Today we will look at ways of mining Ethereum an open-source blockchain based distributed system for decentralized applications.
Although similar to Bitcoin, its different in a number of ways that well discuss here.
What is Ethereum and how is it different from Bitcoin?
In simple terms,Ethereum is to applications (apps) what Bitcoin is to money.
Ethereum provides the platform and infrastructure where programmers can create apps that are governed by smart contracts.
They are decentralized in nature with no central server or controlling authority.
If you rememberour last article, the concept is strikingly similar to Bitcoins.
How does Ethereum work?
Ethereums code is written as a smart contract in specific programming languages.
It is then converted to an intermediate form known as bytecode.
This is understood and executed by an Ethereum Virtual Machine (EVM).
The blockchain nodes store the state of the app as accounts.
This mathematical puzzle-based processing takes time.
This is because every line of program execution or storage requires Ether - which costs money.
Lets consider the case of online gambling sites.
Suppose you register and play a Roulette game.
You put your money on the wheel showing an even number.
But the wheel stops on an odd number and you lose.
Its just a program after all and you dont know the source code.
How can you trust the system?
This is just one of Ethereums useful applications - the possibilities are endless.
How to mine Ethereum
Mining Ethereum isnt very difficult and could be profitable.
Some people also mine just for educational purposes or as a hobby.
If you use a regular computer, the electricity costs might eat up any earnings you make.
This is also true for any cryptocurrency or Blockchain-based technology and the competition is tough.
Heres what you’re gonna wanna set-up a mining infrastructure at your home or office.
Since these mining communities fluctuate frequently, it’s advisable to research which ones are currently the most active.
Most cloud companies charge for the resources you use rather than at a flat rate.
Youll need to calculate how profitable mining would be with a particular host.
Mining on Amazon cloud (AWS)
There are many mining pools available.
This is the file you downloaded while creating the AMI instance.
Other information like the hostname etc.
can be found on your AWS EC2 instance page.
c’mon note that the username for our AMI is ubuntu.
The command below that starts the mining process.
Is Ethereum mining profitable?
Similar to any other Blockchain technology,Ethereum was highly profitable in the beginning.
As its become more successful, it became more difficult and profits have fallen.
Profitability now depends entirely on what hardware you use and how much you pay for your electricity.
This would mean that no block reward will be given to miners, only the transaction fees.
Nevertheless, Ethereum has always remained a high-interest topic for businesses and hobbyists alike.
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