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.
Source: 2miners.com. Historical network difficulty chart for Ethereum
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.
What is a “complexity bomb”?
The “difficulty bomb” was invented by Ethereum developers as a way to make mining very difficult. Its purpose is to make cryptocurrency mining completely unprofitable in the required period of time. This step was needed by programmers as part of a plan to rebuild to Proof of Stake. The algorithm sets deadlines for changes to take effect and forces the system to go according to the plan invented by the programmers.
Important! In the summer of 2022, the network complexity level increased 200 times compared to the initial level.
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.
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 2016, when Ethereum 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.
How to Maintain a Crypto Farm's Profits
Every piece of equipment needs maintenance. Otherwise, the efficiency begins to drop. When it comes to mining, the user loses profit. Initially, video cards were not designed for cryptocurrency mining, so the manufacturer did not take into account some of the nuances of the work. To achieve maximum performance, you should pay attention to the following factors:
- Overheat. PCs usually have 1 powerful graphics card and provide enough space for air movement. In some cases, an additional cooler is added to the case to make it easier for the video card to maintain the optimal temperature. In the case of farms, some users install 4-6 cards too close to each other. Because of this, the warm air has nowhere to go and the video cards in the middle overheat, turn off or even break down. The profitability from finding blocks drops, even if the difficulties have negative dynamics on the chart.
- Service. Every farm collects dust. If the video card is not cleaned for a long time, there may be so much dust that the card will turn off at the first load. It is also necessary to periodically replace the thermal paste. A specialist is recommended to carry out full maintenance once a year. However, most miners prefer to clean the card from dust and change the thermal paste after overheating problems arise.
- Overclocking a video card. You can increase productivity with simple manipulations. This may increase power consumption and shorten service life. However, with the right approach, you can achieve an increase in hashrate of up to 10-20%
. The main thing is not to increase the voltage on the GPU.
Why is Ethereum mining difficulty increasing?
There is a simple answer to this. When the developers created the cryptocurrency, they laid down a fixed number of coins that users would mine in a certain period of time. If users have mined more tokens than required, the difficulty of Ethereum mining increases. This is done to slow down emissions.
Conclusion! If a smaller amount of cryptocurrency is mined than required, then the difficulty is reduced and coins are mined easier and faster.
How quickly the difficulty increases
The Ethereum network is designed in such a way that new blocks are added to the chain approximately once every 10 minutes. Since everyone wants to make money, computing power is constantly growing. In this regard, there must be a certain parameter that compensates for such growth. This parameter is the complexity of the network; it is recalculated once every two weeks or every 2016 blocks. The rate of increase in network complexity cannot be predicted, but assumptions can be made. On average, it grows by 9% per month.
What do miners count on when they buy farms on credit?
The return on investment for farms at the rate growth stage is ensured by the injection of huge sums into cryptocurrencies and icos, the so-called whales (investors who buy cybercurrency worth billions of dollars).
If you look at the current situation, the income is decreasing every day, and if yesterday it was $800 from one farm based on 6 rx470 video cards, then today it is already $225.
The number of coins received inevitably decreases - this is a fact, but profit depends not only on the number of coins mined, but also on their value, which also changes.
Might be interesting: cost of rx470 video cards from 03/09/2017
The uniqueness of the Ethereum network
The Ethereum network, according to many experts, is in many ways superior to the Bitcoin platform. The introduction of smart contracts, which make it possible to register transactions involving different assets, has greatly contributed to this. The Ethereum network also has a feature in the form of increased productivity of coin mining. In addition, transactions are processed at high speed and new blocks are generated quickly. In the Ethereum network you can get a stable profit from mining.
The mechanism for mining Ethereum coins is unique in its own way. As is the case with other cryptocurrencies, the difficulty of mining ETH is slowly but constantly increasing. But the platform’s programming team has planned a major innovation that will greatly affect the emergence of new coins.
The foundation for the upcoming changes was laid last fall with the help of a unique update called “Byzantium” - a “difficulty bomb”. It is required in order to switch from the familiar POW algorithm to Casper, the latest algorithm reminiscent of PoS. After the transition, mining will no longer be profitable, but this has not happened yet, and Ethereum mining still brings good profits.
Why do you need a .bat file?
A miner is a program without a visual interface that runs in the console. When starting the miner, it needs to “pass” the parameters with which it will work. To avoid having to do this using the command line, we create a .bat file. Its only purpose is to transmit the pool address, wallet number, farm name and other parameters to the miner. You can edit the .bat file using any text editor.
After that, run the file and admire the numbers in the console. Among other things, it contains our video cards with hashrate and name.
History of difficulty changes
Since 2016, 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.
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 obtained from the website coinwarz.com, 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 for 24 hours.
Important! If a miner does not have equipment with the highest computing power, then the high difficulty of mining will lead to the fact that he will not stay afloat.
Future prospects
According to analysts, the Ethereum currency rate will grow in the long term and, compared to the current three thousand dollars, will increase to thirty or more. In their opinion, this will be due to the gradual update of the altcoin to the second protocol.
