Ethereum appeared on the cryptocurrency market in 2015, it was created by programmer Vitaly Buterin. Ethereum mining is very popular and today it ranks 2nd among mining platforms after Bitcoin, only Ethereum is easier to mine. With the increase in the number of miners, the difficulty of mining currency began to increase.
This problem plagues all electronic money, the operation of which is based on the Proof of Work protocol (proof of work performed). The miner provides the power of his equipment to receive a reward. The difficulty of mining Ethereum has its own distinctive features, it is worth considering in more detail.
What is network complexity?
Indicators characterizing the complexity of the Ethereum network (block difficulty) are indispensable for calculating the profitability of mining this cryptocurrency and they make it clear whether it is worth mining at all. The concept is used as a characteristic of the time required for block validation. For this value, there is a Nonce definition parameter, a hash, which, together with mixHash, is a confirmation that the required number of calculation operations have been performed for the block. The expected time to find it is called an indicator of the difficulty of mining cryptocurrency.
Ethereum hashing algorithm is Ethash, it sets the metadata of the last block in the blockchain network using the Nonce code. It is not possible to simply guess it, for this reason, the use of equipment with high computing power is necessary in order to encrypt the block and receive a reward. The indicators are adjusted automatically by the system, and they must all be in full compliance. The time spent on block validation is set when its complexity level is determined; if it turns out to be less than expected, the system will reduce the network complexity level.
Content
- Cloud mining in 2022 – what is it?
- Pros of mining cryptocurrency in the cloud
- The best cloud mining services
- IQ Mining
- Shamining
- ECOS
- VMining
- Should you use cloud mining sites in 2021?
Not everyone can afford to buy a ready-made farm or ASIC, so we decided to consider such a phenomenon as cloud mining. You can enter it with a small amount of financial resources, so it attracts a large number of cryptocurrency beginners. Next, you will find out what it is, what offers there are on the Internet and get acquainted with the TOP 4 best services.
Mining Features
Ethereum and Ethereum Classic are mined using an algorithm that differs from that for Bitcoin mining. But the main principle of the process remains unchanged. To mine Bitcoin, you need specialized, expensive equipment; mining BTC using video cards is no longer profitable, and creating Asic farms is too expensive. Therefore, back in 2022, when Ether was very expensive, it then reached 9000% of its lowest value, a huge number of miners were attracted to the Ethereum system.
Until recently, the difficulty of mining ether grew slightly, because it was only possible to mine coins independently using a Geth wallet. This was quite difficult for a poorly prepared participant.
This situation greatly alienated most miners, despite the fact that the price of coins was attractive and mining brought good profits.
Today, Ethereum mining is still a profitable activity, since the cost of ETH and the capitalization of this electronic money are high. Experts suggest that the price of the currency will rise further. But for mining you need to have powerful equipment. The parameters of video cards must be selected correctly and ensure the required performance in order to successfully encrypt blocks. The hashrate of a video card depends on the following characteristics:
- Memory capacity (required from 4 GB).
- Speed (DDR5).
- Memory bus width of the video card (minimum 256).
- Cooling system.
- Overclocking capability.
The hashrate is also greatly influenced by the following factors:
- operating system and its features;
- type and type of device (farm or PC).
In order to correctly calculate how profitable the extraction of electronic monetary units will be, taking into account all circumstances without exception, it is worth using the following resources:
- WhatToMine;
- Nicehash.
Important! The complexity of the Ethereum network will only increase every month, and after the transition from POW to POS is made, mining will no longer affect the security and operation of the platform.
Today you shouldn’t start mining Ethereum from scratch; it’s better to mine coins in cloud services.
More about farms
In addition to the fact that cryptocurrency mining brings in less and less money on one specific device, its cost is increasing, i.e. costs associated with production. Let's not forget that just purchasing a device is not enough. Equipment needs to be serviced. This includes energy supply and ventilation, and cleaning of the same coolers.
When it comes to mining attempts on one home PC, such problems are almost invisible. But the income from such activities today is also close to zero. To overcome the problem of increasing complexity, mining equipment is combined into so-called farms or pools. Due to the operation of the appropriate protocols and parallel computing, the effect of the farm’s operation is much higher than the individual operation of all the devices included in it. But maintenance also becomes much more difficult. It is necessary to select a room (the noise from many devices is quite noticeable) and provide power.
Today there are farms that consume 40, 60 and even 80 MW. This amount of energy requires corresponding costs. It is necessary to ensure ventilation of the entire room, and this also costs and maintains the ventilation system itself. As a result, all these costs (costs) reduce the profitability of the farm.
When creating pools, devices located in different geographical locations are combined. They can be computers belonging to different owners. At the same time, when united in a pool, they are able to perform sufficiently complex calculations to compete in the market.
Recently, the offer to rent equipment from an existing pool (cloud mining) has become popular. Anyone can deposit a small amount into the account and participate in the distribution of income. No problems with purchasing equipment and its maintenance, maintenance, etc. The question arises as to why pool owners need this. Precisely in order to reduce your risks associated with the complication of the network and a drop in profits. Unfortunately, the amounts paid to the “investors” allow the investment to be repaid only after many months - longer than it would previously have taken to pay off the farm.
History of difficulty changes
Since 2022, the number of miners in the Ethereum network has begun to increase rapidly. A well-developed infrastructure played a major role in this (the emergence of many pools, new wallets, as well as instructions). The Ethereum rate has increased by 9000% from its original price. This had a positive impact on coin mining; mining them became very profitable.
