Ethereum is run on a global network of computers, also known as the Ethereum Virtal Machine (EVM). In order to reward the computational costs of the "miners" who support the network, a reward of 3 Ether is issued to the miner who has created the last block to be added to the chain. On average, a new block is created every 15 seconds. Due to the architecture of the algorithm that creates these blocks, this process of generating a "proof of work" (creating a block) is deliberately random and rewards are awarded in proportion to the computing power of each participating miner.
The efficiency of a computer for mining is governed by a difficulty value. Thus, an increase in the difficulty of the mining algorithm (caused by more miners joining the network) means that it becomes more difficult to create blocks, thus resulting in fewer rewards for a fixed amount of computing power. Currently, Ethereum's difficulty is at an all-time high due to its very high demand and popularity.
How can I mine Ethereum?
Before you start mining Ethereum, there are some things to consider:
Mining consumes a lot of electrical energy. Depending on your location, Ethereum mining may even be unprofitable due to the costs associated with electricity. There are several mining profit calculators online so you can check this factor before you get into the world of mining.
The prices of crypto-currencies are very volatile. You need to be fully aware of the risks involved in investing in crypto-currencies. You could end up with a low-value crypto-currency or make trading mistakes if you are not well informed.
Be aware of the laws in your country. Crypto-currency mining can be investigated and punished in some countries. It's best to be prepared.
Now, if you're still ready to mine Ethereum, here are some basics you should know:
Choosing the mining equipment
You will need special hardware that you will dedicate full time to mining. You can mine using your CPU or your GPU. GPUs are more efficient for mining, which will allow you to make larger profits. There are many tips online to help you choose a GPU. A simple Google search is a good place to start.
Installation of the software
The next step is to install the mining software needed to connect to the network. You can use Geth (https://www.ethereum.org/cli), which allows you to mine Ether and deploy your own smart contracts using the command line.
You can try downloading ETHMiner, which is readily available online. Once installed and running, your node will help ensure the security of the Ethereum network. For more detailed instructions on installation and other details, you can visit the official Ethereum website (https://www.ethereum.org/).
Joining a mining pool
Since the computing power required to find Ether blocks is considerable, miners often join forces to find them and thus join what is called a "mining pool". When the pool finds a block, the profits are distributed according to the computing power provided by each miner.
There is a lot of discussion about the different types of pools online, so you should do your homework before making your decision. The topics to keep in mind are the computing power of the pool, the payment structure and the pool fees.
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