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How old were you when you wrote your first white paper? How about when you tried to invent the first “world computer”? Vitalik Buterin, the brains behind Ethereum, was 19 years old when he did just that.
He launched Ethereum with smart contracts, removing the need for third parties to conduct financial transactions. This marked the birth of Decentralized Finance (DeFi), and it would change everything. (I don't know about you, but my greatest achievement at 19 was opening an Ebay store to sell my rare Diablo II items.)
So you've heard of Bitcoin mining (of course), and you've heard of Ethereum. And you know a bit about mining in general. But you know you can't use your computer for Bitcoin mining. After all, no personal computer is powerful enough to do that these days, right? We need these weird and insanely expensive machines called ASICs to mine Bitcoin.
Ethereum, on the other hand...you can still mine that, right? But will the mining profits be worthwhile? And for how much longer? Read on, because these are the questions we get to answer in this article.
Is Mining Ethereum Still Profitable in 2022?
Is Ethereum mining even worth it anymore?
The short answer: It most assuredly is.
It's still the most profitable coin to mine out there, by far. I know what you're thinking. You've heard the rumors coming down the crypto grapevine. With the launch of Ethereum 2.0, ETH will move from Proof-of-Work (PoW) to the Proof-of-Stake (PoS) consensus mechanism.
Let’s see what that means.
Quick Take: Proof-of-Work versus Proof-of-Stake
The PoW consensus secures a blockchain network via mining. Since all miners have invested time and money into mining cryptocurrency with expensive mining equipment, miners should be disincentivized from trying to cheat the system. That's because cheating the system means undermining the very system that pays you (not a good idea). It's a fitting example of biting the hand that feeds you.
Compare this with PoS, which, like the name implies, means you have a stake in seeing the system succeed. Staking involves putting your money where your mouth is. Say you stake 10,000 ADA. If you try to cheat the system - and somehow succeed - people will find out that the Cardano blockchain (ADA) has been compromised. This leads to a crash in ADA prices. Happy ending? I think not. Not when the value of your staked ADA crashes, and you played yourself by undermining the very system that fed you.
After reading the blurb above, you're probably wondering...Can you still mine ETH after PoS?
In reality, staking has already been implemented on Ethereum, running in tandem with PoW. The complete PoS rollout is actually planned in three stages, with the first stage taking place on the Beacon Chain.
So a better way to phrase the question might be, "Can you still mine ETH after PoS rollout is complete?" Unfortunately, the answer is no.
In reality, staking has already been implemented on Ethereum, running in tandem with PoW. The complete PoS rollout is actually planned in three stages, with the first stage taking place on the Beacon Chain. After reading the blurb above, you're probably wondering...Can you still mine ETH after PoS?
But that doesn't mean the mining train has to end here.
With GPU mining, more adventures await! Because we're using graphics cards as mining hardware, we simply look at the next most profitable coin based on the PoW consensus.
And the "next most profitable coin" doesn't necessarily imply that the value will be lower than that of ETH. Once Ethereum completes Phase 2, aka "The Merge" - where the Beacon chain merges with Ethereum Mainnet - sure, the fun stops there for ETH mining. (In this article, we don’t cover Phase 3, aka Shard chains, because it concerns scalability, not mining.)
Once ETH mining stops, all the other miners will have to start looking for the next profitable coin to mine too. This will result in a mass exodus from ETH mining. And where will all these poor miners go? It's anyone's guess, but my money's on ERGO. If this occurs, it should boost mining difficulty for ERGO, in turn enjoying a steady increase in price and value.
But that might take a while.
In a recent tweet, Buterin stated that he had been overconfident about shifting to PoS from PoW. He said the main obstacle actually didn't involve technicalities, but getting consensus from other members on the team. (Oh the irony!) Ethereum 2.0 has been delayed time and again. Speculations of its release are running rampant, much like those about a supercycle in 2022.
So fear not, dear miner. ETH still wears the profitability crown...for now.
Is ETH Easy to Mine?
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Let's clear a few lingering questions before we get started with ETH mining.
Is ETH easy to mine? The difficulty of anything has to do with the amount of effort and the tools you've got at your disposal. Is it easy to get to Canada by plane? Sure. How about swimming across the Atlantic? Not so easy.
If your mining setup is spitting out an amazing hash rate, and you're equating mining difficulty with profitability, then ETH is the easiest crypto to mine.
Just keep an eye out on your electricity costs. With great hashing power comes a great electricity bill. That’s why it's always smart to gauge your potential profit beforehand. There are a lot of mining profitability calculators out there, but the mining calculator here is one of my favorites.
But just because ETH is the easiest coin to mine doesn't mean you can mine it with your phone. To mine ETH these days, you should arm yourself with a GPU mining rig. Sure, you can mine ETH with an ASIC...but why? Since ASICs are specialized mining rigs, once ETH switches over to PoS, they’ll become obsolete. And that's bad because these ASICs will cost you a ton of sweet satoshis.
Lastly, let’s look at the amount of ETH left to be mined. Technically, you can mine as much of it as your hashing power allows by the time The Merge takes place. See, this is my beef with ETH tokenomics. ETH has a yearly market cap, but in total, it has an unlimited supply for minting. This is one of many challenges that Ethereum 2.0 will hopefully address.
