Ethereum is the hit new cryptocurrency that is making a massive splash in the decentralized currency space by its innovative implementation of the blockchain for use in autonomous smart contracts. In the future, we’ll probably see entire computer networks run solely by participation with the Ethereum blockchain, and a lot of people are scrambling to get in on the ground level.
But how can you get involved with Ethereum firsthand and start being an Ethereum miner to generate profits yourself? First, you’ll need to understand Ethereum itself, then understand mining, and finally, put everything together to start cashing in your Ether on the blockchain.
In this article, we’ll walk you through everything about Ethereum, with an emphasis on setting up your mining operations and teaching you how to mine Ethereum. Ethereum has a reputation for being hard to mine for non-technical people, but with our guide, you shouldn’t have a problem.
What Exactly Is Ethereum Mining?
Ethereum mining is the process by which you create new Ethereum using the computational power of your computer. If you’re wondering about the specifics of how to mine Ethereum, the operation looks a bit like this:
- You buy a video card that has a high hash rate
- You install Ethereum mining software onto your computer
- You connect your computer to the mining pool of your choice
- Your computer creates hashes, attempting to find one particular hash that fits Ethereum’s algorithmic requirement
- Now you’re mining Ethereum!
We’re going to go even deeper into the specifics later on in this article, but now you have a brief overview: mining Ethereum is making your computer create hashes in an attempt to earn a dollop of Ethereum.
Like every cryptocurrency, Ethereum asks the users of the protocol to submit hashes and check which hash meets the protocol’s algorithmic requirements for success. Once a hash is successful, the user’s computer submits it to the blockchain, which broadcasts to everyone that a successful hash is here, and then distributes the cryptocurrency to the user whose computer found it.
Also like most cryptocurrencies, successful hashes are a proof of work, meaning that it’s impossible for a hash to form that isn’t by a user’s computer executing the task of hashing. The difficulty to produce a single hash rises over time, giving Ethereum greater value.
Eventually, Ethereum plans to move to a “proof of stake” system rather than a proof of work system when hashing becomes too difficult. At that point, the new software will be implemented to ensure that the blockchain can continue to operate in the same way as before.
Benefits of Mining
Mining Ethereum has some benefits which might not be obvious if you’re unfamiliar with it in the context of the cryptocurrency scene. It’s possible to profitably mine Ethererum, though it may be difficult for casual users.
Ethereum can be bought or sold for USD currently, but that’s not the main reason for mining, at present. Instead, users who mine Ethereum are posturing themselves with hoards of Ether for the period shortly when Ethereum is used as a currency for the computer to computer relations via smart contracts.
Smart contracts can be enforced via the blockchain, and go as far as to have entire programs which run based off of the exchange of Ether without any human interaction whatsoever. Smart contracts mean that Ethereum will likely become the currency used for decentralized autonomous corporations (DACs) which are self-regulating and completely independent of human employees.
Ethereum Blockchain Basics
The Ethereum blockchain is special because it’s more than a simple ledger of events: it’s a Turing-complete platform for executing programs using the currency of Ethereum. Ethereum is both a cryptocurrency and a programming language for smart contracts, which means that its blockchain is extremely sophisticated.
You should learn as much as you can about the Ethereum blockchain before setting up your mining rig, as its iteration and updating occur differently than with other cryptocurrencies. Importantly, as shown in the split between Ethereum and “Ethereum Classic” the Ethereum protocol has been extremely forthcoming about hard forking in the event of a major hack or attack on the protocol.
This means that you need to stay up to date on what’s going on with the Ethereum blockchain if you want to have any hope of mining profitably in the long term. At a minimum, you should develop an opinion on whether certain forks would be worthwhile, or whether certain adverse events should be allowed to happen so long as the protocol itself functions.
Be sure to only mine on the blockchain that is the dominant Ethereum blockchain. When in doubt in the case of a fork, go with the majority. Going with the majority means that you’re more likely to retain your accumulated Ethereum and that you’re more likely to survive without making any major changes to your mining process afterward.
