Through Ethereum, founder Vitalik Buterin has changed the way we perceive the portals and applications we use on a day-to-day basis ever since its launch back in 2015.
Many have invested a lot of time, effort and money in Ethereum mining over the course of 5 years but with the market taking a nosedive as the Covid-19 pandemic took over the world, they started to lose their trust.
Could it be that 2021 is the year of recovery for Ethereum mining, however, or is it too late now?
Ethereum and Ethereum Mining
Ethereum is a cryptocurrency platform designed to build and create decentralised applications (DApps).
These basically are the counterpart to current applications that are dependent on a single entity, such as Google, Facebook and Instagram where information is centralised and easily accessible.
Contrastingly, DApps are not owned by one person or another as they run on a global network of computers and users, also known as nodes.
These different nodes take on the role of a miner as they find valid proof-of-work for new blocks to add to the whole blockchain ecosystem, on which Ethereum is built, by solving complicated mathematical problems.
All types of cryptocurrencies are dependent on mining, yet, Ethereum mining works quite differently from other cryptocurrencies like Bitcoin. With each new block, Ethereum miners receive Ether tokens.
Ether tokens are unique codes which can be used in facilitating the computation of DApps on the Ethereum platform, meaning that they serve as a form of payment for participants to carry out their operations on the network.
This whole Ethereum mining process is completely secure thanks to the proof-of-work mechanism.
At the end of last year, Buterin announced that Ethereum will now move towards a proof-of-state mechanism which is less expensive and uses fewer resources. This is being dubbed as Ethereum 2.0.
However, the founder noted that its full implementation depends on the computation power (also known as hashing power) of the mining rigs used for Ethereum mining.
Mining Rigs and Hash Rate
Ethereum mining can be done by anyone with a computer, however, they will need to invest in the right, dedicated hardware which are referred to as mining rigs.
In basic terms, mining rigs are powerful computers made up of a certain type of hardware that is specially arranged for cryptocurrency mining purposes; CPU, GPU, FPGA and ASIC.
CPUs were a go-to during the early stages of cryptocurrency but GPUs quickly took over and they are one of the most commonly used hardware for Ethereum mining, seeing that Ether was made to be mined by graphic cards. GPUs are durable and easily stackable, providing solid ground for investment and profit.
The same can be said about FPGA mining rigs which serve as the middle ground between GPUs and the most powerful mining hardware to date, the ASIC.
The hashing power of a mining rig is measured by the number of hashes it generated per second (hash rate). The higher the rate is, the higher the chances are for miners to solve the problems, build new blocks and earn cryptocurrency; in this case, Ether.
Hash rate follows a similar scaling system to memory size; Kilo (1,000), Mega (1,000,000), Giga (1,000,000,000), Tera (1,000,000,000,000) etc.
The number of hashes per second (h/s) required to crack a code depends on the difficulty level of the crypto network which is what keeps it secure.
Since security is one of the main pillars on which Ethereum is based, its network is a tough one to penetrate. Thus, a high level of hashing power is needed for Ethereum mining and this requires a powerful mining rig.
So, is it worth investing in Ethereum mining now?
There is never really one way to answer this question since the value of Ethereum mining is dependent on a number of factors such as the cost of the mining rig, its energy usage and its maximum hash rate.
One must also consider the daily fluctuations in the price of Ether, as any other kind of cryptocurrency.
However, there still seems to be a lot of enthusiasm surrounding Ethereum seeing that it still stands second only to the cryptocurrency that started it all; Bitcoin.
Notably, following the massive drop in value Ether faced in 2020, it reached an all-time high at the start of this year.
This success only kept growing in February of this year as it broke through the $1 billion benchmark, despite Ether’s value taking another plunge during the same month. In doing so, the network sent a clear message that Ethereum mining should still be considered to be one of the most profitable cryptocurrency.
If anyone has an interest in starting or progressing in the Ethereum mining world, the following are five of the best Ethereum mining hardware available out there at the moment;
- AMD 5700 XT – GPU
- Priced at $440 this mining hardware mines at a hash rate of 52 Megahash per second (Mh/s) marking it as the weakest but also cheapest GPUs. It is good to note that these limitations come with the plus of low energy costs.
- Nvidia RTX 3080 (1) – GPU
- This GPU takes the previous specifications up a notch both in its hash rate, which stands at 97 Mh/s, and its energy cost. Obviously, this means that it also comes at a higher cost; $700.
- Nvidia RTX 3090 (1) – GPU
- This is the fastest and thus most expensive and wasteful GPU on the list priced at $1,500 with a 120 Mh/s hash rate.
- SQRL FK 33 (3) – FPGA
- Being the most energy-efficient piece of mining hardware on the list, this FPGA is an example of how FPGAs serve as a middle ground between GPUs and ASICs. Its downfall is the $1,000 price tag which is not really justified with a modest 55 Mh/s hash rate.
- Innosilicon A10 Pro Eth – ASIC
- With a $4,500 retail price, this mining hardware holds the best hash rate among any mentioned in this list standing at 500 Mh/s, but it undeniably uses much more energy to function.
So, the short answer to the question that sparked this article, “is it too late to invest in Ethereum mining now?”, is no; considering the results that Ethereum has experienced just two months into 2021.
Yet, it is always wise to consider the variables mentioned above before fully committing to mining Ethereum since, like every other cryptocurrency, it can be unpredictable regardless of what mining rigs you invest in.