As the price of Ethereum is around $1000 you may be wondering to yourself whether it’s worthwhile to mine ETH. Like Bitcoin, Ethereum is a proof-of-work coin that uses miners to confirm network transactions. The profitability of mining varies from person to person and changes over time – usually becoming less profitable as the coin matures.
In this article we will try to figure out the profitability of Ethereum mining. There are three important factors to consider:
- Mining difficulty
- Hash rate
- Electrical costs
In a word, your mining rig needs to solve a mathematical algorithm to mine Ethereum. The mining difficulty of the network is a measurement of how difficult this algorithm is to solve. The higher the difficulty, the less Ethereum you receive for each unit of energy the GPU on your mining rig expends. As more miners join the network – the difficulty increases.
The Ethereum mining difficulty had been steadily increasing since the beginning of December with 1,500TH to ~2,500H.
Etherscan Ethereum Block Difficulty Growth Chart
The daily block rewards of ETH have hardly changed since December and it is currently ~20.339 ETH.
Etherscan Ethereum Block Rewards Chart
The hashrate is the speed in which your mining rig can solve the mathematical algorithm needed to validate a transaction.
Miners with a high hashrate usually come with a high price tag, but they also typically use more electricity as they operate which could further drive your costs up.
Average hashrate of ethereum network has increased since December from ~125492GH/s to ~203394GH/s, which is the highest rate of all time at the moment.
Etherscan Ethereum Network HashRate Growth Rate
Each mining rig works at a different level of efficiency and uses a variable amount of electricity. On the low end, miners typically draw ~100 W at their maximum load, but this can increase up to over 1000 W with more powerful and less efficient miners.
There are several services that allow you to calculate your power cost per day and compare that to the estimated return per day when picking out a miner:
- My Crypto Buddy
- Coin Warz
- What To Mine
The switch to proof-of-stake
The creator of Ethereum Vitalik Buterin, announced last year that the Ethereum network is going to switch from a proof-of-work to a proof-of-stake framework to confirm transactions. With a proof-of-stake system, holders of Ethereum stake coins by putting them up as collateral to validate transactions.
The transition to the PoS-algorithm will allow to reduce energy costs as much as possible without requiring real resources, since it will not need large computing powers, and hence users with equipment. This means that miners will soon be obsolete. But while ETH mining remains traditional, ordinary users still have a chance to get a rapidly developing cryptocurrency on their wallet.
To sum up, Ethereum mining is still profitable, but there are several other coins available for mining, like Monero, that may be a better choice for you depending on your purposes.
"This article is originally published at CoinCentral.com"