In the last year, cryptocurrencies have entered the general public consciousness. People are trying to figure out the phenomenon. Speculating in the most famous cryptocurrency bitcoin seems like a Las Vegas high-stakes gamble. But bitcoin is not the only game in town. Ethereum is often considered a better value than bitcoin. Also, speculation is not the only way to make money with cryptocurrencies. There is an alternative way to earn cash through blockchain mining.
What is Blockchain?
Blockchain is the core technology behind all cryptocurrencies. It is a distributed digital ledger that keeps track of transactions as blocks. The reason for all the excitement around blockchain is that any transaction that is added to the digital ledger is immutable. The immutability results from how the blocks are calculated. Every new block addition depends on everything that came before it. So it's impossible for any single party to manipulate the blockchain.
What is Ethereum?
Ethereum is a blockchain like bitcoin. While bitcoin blockchain only deals with cryptocurrency transactions, the Ethereum blockchain is created with a larger scope in mind. Ethereum uses the idea of blockchain to develop a platform where its possible to build and deploy decentralized applications. Developers can write computer codes that execute on the blockchain. It has created the idea of smart contracts. You can create a contract in code on the Ethereum blockchain that will execute when certain conditions are met. Also, Ethereum has its own unit of currency called ether. Ether is used for transactions in the Ethereum blockchain. In the last year, ether prices have seen dramatic increases just like bitcoin.
What is Blockchain Mining?
A few points need to be emphasized before delving into mining:
• The digital ledger in a blockchain is distributed. It means multiple copies of the ledger exists in the system.
• Adding a block to the digital ledger is intentionally made difficult to prevent users from manipulating the ledger.
To add a block to the blockchain, a user has to solve a difficult math puzzle using computer hardware. Users who provide the computational power are called miners and the process of solving the puzzle is called mining. The term "mining" stems from the fact that it produces new coins for the ecosystem. These coins are rewarded to the winner who solves the puzzle. The winner gets to update the blockchain ledger.
In simpler terms, mining provides the mechanism to create new currency in the system and works as a reward for users to participate in keeping the system running.
How to Mine Ethereum Blockchain and Make Money?
There are multiple ways to become a miner. Here are a few:
Buy your own hardware and install Geth and use it to mine Ethereum blockchain.
An Idiot’s Guide to Building an Ethereum Mining Rig
Ethereum Mining Rig Hardware
Get cloud computer resources (eg. EC2 on AWS) and run Geth there.
Have Fun by Mining Ether with AWS Spot
Ethereum mining on AWS in 5mins
Join a mining pool to lend your computer resources. (Beware of scams! Check reputation before downloading pooling software.) Mining pools improve your chances of winning ethers.
Ethereum Mining Pools
The 3 Best Ethereum Mining Pool Options
Is Ethereum Mining Worth It?
For individuals, Ethereum mining is not going to be profitable. Generally, the hardware cost, electricity bills, and network costs will be more than the amount of ether you are going to earn. So you are unlikely to make money in the short-term. But if you are happy to earn ethers at a loss with long-term plans to hold them, it might be worth it.
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