You can get the basic stats on the Ethereum blockchain here; the most important statistics on that page are the difficulty, total hash rate, and current rate of block issuance. As time goes by, the global hash rate will rise, as will the difficulty. The rate of block issuance will likely become shorter, although that’s a matter to be decided by those who have a large stake in the protocol.
In general, these matters will heavily impact anyone who is mining Ethereum for a few reasons. First, if a large portion of the mining network suddenly drops out (perhaps due to a regional failure of internet infrastructure), your contribution to the total is much larger, meaning that you’ll get more rewards within your mining pool, for a time.
Second, the rate of difficulty is a way of determining what scale of enterprise can be a profitable mining venture. A higher rate of difficulty uptick means that larger players will be scrambling to replace their hardware fast enough to stay profitable, whereas a lower rate of difficulty uptick means that casual miners can have some time mining profitably with equipment that they already own.
Finally, the block issue rate is only of direct interest to miners because it denotes the rate at which Ethereum deposits into your wallet after mining.
What You Need To Get Started
Now that you’re familiar with the bare bones of Ethereum let’s talk shop about how to mine Ethereum. Like with all cryptocurrency mining, you’ll need:
- A lot of GPUs
- A lot of power supplies
- At least one motherboard with at minimum 4 GB of RAM installed
- A way to discharge heat from the mining area
- Physical space
- Ways of organizing wires
- Time to setup and organize wires and mining units
- A little bit of technical skill
- A lot of patience
You need these things in proportion to how serious of a mining operation you’re trying to set up. If you just want to do some casual mining with your only PC, you’ll probably only need to improve your heat discharge.
If you’re looking to setup a full blown mining center, you should probably rent out some new space and think about purchasing server racks, too.
Remember, the costs of mining scale a bit unpredictably. If you have a huge mining center with 500 GPUs, you may not recoup your investment if the difficulty of mining jumps upward sooner than expected as a result of your contribution to the protocol’s hash rate.
Likewise, if you make a small mining rig with only a few GPUs, you may be able to produce a small amount of profit reliably for quite some time, though it will diminish slowly if difficulty ramps up slowly. It’s very hard to predict where the price of Ethereum will be in a year, so make several projections before you decide what scale to buy equipment.
The Ethereum Mining Process
If you’re creating a new mining rig, you’ll need to figure out which GPU is the best to buy. There are guides which can help you make this decision, but you should be familiar with the basic idea first.
Mining Ethereum occurs by creating hashes based off of the output of your GPU. Newer and more powerful GPUs will have higher hash rates and may be more profitable to mine with—assuming that their power consumption isn’t too high.
Profitable hardware is hardware which can deliver you with a high hash rate without consuming so much power or generate so much heat that they offset the profit of their output with the cost of their upkeep.
Think of setting up a mining rig as a small business: you need to make sure the pieces of capital that you buy to produce Ethereum are going to be able to pay for themselves after a set period, given the current price of Ethereum and the amount of money that you’ll have to invest up front and in maintenance costs.
Purchasing the right GPU can be hard to predict because of how frequently the difficulty of mining Ethereum changes, but in general, more expensive cards will deliver you with a higher hash rate, and some of the more expensive cards can use power more efficiently, too.
You should also purchase good power supplies that are capable of feeding as many GPUs as you plan on connecting. The power supplies need to be as efficient as possible, too.
Setting Up The Parts
Plugging in all of the GPUs, power supplies, and other paraphernalia into a central motherboard or bank of computers will take some time, but it’s the next step. Be sure to setup any cooling infrastructure that you have like fans or liquid cooling rigs so that the heat flows away from the parts generating the most heat—the GPUs.
Most at-home miners settle for fans which blow hot air out of the mining room and into other rooms or outside. In wintertime, opening the windows of your mining room is probably a good idea to reduce the wear and tear on your mining infrastructure.
Download The Right Software
Once the guts of your mining system are set up, it’s time to get the software portion of the operation into working order.
Make a folder somewhere on your computer which will hold all of your Ethereum related files. Next, it’s time to download the programs which will let you mine.
