Ethereum mining in simple language; How to extract the second most important cryptocurrencies in the world?
Tags: blockchain, cryptocurrency
Published: 2021-09-18 10:51:09

ethereum is the second largest currency in the world and one of the most important extractable currencies in the cryptocurrency market. Many digital currency market players consider ethereum mining to be an important and reliable source of income. If you are also interested in ethereum extraction, this article is a comprehensive but simple guide to ethereum extraction. Please stay with us until the end of the article.

In this article, we will assume that you know what an ethereum is and how it works by default. So we will only give a brief explanation about this.

What is an ethereum?
ethereum extraction
ethereum creator Vitalik Butrin became acquainted with Bitcoin at the age of 17 and has since started writing for Bitcoin magazine and offering suggestions for improving it. But since these proposals did not materialize, he decided to build his own digital currency. In 2015, ethereum was introduced to the market.

ethereum is actually a blockchain and its native cryptocurrency is called ETH. ethereum has its own browser and language and payment system. This blockchain also has no single and central controller and thousands of users voluntarily control it with their computer systems around the world. These users are called nodes or node networks. Nodes perform ethereum transaction verification and smart contracts on the network.

What is extraction?
In simple terms, extraction is the process of solving complex mathematical equations. Miners are network nodes that use their computer's processing time and power to solve these equations. ethereum extraction algorithm is proof of work that confirms ether or ethereum transactions. In addition, miners are responsible for creating new tokens and blocks in the process. In the end, every miner will be rewarded for their successful activity.

Poof of work algorithm is the most popular consensus algorithm in blockchain cryptocurrencies. The consensus algorithm allows the user to use the same source of information as other users and ensures that all users on the network use the same source. The purpose of this algorithm is to prevent the entire system from being harmed when one or more users leave the network. The proof of work algorithm was first used in Bitcoin, but its concept and application is not limited to Bitcoin.

Why is it necessary to extract ethereum?
ethereum extraction
The ethereum network, as we said, has its own blockchain. Any transaction in this blockchain must be approved by the miners. That's why transactions take time. This time is spent approving ethereum miners.

ethereum transactions enter the ethereum blockchain after confirmation. So the blockchain needs to have enough space to store transactions. In addition to confirming transactions, miners add new blocks to the blockchain. In general, the task of a miner is to make sure that no transactions are made twice by mistake and that no errors occur in the network.

When a miner can solve one of the equations, he adds the corresponding block to the blockchain and receives his reward. By doing this, the three goals of the extraction work are:

Confirm correct transactions
Add new blocks and create new storage space
Receive rewards by miners and add new coins to the network
will be done.

Who is Miner? What is a Miner?
ethereum extraction
Miner is a person who provides his / her computer processing power to the network to approve transactions and record new transactions. Miner actually does this in the hope of receiving a reward from the network (new block extraction bonus, transaction registration fee).

But it is not possible to extract ethereum with GPUs from home computers. ethereum extraction is actually done with the help of extraction pebbles, which is a collection of powerful graphics cards. These pebbles are also called miners.

What is GPU Mining?
GPU mining or mining with graphics cards is a popular way to extract cryptocurrencies, especially ethereum. This method was formed because bitcoin mining with CPUs (CPUs) was increasing day by day and on the other hand, it had created a kind of monopoly among ISIC manufacturers.

GPU (GPU) extraction tools were much cheaper, and this method was able to find its place among important cryptocurrencies such as ethereum and Monroe. These cryptographers have written their algorithms based on the presence of small extractors and their persistence in the network and want to take care of them.

What is the ethereum Extraction Algorithm?
Digital currencies use different consensus algorithms for their operations. Consensus algorithms help the network to tolerate error. The two most important consensus algorithms are the Proof of Work algorithm and the Proof of Stake algorithm. Bitcoin and ethereum both use proof-of-work algorithms as market leaders in digital currencies. In the proof-of-work algorithm, the user must provide the network with the processing power of his computer to participate in the network and make a profit.

