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Ethereum is not only a cryptocurrency, it is also an open-source computing platform that allows decentralized confirmation of transactions. Based on the blockchain technology, Ethereum possesses innovative features and has extended capabilities. Most of the people are investing in this cryptocurrency in different ways, such as joining a mining pool, using a mining hardware, and opting for Ethereum cloud mining. However, some people are still confused that they should invest in Ethereum or not.
What is Ethereum Mining?Ethereum (ETH) or Ether mining is validating various network transactions. Mining refers to the participation for confirmation of transactions that got recorded on the Ethereum blockchain. Ethereum can be mined at home computers or tailored rigs can also be used in order to mine Ethereum. It is advisable to do Ethereum mining on UNIX machine rather than Windows as it helps in mining Ethereum easily.
Mining Algorithm Used in EthereumThe digital currency uses Casper Proof-of-Stake algorithm rather than atraditional Proof-of-Work algorithm. Proof of Stake uses less computational power in order to achieve thesame result as Proof of Work algorithm uses in Bitcoin. Casper prioritizes speed, consistency, availability, reliability and also provides faster validations as Proof of Work algorithm. In addition, Proof of Stake makes use of the approach that frees up energy requirement of the network.
Different Methods of Mining Ethereum1. Ethereum Mining HardwareAs Ethereum uses Casper Proof-of-Stake algorithm, so Ether or Ethereum mining can be done using Graphics Processing Unit (GPU). Bitcoin mining is limited to ASIC miners as they are specifically meant for mining Bitcoin, so it favours Ethereum and increases its investors. Similar to a home computer, Ethereum uses the following things for setting up a mining rig
Motherboard For the communication of parts Graphics Card In order to process Proof of Stake algorithm Storage (SSD/HDD) To store new confirmed transactions on the blockchain Memory (RAM) It is required to give memory to the mining program PSU To provide power to different parts of the mining rig Ethernet In order to receive newly confirmed transactions that are stored on the blockchain
In addition, graphics card also plays a vital role in determining the profitability of mining rig.
2. Ethereum Mining PoolMining pools are significantly increasing nowadays and increasing the chance of getting Ether. Similar to other cryptocurrencies, Ether allocation is proportional to productivity in the entire network. Therefore, joining a mining pool can increase your chances of earning Ether. In this mining process, revenues earned in the pool are divided into participants equally; however, distribution agreements may vary.
There are two types of pool, proportional (PROP) payouts and Pay Per Share (PPS) to obscurer algorithms, such as Double Geometric Method (DGM). Apart from these, you can easily find more mining pool methods and even find specifically Ethereum mining pools. To receive the payouts, Ethereum wallet and mining software are required along with the mining pool.
3. Ethereum Cloud MiningCloud mining is basically managing the pre-existing mining facilities via a service provider. It is an ideal option for people who are beginners in this industry and cannot afford to have their own mining rig or equipment. Usually, miners or users buy some site-specific tokens that contain a particular amount of hash power. The hash power is used as mining power that will mine Ether. There are three types of cloud mining, including
Hosted Mining Hosted mining service offers machines that can be leased to the clients. Virtual Hosted Mining The main purpose of virtual server providers is to lease out memory and processing power in order to mine Ethereum. Lease Hashing Power In order to collect profits, cloud mining service provider can lease the hashing power.
Ethereum WalletThe cryptocurrency, Ethereum uses standard wallet known as Mist (works as a gateway for developers in order to use decentralized apps). Similar to Bitcoin wallets, Ethereum wallets use integral system tools or other wallets convenience in order to wrap software in a proper manner. Apart from Mist Wallet, Ethereum can also be managed with other online wallets like EthereumWallet.com and MyEtherWallet.com. Also, Ethereum hardware wallet is an ideal option.
The Bottom LineThe above-mentioned are various ways of Ethereum mining. From hardware, mining pool to Ethereum cloud mining, you can find the suitable solutions as per your needs. When talking about the profit, it is always difficult to predict whether investing in Ethereum mining will result in profitable opportunity or not. Therefore, it is better to first do a proper research about the required mining methods and get an idea about the expenses, so that you are well aware that after investing in this digital currency where will you stand.