From the beginning of 2022, the price of altcoin is expected to rise above ten thousand dollars, which, when updating the Ethereum protocols, will cause an increase in transaction volumes to be comparable to the well-known payment systems Visa and Mastercard. However, analysts at the Amsterdam FB believe that the rise in price of the Ethereum coin will not exceed ten thousand dollars.
It can be seen that since August last year and over the course of nine months, the cost of one coin has increased by almost one and a half thousand dollars.
The new protocol (Ethereum 2.0) will be more user-oriented and user-friendly due to the scaling of the initial blockchain. The main difference from the old network is the transition from PoW to PoS consensus.
According to analysts, the Ethereum exchange rate will grow in the long term
The main difference between these two consensuses is the refusal to have miners and their computing power to support the operation of the PoS network. Now, to maintain the functionality of the blockchain, cryptocurrency holders are needed, who will receive a reward for this.
With the “London” update of August 5, 2022, the Ethereum network underwent changes in the rules for calculating commissions. Now part of the transaction commission received by miners as a reward will be burned.
According to sites that track coin burns on the altcoin network, coins are burning at a rate of 3.22 ETH per minute.
Burning is the removal of coins from circulation by gradually destroying them and reducing the total number. This is a powerful method of fighting inflation and is used to increase the final value of the cryptocurrency. Any user can verify that the coins were destroyed by checking the blockchain, where the operation is recorded as a transaction.
Leading investment analysts believe that the transition of the Ethereum network to new capacity will be an effective factor in the growth of the price of this currency. It will be ensured by increased demand from institutional participants, compared to retail ones, since the former will be interested in the technical power of the project while maintaining the increased demand of dApps founders.
Some believe that Ethereum will surpass Bitcoin. At first, the altcoin cost $0.3, since then its chart has only grown, increasing 10,000 times. One of the founders of BitCluster, Sergei Arestov, believes that cryptocurrency will be able to rise in price to $10 thousand, while Bitcoin (btc) will remain at the same level - $60 thousand. In his opinion, today Ethereum is a kind of cryptocurrency Internet, while Bitcoin is only only a payment system.
Others believe that Bitcoin will soon grow to $100,000 next year, the main load will continue to fall on it. Ethereum is predicted to increase to $5,000. Today it costs about $4,600; over the week its position has strengthened by 8.5%, while for btc this figure is at 3%.
Forecast for 2022
Due to the fact that the developers of the Ethereum network promise to soon transfer coin mining to the Proof of Stake algorithm, there is no point in buying special, expensive equipment. It may happen that funds are spent on acquisitions, but it will not be possible to recoup them. It is much more efficient to spend money on purchasing as many Ethereum coins as possible.
But there is also one minus here. None of the specialists or ordinary users can guarantee that the POS algorithm will work in 2018, despite the promises of the developers. Also, no one knows what will happen to the tokens themselves if Proof of Stake starts working. Some experts argue that there is a high probability of a collapse in the Ethereum rate. After which it will be difficult to recover.
If a miner has a powerful cryptocurrency mining farm, then it is worth trying to extract the maximum possible number of coins before the end of the year. For now it is possible to do this. Those who do not have expensive equipment can do cloud mining. Thus, it will be possible to avoid unjustified expenses and the risk of recouping the invested funds. Of course, everyone must make their own decision, but it is worth considering all the factors before investing your personal savings.
If we soberly assess the current situation, we can see with the naked eye that the complexity of the network is constantly increasing. The update, called "Byzantium", prepares the blockchain to switch to the POS algorithm. In this regard, the “Ice Age” may soon occur - a certain stage of time when mining Ethereum will be simply impossible.
The reward for a mined block today has already decreased from 5 to 3 ETH. Thus, the developers are preparing the ecosystem for a new hard fork. If in the coming weeks or months the Ether rate becomes higher, then by the end of the year it will be possible to mine it, and if it goes down, then mining will become unprofitable.
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Blockchain 0
Some terminology
In the process of development of the crypto industry, terms and names have appeared that are not used anywhere else.
The concept of Ether difficulty takes on a different meaning for the blockchain.
Difficulty of Ether, derived from the English Difficulty Ether, is a parameter of a unit of measurement that shows the miner the possible levels of difficulty of finding a hash in the network, and the conditions are proposed directly by the target network.
To have a clear idea using a specific example, let’s take the usual fiat money. Here, labor intensity will be limited by emissions.
A similar concept applies to cryptocurrency mining, that is, there is no way to mine as many coins as you want in any specified period of time.
The total aggregate quantity of digital assets cannot be greater than the quantity programmed by the source program code of the settlement number.
To ensure that coins are not generated simultaneously while miners are working, SEO developers introduce forced restrictions.
Thus, the reward is conditionally 1, but the number of applicants for the reward (represented by miners) is huge, and the competition between them is growing accordingly.
Whoever becomes the owner of a single reward will be shown the algorithm for calculating the difficulty of ether, which is used to obtain the necessary reward.
Thus, any complexity of mining ultimately indicates difficult ways to achieve the task, where complexity itself is a tool for regulating the generation process.
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