Before 2021, the only cryptocurrency that seemed to attract significant interest was Bitcoin (BTC). That’s because its value far exceeded that of any of its competitors, many of which are still worth very little. However, there’s been a growing interest in Ethereum (ETH) in recent months, helping its value rise from a few hundred dollars to over $4,000 in early May. Not only has its success prompted a lot more people to invest in ETH, but it’s also created greater interest in mining it. The question that many may have around this right now, though, is how does it work?
Here are a few things you should know:
The Proof Of Work Protocol
Ethereum, much like Bitcoin, makes mining possible through a proof of work protocol. This algorithm helps protect the chain from attack and ensures that no one spends more than they intend. It also establishes the rules and difficulty for the work that miners have to do to add blocks to the chain. Eventually, the proof of work protocol will shift to a proof of stake one, which will bring about some significant changes. This includes increased security, less wasted energy, and a change in payment for miners. However, it’s tough to implement, which is why proof of work is still in place for the time being.
Different Types Of Mining
There are different ways to go about mining Ethereum, some of which are better than others.
CPU mining is a basic version of it that simply involves someone using their computer to do the job. GPU mining, which utilizes the graphics processing unit of a computer, is another option, but it works better for other cryptocurrencies than Ethereum. This is down to the increased difficulty of mining ETH this way. Application Specific Integrated Circuit mining is something that was created solely to mine Bitcoin and Litecoin. However, more recent developments have allowed Ethereum to be mined this way too. Given that it’s machinery designed to mine cryptocurrency, it’s one of the best ways to go about doing this. Alternatively, if you’d rather let someone else do the hard work, you can always just convert your cash to Ethereum instead. With Paxful’s 300+ payment methods for transferring money into ETH, you can get involved in the cryptocurrency without being a computer whiz.
Using A Mining Pool
Trying to mine Ethereum on your own may prove to be incredibly difficult, which is why mining pools exist. These allow you to combine your resources with other people around the world, all of whom are working towards the same purpose as you.
How successful this is can depend on the ethics of the pool manager. However, it’s an excellent way to go about mining ETH if you’re inexperienced or don’t have the means to achieve much of a result on your own. Given the growing popularity of Ethereum, mining is definitely something worth considering. The change to proof of stake will likely harm mining operations in the future, so if you’re interested in this, it’s better to start sooner rather than later.