With these considerations in mind, if you’re still set on mining ETH, let's go over the mining process.
How to Start Mining Ethereum
What you're about to learn is the most straightforward mining process to start mining Ethereum in as little as 20 minutes.
Here's a quick rundown of what we need:
A Metamask wallet, or an exchange wallet address of your choice
A mining pool
Step 1: Get an ETH wallet
I recommend Metamask because it now offers a handful of built-in swaps. This means you can easily swap your ETH for whichever coin your heart desires via a decentralized exchange (DEX). The best part? You can do all this without having to ever leave your wallet.
But say you want to offload your ETH immediately. If that's the case, get your wallet address off a reputable crypto exchange. If you're based in the US, Coinbase is your go-to. If not, Binance is your friend. For improved security and peace of mind, consider getting your hands on a hardware wallet. I recommend the Ledger Nano X or a Trezor.
Step 2: Go to Ethermine
On the website, click on "Connect Wallet" on the upper-right-hand corner. If you want to mine ETH, you've got to "pool" your computing power. And to do that, you need to join a mining pool. (Pardon the pun.) As far as pool mining ETH goes, Ethermine is one of the most reputable ETH mining pools, and they claim to be the biggest. (Let's take their word for it.) That's why we'll be using it as our example.
On the Ethermine site, once you click on "Connect Wallet", you'll be prompted to connect your Metamask wallet. You won't have to do anything other than click on that button to get connected.
Step 3: Click "Start Mining"
You'll be presented with a list of options and steps to go through. We'll come back to this page once we've installed our mining software.
Step 4: Install your mining software
For our purposes, we use Phoenix Miner. (This miner works on both Nvidia GeForce GTX cards and AMD cards, which is why it's popular for mining crypto.) Once you've installed it, repeat the step of extracting the content into its own folder. Make sure to copy the location of the application file as well.
In case you read some of the vitriol online surrounding Phoenix Miner, the mining community knows that this mining app has been the target of an unfair propaganda campaign. Still, if you'd rather go with another mining app, popular alternatives include T-Rex for nVidia GPU miners and Lolminer for AMD miners.
Step 5. Use an extraction tool like Winrar to extract the content into its own folder
Watch out for this error when installing your miner app
When installing mining software, there's a good chance your antivirus program or firewall will flag it. Don't panic. This happens all the time. To fix it, add your miner as an exception to both your firewall and antivirus program. You can also switch off the firewall and antivirus until you're done installing the apps.
For your browser, go to Settings. Click on "Privacy & Security", then click on "Security" again. Under "Safe Browsing", click on "No Protection".
For Windows, go to your Windows Settings. Navigate to "Windows Security", and click on "Virus & Threat Protection". Then click on "Manage Settings" and switch off "Real-time protection".
Switch everything back on once you've completed the installation process.
Step 6. Prepare a batch file by creating a txt document
Copy and paste the following:
PhoenixMiner.exe -pool eu1.ethermine.org:4444 -pool2 us1.ethermine.org:4444 -wal YourEthWalletAddress.WorkerName -proto 3
Click on this link, which takes you back to the configuration page for the Ethermine pool. Pick your server location and replace "eu1" and "us1" with your closest and second-closest locations.
Replace "YourEthWalletAddress" with your ETH wallet address, copied over from Metamask. (Cashing out right away? Then remember that this address is from a cryptocurrency exchange like Coinbase or Binance.)
Replace "WorkerName" with whatever name you want your mining setup to go by. You can call it "Soon-to-be-crypto-millionaire". It doesn't matter as long as you can recognize it.
Save by clicking on "File", going to "Save as...", and saving as "Start.bat", and instead of saving as txt, checking "All Files". This way, once you close the file and double-click it to open it back up, it won't reopen as a doc. It'll instead start running the miner.
Step 7. Right-click on the executable “PhoenixMiner” (exe) file and click on “Properties”
Check the “Compatibility” tab, and make sure “Run this program as an administrator” is ticked. This move guarantees that your miner will always enjoy administrative privileges, ensuring a smooth mining process and no limitation on your hash rate.
Step 8. Double-click on "Soon-to-be-crypto-millionaire"
You've got your miner running, but how do you know that it’s actually working? Go back to EtherMine and click on "Miner Address". Copy and paste your MetaMask address into the field. Your address should be identical to the one in your batch file. If your mining setup has been configured correctly, within a few minutes, the dashboard should populate with your mining data.
Congratulations. You've launched your Ethereum mining operation. How easy and fun was that?
Want to Check Out How to Mine Dogecoin?
Perhaps you’ve heard of this precious little gem that’s caused quite a stir in the world of crypto. But it’s not just the first meme coin ever. It’s based on the Proof-of-Work (PoW) consensus, so you can mine it. (Yes, especially if you’ve got a more budget-friendly computer.) Read all about how to mine dogecoin.
Valerioshi is the 4th president of X+, one of the most exclusive communities in web3, for holders who hold 10 or more DeGods. Along with the burn team, he led the CryptoPunk burning campaign for DeGods, successfully raising more than US$100,000 in under 30 hours. He runs Degen Reports, and is host of The Degen Hour as well as the X+ Sigma Lounge, both weekly Twitter spaces. Follow the author on Twitter @valerioshi_