Almost immediately after this, the difficulty began to increase. This lasted throughout 2022 until the increase reached 3,000 terahash in October. The difficulty of mining tokens increased in line with the growth of the ETH rate. In 10 months of that year it grew from $10 to $300.
Afterwards, the difficulty of mining coins dropped to 1,500 terahash. This was influenced by the new Byzantium update. As mentioned earlier, it became the foundation for the “complexity bomb”. But despite everything, the growth in the value of Ethereum continued and reached its peak in January 2022. Then the price of the coin was fixed at $1,415. The period that lasted from October 2022 to January 2022 is the most profitable in the entire history of Ethereum mining.
Factors Affecting Ether Difficulty
What affects the difficulty of mining Ethereum?
In addition to the already mentioned relationship between hashrate and Ethereum mining difficulty, the latter parameter may also depend on:
- The cost of Ethereum and electricity tariffs (affect the profitability of mining and, as a result, the number of those who engage in it);
- Changes in the size of the reward for miners and the time it takes for blocks to be found (through hard forks);
- General sentiment on the crypto market (during a bearish trend, miners leave, during a bullish trend, miners return);
- Level of technology development (connecting more powerful devices to the network leads to increased complexity).
EIP-1559
EIP-1559 is one of the planned updates this year. It aims to restructure how transaction fees work and will reduce mining profits as a result. EIP-1559 will be part of the London hard fork, which is scheduled for implementation in July.
After EIP-1559, fees will be split between an algorithmically determined base fee that fluctuates depending on how complete the last block was, and a market-determined tip. The block size will become flexible and the network will strive to keep blocks 50% full. If the network is busy and block capacity exceeds 50%, the base fee is increased. One key reason for using flexible block sizes is to shift volatility from the fee price to the block size; since the network will have some built-in capacity to compensate for fluctuating demand, there should be less need to incentivize miners to squeeze your transaction into the next block. Since the base fee is determined algorithmically, there should be more predictable and reasonable fee price increases during congestion.
It is worth noting that this update was received extremely controversially by the mining community, with some even discussing the possibility of carrying out a 51% attack to prevent the update. However, with ETH 2.0 approaching, there is no productive reason to oppose EIP-1559. Mining is on its way out, and lower transaction fees are critical to Ethereum's success.
Ethereum Difficulty Bomb Delayed Until December
The so-called difficulty bomb or “ice age” of the Eth blockchain was created in 2015. The idea is to gradually increase the difficulty of mining ethers after the bomb is activated and, accordingly, increase the block creation time from the current 13 seconds.
Obviously, the difficulty bomb is not suitable for miners, since in this case their reward will be lost. For clarity: after its activation, the time for creating blocks in the Ethereum network will increase five times in five months. This means that the miners’ reward will also fall five times, provided that the ETH exchange rate is stable.
Ice Age has been postponed several times: it was in 2022, 2019, 2022 and 2022. Created the day before, EIP-3554 is also delaying the bomb until the first week of December 2022. Does this mean that the Ethereum developers have shelved this idea? No. Most likely, the bomb will be postponed again - or even canceled altogether in the future. However, the cost of gas is already prohibitively high.
Does it make sense to start mining in 2021?
Pessimists will say that these are just a few good months and things will soon go downhill again. Yes, of course, after growth there is always a correction, but this is not a reason to give up mining ether.
If you already have a working mining rig, switch to Hashalot to mine Ether. Now is the best time for this. If you are just planning to start mining crypto, then now is still not too late. You need to catch the period while Ethereum has a large number of daily transactions and a good rate.
Even if you're reading this while the cryptocurrency market has taken a hit, that doesn't mean all is lost. The cryptocurrency market, although unstable, is cyclical. Therefore, if a coin is cheap now, it will soon rise in price again. This is a pattern that has been proven over the years. You just need to have enough patience to sell assets at a good price.
Current Ethereum mining difficulty
After the Byzantium update was released, the difficulty began to return. At the moment, this figure is 3183 terahashes, and this is despite the fact that the Ethereum rate has dropped significantly. At the end of April 2022, coins cost $400. This greatly affected mining profitability.
According to information received from the coinwarz website, Ethereum is the most profitable electronic currency for miners: having powerful equipment of 108 MHz/s, taking into account electricity consumption of 600 W per day at a price of $0.054/kWh, net earnings will be $3-4 within 24 hours.
Advantages and disadvantages
Earning money with minimal investment Getting rid of the worries associated with mining: purchasing and setting up equipment, paying electricity bills, air conditioning and sound insulation High level of profitability: up to 200% per year All tax and legislative issues are resolved by cloud service employees Opportunity to earn more by purchasing more capacity Ability to work with different algorithms, mine several currencies at the same time, switch to the most profitable one at the moment Automatic mining option for the most profitable contracts Ability to predict profitability Additional earnings from referral programs Cloud mining from mobile devices High-risk activities associated with exchange rate volatility, fraudulent services, possible hacker attacks, etc. Mining profitability level promised by services (400 % per annum) is often not true Reduced profits due to rental payments and commissions Network complexity may change unexpectedly, which will negatively affect the hashrate value When the price of the mined currency falls, the user needs to wait until the end of the paid time to withdraw funds There are no guarantees that the data center will not fail out of order and the service will stop paying
ETH mining difficulty chart
On which portals can you track the mining difficulty graph? To track changes in difficulty and hashrate, it is better to use official resources. For example, the etherscan portal, which is part of the general Ethereum ecosystem. The main page of the platform provides information about:
- Difficulty - difficulty of production.
- Hashrate - current hashrate per second.
- Transactions - number of transactions per second.
A detailed chart with dates is available for each parameter.
