What is Ethereum mining and how it works
Ethereum mining is an omnipresent way of earning money nowadays. Thousands of people switched from their careers to mining as a full-time job. This guide is for those who are interested in mining and consider it a possible way of earning extra money. Go through all of the steps to find out everything about Ethereum: what is mining Ethereum, how it works, who are the Ethereum miners and how to start eth mining.
What is Ethereum mining: brief end easy explanation
The crucial question about Ethereum mining – what is it? – is answered in this section. Ethereum is a worldwide ledger system that registers transactions. In other words, this system, based on the blockchain, records all the data about transfers from person to person. Imagine that it is as a huge electronic bank where all the transactions must be registered. If mining Ethereum works like a bank, there must be a person who keeps a watchful eye on all the operations. This person must check if all of them are done correctly and all of the transactions are recorded. With Ethereum, computers perform this function. Thousands of the computers check thousands of transactions within seconds. They are called “ethereum miners.”
How does Ethereum mining work?
So, you already know that the ether miners are computers, that proceed transactions. But is it safe to let computers check such significant processes as money transactions? Here is ethereum mining explained in more detail.
To keep the transactions safe and reliable, computers perform thousands of difficult mathematical calculations. That is why any ethereum mine requires a lot of computing power, expensive equipment, and human resources. Therefore, the people who invested quite a lot of money in a mine must receive some profit to cover expenses. And they get this profit in the form of Ethereum. Thus, we can say that ETC altcoins are a compensation for those who process transactions. And the ethereum mining algorithm consists in earning money by solving sophisticated mathematical tasks.
Ethereum mining: how to get it?
To date, there are three ways of getting Ethereum:
- Earning – by asking people to pay in Ether for providing them different services. This is the easiest method;
- Buying – by exchanging real money for Ethereum. You can do it on the Internet, from brokers or exchanges like Binance or CoinBase;
- Mining – the most sophisticated for an average person way of getting the altcoin is mining ETH. It requires a lot of money and equipment.
We can’t be sure that the most reasonable choice lately is mining. If you are a beginner in cryptocurrency ethereum mining and want to figure out how it works, we recommend you earn or buy it before you mine ETH. Still, if you are firm in your intention to mine, we prepared the next step for you.
How Does Ether Mining Work? Starting the Process
Here is what you need to start mining Ether; use this simple checklist:
- Understand how Ethereum mining works;
- Create your Ethereum wallet (it is used to keep all your Ethers and send it to others, or to exchange it for other coins). The simplest and fastest way to create an account is through the Mist Ethereum wallet. It is an app allowing users to manage their account and interact with other account holders;
- Start mining. There are three ways to mine Ether. Let’s examine them and figure out, “how does Ether mining work in the most convenient and appropriate way?”
How is Ethereum mined?
- Mining by yourself. A really tricky and risky choice. It may be appealing at first, as the main pros of this way is that you don’t work in a team, so you don’t have to share the incomes. But the thing is that if you are alone, it means that you compete with other miners for rewards. You can win only in case you solve the mathematical task first. Mining alone also means that you will need to have enough computing power to compete. Not to mention the fact that you will face such problems as noise, electricity cost, and heating issues.
- Cloud mining. In this case, you rent mine for real or digital money and pay people to mine for you. Nevertheless, be careful: it is not easy at all to find a reliable mine and avoid swindlers. Most people prefer using the equipment to mine for themselves, not for other people. Even if you find a trustworthy mine rent, there is a risk to lose money, as you pay in advance and if the price of Eth drops, you will not be able to return your money. Anyway, a much sounder decision is to buy Ethereum, rather than to pay somebody to mine it. That is just how ethereum mining works.
- Pool mining. It is the most convenient and safe way to start mining. You join a group of miners, called “pool” to mine together and share rewards among all the people. The bigger the pool – the more rewards you get. To choose the most suitable pool for you, pay attention to the fee amount (varies from 0 – 3%; better to choose one with 1% fee), the payout structures (how often you will get payouts), and the computing power of the pool.
Here is the basics of Ethereum mining; good luck on your path to richness!
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