In this algorithm, validation nodes (hereinafter referred to as miners or miners) perform the hashing of information. Hashing means creating a unique solution (function) to add information to the blockchain. A hash is a seemingly random string of letters and numbers that is created when solving a hash function. This string of letters and numbers is actually encrypted transaction information that is to be stored in the blockchain.
1-2. Important points before choosing an extraction pool

Currently, several small and large extraction ponds are active in the ethereum extraction process and have very different characteristics. But each miner can only join one pool. So before you make your final decision, you can experience membership in different pools and read about them well. Important points to consider when choosing a pool:

1. The size of the pool
The more people who are members of the pool and the more devices that share their processing power with others, the better the chances of solving a block for all members. However, if the number of pool members is too large, the reward received by each member will decrease. For this reason, the size of the pool can be very effective in the profitability of its membership.

2. Currency payment method in the pool
Another point to keep in mind when choosing a pool is the minimum withdrawal of currency from the account. If the minimum withdrawal is very high, for example 1 ethereum, you have to wait a long time for the currency you mined to reach this amount. So you will need a lot of time to make a profit or change the pool.

3. Pool fee
Extraction pools, like any other service center, receive a fee for managing and organizing extraction and distribution of rewards among users. When you join the pool and use its services, you also have to pay some of your income to the pool as a fee. This fee is usually between 1% and 3%. It is better not to look for pools with 0% fee, because it is not right to trust them.

Method 3: Subscribe to cloud mining services
Cloud extraction services are services in which a person does not need to share the processing power of a computer or extraction rig with others to subscribe, but can only extract ethereum for a fee or, in fact, rent an extraction machine.

These services are actually a very large mining farm where people actually pay to participate in the mining farm costs and receive ethereum in return. This method is much easier than the other two methods and does not require much time or technical knowledge. But before joining a cloud mining service, ask yourself the following questions:

Why should one lease one's mining machine to others when one can make a profit with it?
Why not buy ethereum with the same membership fee to save in your account?
Try to answer these questions carefully and thoroughly. Membership in these services is usually not cost-effective. In fact, cloud mining services are guaranteed to be more profitable for its operators than for its users.

What are the problems of ethereum extraction?
ethereum extraction
ethereum mining, like most digital currency mining, has many challenges and opportunities. Although mining is still a lucrative business given ethereum price growth, you should be aware of its problems before starting any business. ethereum and bitcoin mining is no exception. The high cost of electricity and mining equipment, exposure to hacker attacks, and decentralization are some of the problems that we will address below.

1- High costs of electricity and extraction equipment
Mining cryptocurrencies is generally costly. If you want to extract ethereum legally and at the electricity rate, you have to pay approximately 900 tomans per kilowatt hour. This cost is usually calculated during the month and of course it varies depending on the model of your device. But keep in mind that the more powerful and profitable the device you buy, the higher its electricity costs will be.

ethereum extraction devices are another part of your costs. Graphic ethereum extraction graphs are not cheap and are out of competition, especially with the constant advancement of technology. So if you want to upgrade your device by increasing the network hash rate, the extraction costs will also increase.

2- The risk of hackers attacking your property
Avoid ransomware
Hackers are always one step ahead of security technologies. If you do not take good care of your assets and computer system, you may be exposed to cryptocurrencies and your passwords may be stolen. In 2017 alone, attacks on computer browsers increased by 31%. So if you set up only one mining node and do not secure it, you are actually doing an important service to hackers.

3- Centralization
The initial idea of ​​cryptocurrencies was to decentralize and take the power of money management out of the hands of a specific source such as a bank. But as time went on and many people turned to mining, it became necessary to design more powerful and better mining machines. Of course, the technology of making these devices and pebbles was given to certain companies. This is practically the opposite of the concept of decentralization of digital currencies. Although ethereum has entered the process using fewer graphic pebbles, it is still at risk.

So before entering the ethereum extraction process, please know all the challenges you and the network face. Start buying and selling with full awareness to help both yourself and the network and ultimately have a healthy and secure income (source).
Is ethereum extraction cost effective?
For now, yes, as long as you follow the tips in the previous section of this article. ethereum reached $ 4,000 in 2021 and reached its highest ceiling. This shows that the approach of the people to the ethereum market is very positive and the extraction will be very profitable if the details are observed. For example, mining with the Pandaminer B5 Plus device will currently generate about 6 million Tomans per month for Miner.

In the future, the conditions for making money from the ethereum network will probably change. ethereum is planning to move to the ethereum 2 network. This blockchain network will continue to operate with a stock proof algorithm. If this happens, the ethereum extraction process will be obsolete. But at the time of writing, ethereum extraction is still cost-effective.