Geth relays information between the Ethereum network and your computer to synchronize the blockchain. Ethminer uses your GPU drivers to their maximum ability to hash, performing the act of mining. Lastly, the wallet is the location that your Ether is dropped into after mining is complete.
Be sure to update your graphics drivers to the best version for mining, which is typically not the latest. For nVidia drivers, version 347.52 is the commonly suggested version. For AMD, version 15.12 or 15.11 will do better than others.
Creating A New Account
Open up your command line interface, and navigate it to your Ethereum folder. Then, type geth account new. Press enter. “Geth account new” signals to Geth that you’re ready to sync with the blockchain and that you want a new account.
Geth will prompt you to enter a password, so invent one for yourself and don’t forget. Geth will then give you your address and your cryptographic keys, which are necessary for proof of work and also transfer.
Now, it’s time to create your actual wallet file. Run the wallet executable program, and it will start to synchronize with the Ethereum blockchain, which is several tens of gigabytes in size, so it’ll take a while. If you don’t have enough room on your hard drive to accommodate at least 30 gigabytes of blockchain space, make room before starting.
Syncing To The Blockchain
Once the blockchain download is complete, you’ll be prompted to enter the same password that you created with Geth earlier. Once you enter this password, you’ll get a glimpse of your new wallet’s balance: zero.
Joining A Mining Pool
Your chances of producing Ethereum alone are very low, so you’re going to have to join a mining pool. Dwarfpool is a large enough and equitable pool, so it’s the one that we’ll be using. First, go back to your command line with Geth, and enter geth –rpc, which will leave Geth to handle the blockchain while we do other things.
Wait until you receive the final message from Geth that says there are 0 queued and 0 ignored transactions, and you’re ready to go. Next, open another terminal so that you can start mining.
Changing Your Mining Settings and Setting The Mine In Motion
Navigate your new terminal to the place where you installed the Ethminer. The idea here is to connect our Ethminer to Dwarfpool via Geth and get Dwarfpool to acknowledge that Geth’s reference to our Ethminer and our wallet is valid.
Depending on which GPU you have, you’ll need to type something different. Let’s start with an example:
The above string instantiates Ethminer, declares that you have an AMD GPU (-G), declares that you will be using a mining pool (-F), provides the URL of the mining pool and the name of the wallet that you’d like that pool to deposit Ethereuem into, and then provides two tweaking commands (cl-local and cl-global).
The tweaking commands are items you’ll have to explore to get the most hashes out of your particular video card. Write your version of that string, and press Enter to receive the miner’s start-up prompt. If there’s an error, check your syntax and try again.
Checking Your Performance Metrics
If you look at the command line interface where you input your mining information to start the miner, you should see your hash rate iterated line by line every second. So long as you are in the mega-hash range, you are mining a measurable quantity of Ethereum each block.
If you notice that your hash rate is extremely low, you should tinker with your -cl settings by reading internet forums and discussing the issue with people who have similar hardware to you.
Calculating Your Profitability
Once you have your miner up and running and can see your hash rate reliably static, you should calculate and see whether hashing at your current maximum rate is going to be enough to be worth your investment, should you decide to liquidate your accumulated Ethereum eventually.
To calculate profitability, you have a few options. There are basic calculators which you can use to input your data or more advanced ones which offer a selection of video cards and offer a more detailed breakdown of your earnings and your break even point. You shouldn’t immediately freak out and shut down your mine if you find that your effort won’t be profitable at the current price point.
The price of Ethereum tends to rise over time, so a hash rate that may not be profitable today may well be profitable shortly when the price of Ethereum doubles or even triples.
Best Ethereum Miner Software
The final point on how to mine Ethereum is which miner software to pick. We’ve already discussed Geth as an example, but now it’s time to compare it to the other options out there.
Geth is the default mining software for Ethereum, and it’s very bare bones. Because Geth is barebones, there isn’t a ton of room for tweaking, and most people tend to think that its support for pooled mining is not very robust.
