Ethereum Mining: How Does It Work?

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Ethereum is currently the third-largest cryptocurrency by market capitalization and has had its fair share of the spotlight as a platform for building decentralized applications. Its founder Vitalik Buterin has also become a thought leader within the space, and the platform continues to grow despite recently encountering ups and downs.

Want to learn more about Ethereum? Read our Guide to Ethereum now!

The comparison between Bitcoin and Ethereum is a common one, and one aspect in which there are very similar is mining. This is the process of securing and sustaining a blockchain network by validating transactions and allowing continuous flow of cryptocurrency within the system. The individuals responsible for mining, are called miners, and they use both complex hardware and software to achieve this.



Ethereum platform runs on blockchain technology, an immutable digital ledger in which all the network’s transactions are recorded. Typically, a blockchain consists of a chain of blocks (batches of transactions). Miners are tasked with adding new blocks to the blockchain in exchange for a reward in the form of 5 ETH.

Although anyone with the resources can mine Ethereum, the process is competitive. This is because Ethereum uses a mining system known as a Proof-of-Work (PoW) to select which miners can append the blockchain. Bitcoin also uses this algorithm but with a few differences. A PoW system requires miners to use computational power to solve certain puzzles with fluctuating difficulty. All the miners continue to guess the answer to the problem until someone figures it out and wins.

Ethereum uses a specific Proof-of-Work algorithm known as ‘ethash,’ which requires more memory to function correctly. This makes it difficult for miners with ASIC devices to mine the currency. ASICs are expensive and in systems like Bitcoin where only a few people can afford to buy them, the steep price can lead to unfair mining distribution. Ethash has succeeded in making Ethereum ASIC-proof, and for now, there are no dedicated Ethereum ASICS on the market.

The Ethereum mining process happens in a few critical steps:

  • Miners run a block’s header metadata (which is different for every block) through a hash function which subsequently returns a string of numbers. This string is typically scrambled and fixed in length. All that changes is the nonce value, and this directly affects the resulting hash value.
  • When a miner finds a hash that matches the current puzzle answer, they are rewarded in ETH and allowed to broadcast the mined block across the network for every node to validate separately while adding it to the version of the blockchain they have stored. This process is fast and only takes a few seconds. As soon as one miner finds the correct hash, other miners abandon that block and begin working on a separate block.
  • Where Ethereum mining is concerned, it is difficult for a miner to cheat the system and initiate double spending. The blockchain cannot be corrupted without tipping off all the others. The only way around the Proof-of-Work method is to do the necessary work, and at the end, block with the most work done is chosen.
  • A miner finds a new block every 12 seconds on average. If anything threatens this set time, the difficulty of the puzzle adjusts, to ensure that the process falls within the appointed time. This difficult adjustment either makes the process of finding a hash value slower or faster.
  • Mining profitability mostly depends on luck and the amount of hash power a node has. The ETH earned by miners is gradually distributed within the markets and contributes to the sustenance of the coin.
  • Ethereum is currently in the process of transitioning from a Proof-of-Work system to a Proof-of-Stake one. A PoS system will allow users to benefit from using smaller, and more affordable devices such as GPUs.


Soon, Ethereum may no longer need the rigorous practice that accompanies mining. Platforms like Ripple have since shown that blockchain applications can function without the need for mining.

Soon, the platform’s developers may leave Proof-of-Work behind and embrace the Proof-of Stake method. In a typical PoS system, those who want to validate transactions must place a stake in that cryptocurrency. This ensures that they have enough of an incentive to properly secure the network, knowing that they may lose their stake if they try to cheat the system in any way.

The aim of moving to a PoS system is to make mining easier and more profitable for the average miner. There will also be distributed consensus within the system instead of within just a small niche.

Tools for Ethereum Mining

Mining involves specialized hardware as well as software and uses a lot of electricity. This is one of the most challenging aspects of the entire process because electricity is not cheap. It puts some extra pressure on miners to earn more money. Unfortunately, Ethereum’s price has gone down to record lows, meaning that miners may have to work twice as hard for less pay.

For mining Ethereum, a GPU (Graphics Processing Unit) system is considered a better option than a CPU (Central Processing Unit) system since the former uses graphics cards which are a lot faster and more convenient than CPUs.

Usually, a basic ETH mining setup looks like this: An arrangement of six graphics cards, and six risers. Typically, each riser connects the graphics cards which are linked to the motherboard of the computer system.

Software like Ethminer, Minergate, and Wineth are the best options for controlling the hardware during this process.


Apart from the financial benefits mining ETH, it presents some added advantages, in both the long-term and short-term. These advantages include:

  • Ethereum can be mined at home, as a full-time job or something on the side. It takes very little time and has fewer users and thus, fewer miners than the Bitcoin network. This reduces the amount of competition on the network and increases a miner’s odds of mining the next block.
  • The platform offers security and immutability.
  • Miners get the opportunity to secure a platform which has many different decentralized apps on it. This exposes them to more projects that they can potentially benefit from, depending on how strict their mining constraints are.
  • There is currently speculation among investors that Ethereum will rise in value again over the next few years. If this happens, miners will be able to earn more in the form of block rewards. For example, right now, the value of 1 ETH is about $120. If the block reward is 5 ETH, that translates into $600. However, in a case where 1 ETH is $500, the same reward becomes $2,500.


Ethereum is immensely popular and for good reason. It offers several benefits and advantages to users over other coins. It was also one of the first digital currencies to provide an excellent use-case for blockchain technology; one that did not just see cryptocurrencies as a store of value.

Although the price of Ethereum has fallen substantially in the past year,  mining this cryptocurrency is still a lucrative venture for those involved. It is evident that the platform seeks to create a process that is secure and fair to all its users. Unlike the centralization of mining happening on the Bitcoin network, almost anyone can mine Ethereum profitably.

So far, the platform has announced plans to change its mining protocol a couple of times and may continue to work on it, to improve efficiency within the system. In due time, when the price of Ethereum rises again, so will the value of mining rewards and more users will be motivated to enter the mining space.

Featured image: Pexels

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Ethereum Mining: How Does…

by MintDice time to read: 5 min