. Instead of earning bitcoin as a reward, Ethereum miners earn Ether, or ETH. Ether is the digital token fueling the Ethereum network. It’s also important to note that the total supply of ETH is indefinite. Unlike bitcoin, there’s no cap of 21 million tokens. ETH will be emitted every year as long as miners continue to mine ETH.
Another difference is the fact that you can use dedicated mining hardware to mine bitcoins – but you can’t use dedicated mining hardware to mine Ether. That’s because Ethereum is built with an “ASIC Resistant Framework”. This prevents users from using Application Specific Integrated Circuits (ASICs) to dominate the Ethereum mining space. Ethereum did this on purpose to ensure no miners had an unfair advantage. We’ve seen bitcoin mining power concentrated in the hands of a few people with bitcoin. Ethereum wanted to avoid that problem.
Of course, someone with a higher-end GPU or multi-GPU configuration is inevitably going to mine more ETH than someone using a laptop or low-end rig. As mentioned above, the vast majority of Ethereum mining, like original bitcoin mining, is performed using GPUs.
Another major difference is the fact that Ethereum mining continues to be accessible for hobby miners. If you have a high-end gaming PC, then you should be able to generate a small profit with Ethereum mining. Bitcoin mining via your GPU is virtually impossible today. With Ethereum, it’s still accessible.
What You Need to Mine Ethereum
If you want to start mining Ethereum, then you’ll need the same basic supplies as you would when mining bitcoin, including all of the following:
- Ethereum mining hardware (i.e. a PC with a strong graphics card or GPU)
- Ethereum mining software
- An Ethereum wallet
- An Ethereum mining pool
All of these things can easily be found or purchased.
Ethereum Mining Hardware
Ethereum mining hardware isn’t like bitcoin mining hardware. You don’t need to purchase special ASICs like the Antminer S9. Instead, you can simply buy a high-powered PC with a strong GPU.
Ideally, your GPU has at least 3GB of RAM. When it comes to GPUs, you have two basic options: Nvidia or AMD. AMD tends to be the preferred choice for Ethereum miners.
Beyond the AMD versus Nvidia debate, you can compare GPUs based on performance (their hashrate), power consumption, and price.
We’ll explain more in our Ethereum mining hardware chapter.
Ethereum Mining Software
Ethereum mining software is the connection between the hardware and the user. The software performs the actual mining process using your hardware. You can also use the software to get valuable statistics on your mining operation – like your GPU temperature.
Just like with bitcoin mining software, there are plenty of Ethereum mining software options available. You can download Ethereum mining software for Windows or Linux.
There’s nothing stopping you from downloading Ethereum mining software on your Mac. However, you’ll find that Ethereum mining is very inefficient even on high-end Macs. That’s why you’ll rarely see anyone mining Ethereum outside of Linux and Microsoft setups.
An Ethereum Wallet
You’ll need to setup an Ethereum wallet to begin mining Ethereum. We explained more details about Ethereum wallets in our previous chapter. However, suffice to say that there are plenty of different Ethereum wallets from which to choose, including MyEtherWallet, Mist, and others.
Your wallet allows you to store your Ether – including any Ether you’ve mined.
Ethereum Mining Pools
Like bitcoin, Ethereum has become virtually impossible for individual miners to mine. That’s why most Ethereum miners join a mining pool.
Like other pools, an Ethereum pool will distribute mining profits based on your contribution to the pool. The more processing power (hashrate) you contribute to the pool, the greater your reward will be.
A quick Google Search for Ethereum mining pools will reveal hundreds of options. Enter your pool details into your Ethereum mining software, then start mining Ethereum.
That’s it! Once you’ve got these four components, you can begin mining Ethereum.