Geth is essentially bug-free and is perfectly stable, but events external to the program itself—like brief network interruptions or pool difficulties—will send it cranking to a halt. Getting Geth to restart on its own after encountering a problem is extremely tough, so it’s best that you babysit your Geth miner at least a little bit.
You also can’t access your computer’s hardware at a very deep level with Geth. Sure, you can change a few settings here or there to make sure that it’s mining in the most efficient way given your video card and drivers, but beyond that, resource distribution isn’t Geth’s strong point. Nor is power consumption efficiency; Geth doesn’t have great features for tuning to create power efficient mining. Expect your mining to be optimized for a high hash rate but a low efficiency if you stick with Geth’s default settings.
You know exactly what you’re getting when you mine with Geth. Other mining software may take cuts of your reward and not explain them perfectly, or they may run various websites in which you can opt to perform certain kinds of computations preferentially in exchange for a reward in other cryptocurrencies.
You won’t have to worry about any of that when you mine with Geth. The command line interface is intimidating to start off with, but it has very few options—and very little documentation for those options—so it can be a viable program for new miners to get started.
MinerGate is the Cadillac of the Ethereum miners because it offers mining in many different cryptocurrencies, and offers mining with a user interface. MinerGate is by far the easiest miner to setup, and it provides a ton of flexibility relative to what pool you join, the hardware you use to mine, and all sorts of other features that more intense miners will appreciate.
There is also a controversial side to MinerGate, however. Some users claim that MinerGate’s fees and block reward distributions are a bit sketchy, and there have been instances of delays in payout. The MinerGate software itself is free to download, but you’ll forfeit a bit of your hashing power—that’s right, your actual hashing power—to purposes which are opaque.
If you can tolerate the idea that MinerGate may be taking advantage of you from time to time for the sake of its profit, it’s probably the best Ethereum mining software for beginners. The point and click interface and configurable modules make pointing it toward any number of mining pools across several cryptocurrencies very easy.
MinerGate is also extremely stable and has a pretty good system for resuming mining after interruptions. You won’t come back from a long vacation and find MinerGate stalled due to some technical matter unless you specifically indicated that it should do so. Much like all other pieces of mining software, a little bit of time spent configuring to account for edge cases goes a very long way with MinerGate.
For the true Ethereum purists, MinerGate may not offer enough support for large scale mining operations which use multiple computers and dozens of GPUs, however.
Claymore is the ultimate Ethereum mining software, useful for the most hardcore miners only. Claymore offers all sorts of clustering support for massive mining operations which span locations, pools, hardware, controllers, and even wallets.
All of these features free, but the real cost is in technical overhead. Claymore is a command line interface only program, which means that you’ll need to become quite savvy at its various operations and their attendant modifications.
Claymore provides more than just a platform for Ethereum mining, however. With Claymore, you can mine other cryptocurrencies with aspects of your hardware that aren’t being fully utilized by mining Ethereum. This means that you may be able to make a greater profit while mining via Claymore because you can mine multiple currencies at once for the same amount of power consumption.
On the note of power consumption, Claymore’s power consumption configuration suite is unmatched among the other programs for mining Ethereum. If you’re wondering how to mine Ethereum from a location where power isn’t cheap, Claymore probably has a few options to help ease the issue.
Claymore has access to your computer’s hardware at a deeper level than any of the other miners, meaning that changes you make elsewhere—like changing your graphics drivers, for instance—can easily break all of the fine-tuned settings that you’ve spent hours tinkering with in Claymore. If you plan on being a full-time miner or a very serious hobbyist miner, Claymore is the right option, but that doesn’t mean that it’s bug-free or that it can’t be exceptionally frustrating at times.
If you’re willing to invest a lot of time in getting things configured perfectly and having complete granular control over every aspect of your entire mining operation, Claymore is the right app for you. If you aren’t ready for so much power, stick to one of the others.
Our review of Claymore concludes our comprehensive guide on how to mine Ethereum.
Hopefully, you’re ready to start up your mining operation and make some cash. Just remember to stay abreast of trends in the cryptocurrency community, and you’ll be minting cryptocurrency profitably in no time flat.
Good luck hashing!