Understanding the Fundamentals of Ethereum Mining

According to MarketCap, Ethereum is the second-largest cryptocurrency, with a current value of $2,921.50. Recently, Bitmain, a company that manufactures ASIC chips for crypto-mining, has announced a release of an Application Specific Circuit(ASIC) miner for Ethereum Mining. Thus, indicating to its developers that the Ethereum Mining Industry is going to be doubling down at Proof-of-Work only.

Till today almost 115,708,027 Ethereum has been mined with a trading volume of $29,107,123,138. 

If you are interested in Ethereum and Ethereum Mining, then you are in the right place.

In this Ethereum Mining tutorial, you will look into the various concepts and components around Ethereum Mining.

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Introduction to Ethereum

  • Ethereum is defined as a blockchain-based computing platform that enables its developers to build and deploy decentralized applications.
  • Ether is the cryptocurrency for Ethereum, which is used to build decentralized applications, smart contracts, and make standard peer-to-peer payments.
  • Ether acts as fuel for the Ethereum Network. It tracks and facilitates all the transactions in the network.


Ethereum Coin

Features of Ethereum


Now, have a look at the features of Ethereum that make it so different from other cryptocurrencies.

  • Ethereum ensures all the transactions in the Ethereum blockchain are cryptographically more secure.
  • All transactions performed under the Ethereum blockchain are immutable. That is, once the data is written and stored, it cannot change. This makes it more difficult to hack or manipulate.
  • Ethereum has the largest developer community globally, which gives it a tremendous advantage over other protocols.
  • You can instantly connect the applications built on Ethereum to hundreds of different protocols like finance and marketing, known as money legos.

What is Ethereum Mining?

  • In simple words, Ethereum Mining is a process of creating and adding a block of transactions to the blockchain network of Ethereum. 
  • Currently, it uses the Proof-of-Work consensus mechanism. 
  • All transactions taking place in the Ethereum network need to get approved by the miners.
  • Miners use a Hashing Scrypt (Ethash) to solve computationally hard puzzles for successfully mining the blocks of transactions, in the Ethereum Blockchain Network.
  •  This process helps secure the network from attacks like hacking or manipulation of identity.


Ethereum Mining

Why Should You Mine Ethereum?

  • The primary goal for mining Ethereum is to make money. 
  • It turns the act of securing the network into a relatively complex, but profitable business. 
  • Miners receive a certain amount as a reward for mining each block of the Ethereum Blockchain Network, including the transaction fees paid by the users.

Types of Ethereum Mining

There are three ways of performing Ethereum Mining :

  • Pool Mining
  • Solo Mining
  • Cloud Mining

Pool Mining


  • Pool Mining is the easiest and fastest way to get started with Ethereum Mining. 
  • Along with other people, you work together in a single pool. And if someone gets the hashcode correctly, they share the reward among everyone in the Pool.
  • Important Factors that you should consider before joining a Pool are:
    • Pool size
    • Minimum Payout
    • Pool fee

Pool size is the factor that determines the number of blocks you find in the Ethereum network and its share rewards. As the number of miners increases, the chances to get rewards also increase.

However, the more people, the smaller your share in the reward.

Minimum Payout is the minimum amount of Ethereum you need to mine before it gets credited to your wallet. 

  • Pools with large Minimum Payouts are not beneficial as you will have to wait in the same pool for a longer period before getting your reward. 
  • Therefore, pools with small Minimum Payouts are considered to be a safer option. You will get paid frequently without committing your time to a single Pool for too long.

Every pool has a certain amount of Pool fee associated with it. It is the amount you need to pay to continue using the pool. This amount is percentage-based, on the amount of Ethereum you are mining. It mainly varies between 1% to 3%.

Note: It would help more if you went for Pool Mining because you might get a smaller reward, but you will not have to wait for days or weeks to get no reward.

Solo Mining


In Ethereum Solo Mining, you will get rewarded only if you solve the puzzle and mine the Ethereum block first. 

Note: Here, since you are competing with many people and companies, you have to be very good at your work.

Solo Mining is only profitable when you have plenty of resources with you, like a 100+ Graphics Card. But it has its disadvantages like:

  • Electricity costs - Having so much equipment and other electrical devices like fans and lights may use a lot of electricity, leading to high electricity bills.
  • Space - Space is a real problem because not everyone has a considerable amount of area to set up all the resources and equipment needed for mining Ethereum.

Cloud Mining


In Ethereum Cloud Mining, you pay someone else with the equipment to mine Ethereum for you. You pay some amount of money as fees to them for investing their time and resources, and in return, they provide you with the reward they gain by mining Ethereum.

But this technique of mining Ethereum has some pros and cons too.


  • You are not responsible for any equipment damage.
  • You don't have to acquire all the necessary equipment and look for ample space to store it. You can sit back, observe the market and enjoy the reward for your investment in Ethereum Mining.


  • If the Ethereum price drops, then there is no way you are getting your money back. The money you invested, or the fees you paid to the miner, is lost.
  • You can't ask the other person to change their equipment according to your concern.