Know more:
How long does ethereum extraction last? What percentage of ethereum has been extracted so far?
ethereum, like Bitcoin, has no limit on the number of tokens it can offer. At the time of writing, 116,870,559 ethereums have been extracted, and will continue to be extracted until ethereum migrates to the blockchain network with the stock proof algorithm. Of course, to protect the network from inflation, only 18 million ethereums are extracted annually. This means two ethereums approximately every 14 seconds.

How to extract ethereum 2.0?
ethereum 2.0
ethereum 2.0 is not actually extracted. ethereum 2 uses a stock proof algorithm. In this algorithm, instead of the need for processing power, it is necessary to register participation in the network with your assets. Having 32 ethereums, for example, will qualify you to participate in the network and decide whether to make changes or approve transactions. By providing these 32 ethereums to the network for approval, you will receive a reward (source).

Is ethereum extraction legal in Iran?
According to a government decree, the extraction of bitcoins, ethereum and other cryptocurrencies is possible only with the permission of the Ministry of Industry, Mines and Trade; Of course, in free trade zones, the ministry has delegated the responsibility of issuing licenses to the Free Zones Organization. Also, in some cities, there are restrictions on the establishment of Ramzarz mining units: it includes a limit of 120 km in Tehran, 50 km in Isfahan and 30 km in the centers of other provinces.

Electricity supply is also possible by receiving a branch from the national grid or the construction of a power plant outside the national grid. . But according to the same law, the extraction of ciphers during peak hours is prohibited. Another important point of this decree is that the production centers of cryptocurrencies are considered as an industrial production unit and will be subject to the tax law, but if they issue their cryptocurrencies and return the resulting currency to Iran, their tax will be zero ( Source).

## Is free ethereum extraction possible?

We keep emphasizing on the Wallx blog that "nothing is completely free", and so does ethereum Free! The least you can ask for when extracting ethereum for free is the internet, computer or mobile processing, and of course your time. However, there are tools that you can use to get ethereum without paying directly.

Of course, these tools have little profitability, and in many cases the profit is so low that even its harvest is not economical. But the choice is yours anyway. The Idle-Empire website is one of the sites where you can get ethereum by subscribing and choosing from a variety of activities. For example, filling out questionnaires, watching promotional videos, and playing games are some of these methods.

## Introducing the best ethereum extraction software
ethereum extraction software, like other cryptocurrencies, covers a very wide range. In fact, there is a long list of ethereum extraction software that you can not excel at until you have used them. This makes it difficult to choose better software. But relying on the experience gained in this area and analyzing hundreds of user feedback and critiques can provide a limited but strong list of ethereum extraction software.

1- ETHminer software
The first recommended software is ETHminer software. As the name implies, this software is designed solely for ethereum Extraction and now supports Linux, Mac and Windows operating systems. When downloading this software, pay attention to select the version related to your operating system. With this software, in addition to ethereum, you can extract other cryptocurrencies that use the Ethash algorithm; Including Expansion, Elysmus, Metavars, Myosquin, Pearl, Classical ethereum, etc.

2- CGMiner software
The next software is CGMiner, which was released in 2011 and is still one of the most popular mining software. The main reason for the popularity and ubiquity of CGMiner is its excellent compatibility with three different hardware ASIC, FPGA, GPU. CG software is an open source software written in C language. The advantages of this software include measuring the desired hash rate with zero delay as well as advanced detection of new blocks. This software is also available for Linux, Mac and Windows operating systems.
3- BitMinter software
The third application is BitMinter, which offers great features to its users; These include a clear graphical interface as well as a very high connection speed to the Bitminter mining pool. This software entered the market in 2011 and it can be said that it has the most experienced mining pools in the field of cryptocurrency mining, so that it now has 450,000 registered user accounts. Another advantage of this software is that unlike CGMiner, it does not need to be installed, because it is based on the Java Network Launch Protocol (JNLP). You can easily run it on ASIC, FPGA, GPU hardware. The software is also compatible with Linux, Mac and Windows operating systems (source).

## Concluding remarks
ethereum mining, like bitcoin mining, is an opportunity for digital currency market enthusiasts to both contribute to and benefit from network stability and security. In this Walx article, we tried to explain what is needed for ethereum mining. From now on, start the extraction rig with you to start extracting this amazing cryptocurrency.

If you have questions about Bitcoin or ethereum mining, ask us in the comments section.