Ethereum Cloud Mining is considered a safer way for mining service providers to guarantee a profit for the resources they have purchased.

How Does the Mining Process Work?

Ethereum Mining follows a specific set of steps to function.


  1. A user requests a transaction with the help of the private key of his digital wallet account.
  2. Then the request is shared worldwide with the Ethereum network.
  3. Next, the requested transaction is added to a list of pending transactions that need to be added to the Ethereum blockchain network.
  4. The miner then verifies and validates the requested transaction and performs a complex mathematical puzzle on the transaction data.
  5. Once the requested transaction is verified and it stores a copy of it in EVM, the process of "Proof-of-Work" begins for the respective block.
  6.  Then, the nodes of the Ethereum Network verify that the checksum of the state of the miner's block matches the checksum of their updated state of EVM after execution of all transactions.
  7. Only after that, the block is added to the Ethereum Blockchain Network. 
  8. On successfully mining the block, it rewards the miner with some amount of Ether in their wallet.
  9. Then the requested transaction is approved and credited to the respective wallet/wallets.

Each transaction is mined only once, but every participant of the Ethereum Network verifies it.

How to Mine Ethereum?


Tools you will need to be an efficient miner for Ethereum on your personal computer are :

  • An Ethereum wallet to store all your currency earned.
  • GPU drivers or Graphics Card with a minimum of 3GB RAM.
  • A mining software suitable according to your hardware like GPU.
  • And a compatible operating system (Windows 7 or 10, 64 bit).

Create an Ethereum Wallet


Before getting started with mining Ethereum, you need to create an Ethereum Wallet to store all your Ether.

Trezor Model T and Ledger Nano are the most reliable and secure wallets in the market of cryptocurrency.

Installing Your GPU drivers or Graphics Card


After creating your digital wallet, you need to update all the hardware, i.e., drives in your system.

You can use two types of Graphics Cards, they are :

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Installing Software for Mining Ethereum


Claymore is considered the best software for mining Ethereum on GPU drives.

1. Download the latest version of Claymore dual miner for your operating system. The latest version is Claymore11.0.

2. Click on the latest version for Windows and download the zip file.

3. Extract the files of Claymore v11.0 to a folder on your desktop for easy access.

4. Open the folder to have a look at the files.

5. Right-click on start and then on the edit option.

6. Edit the Start.txt file and add these lines :






EthDcrMiner64.exe -epool -ewal -epsw x

7. Choose your desired pool from these recommendations:

Pool Name

Pool Fee

Minimum Payout (ETH)

Pool Address

Pool Size










Very Big










Very Big

You can find better search results than these according to your region.

8. Type in your pool address instead of <Mining Pool Address>.

9. Save your Start.txt file with your new updates.

P.S. - While saving, select type as “All Files.”

10. Once you save, click on the Start.bat file, to begin mining Ethereum.

Will the Proof-of-Stake Transition Kill Ethereum Mining?

  • The newly introduced concept of Ethereum 2.0 roadmaps plans to upgrade to Proof-of-Stake, a consensus algorithm in which it will provide all existing miners of Ethereum Network with a limited time to earn a return for their investment.
  • It is expected to be launched by the end of 2021 or the starting of 2022. It was supposed to be launched by October 2020, but the history of delays regarding this upgrade is worth talking about.
  • Nobody truly knows when Ethereum 2.0 will be completed and introduced to the Crypto-mining world. 

Therefore, Proof-of-Work mining is likely to be functional till 2022.



Is Mining Ethereum Profitable?

  • The profit of any crypto-mining majorly depends on the cost of electricity in that particular area. 
  • As a rule, anything below $0.12 per kilowatt consumed in an hour is considered profitable.
  • You can mine Ether and turn it into a vital source of income by analyzing these figures like hashrate of Ethereum, block reward, no. of blocks per day, and the coin price of Ethereum.
  • You can use an Ethereum Calculator to figure out your daily revenue basing it on these factors.


Ethereum Calculator

  • Or you can use this formula too.

Daily Revenue = (your hashrate * block reward *blocks in a day * coin price) / Total hashrate

The predictions are made that the ETH price can rise and become more stable in the coming few years. So, it is an excellent opportunity to invest in and save in Ethereum.

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In this tutorial, you saw Ethereum Mining, its concepts, types of Ethereum Mining, how you can mine Ethereum, what you need for Ethereum Mining, and if it is profitable to mine Ethereum.

Whether you're an experienced Blockchain developer or just aspiring to break into this exciting industry, to know more about Cryptocurrencies and Blockchain, enrolling in Simplilearn’s Blockchain Certification Training program helps you with all levels of experience to learn more about cryptocurrencies, Blockchain, and its technology.

Do you have any questions for us? Please feel free to drop them in the comments section of this article; our experts will get back to you as soon as possible.

About the Author

Ravikiran A SRavikiran A S

Ravikiran A S works with Simplilearn as a Research Analyst. He an enthusiastic geek always in the hunt to learn the latest technologies. He is proficient with Java Programming Language, Big Data, and powerful Big Data Frameworks like Apache Hadoop and Apache Spark.

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