An Introduction to Ethereum Mining For Beginners

Technology has updated everything, from your phone, computer or washing machine to the traditional currency. Cryptocurrency is the new money. It is a form of digital currency that uses cryptography to secure and authenticate monetary transactions. Cryptocurrency mining is the process of verifying and adding transactions into a public ledger called a blockchain.

Bitcoin mining and Ethereum mining are two popular forms of mining. And, a miner solves problems using his/her computer’s processing power and gets rewarded for it. We will focus on Ethereum mining in this article.

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Let us understand the basics of mining…

What is mining?

In a cryptocurrency network, all transactions are stored as blocks that are linked internally creating a chain called a blockchain. These blocks have to be analyzed and authenticated to ensure seamless transactions across the network. But, the parties involved in issuing such currencies are not always equipped with the processing power of technology to ensure smooth transactions.

This is where miners come in. Mining is the process of participating in a cryptocurrency network and solving mathematical problems. A miner is rewarded for his/her solutions. They also help the issuers of currencies to handle transaction blocks. Miners provide issuers with solutions that are used for the verification of transactions.

After successful verification, issuers reward miners. Rewards are the portions of transactions verified by using solutions. Digital coins are also offered to miners.

Just like mining gold or precious metals is performed to increase the number of metals in the market, digital mining is done to increase the number of digital currencies. Similarly, Ethereum mining is done to maximize the quantity of Ether in the market.

Let us understand the concepts of Ethereum and Ether in a bit more detail…


Ethereum is a decentralized software platform that is based on blockchain technology. It facilitates decentralized applications called DApps and peer-to-peer contracts, also called smart contracts. These contracts allow users to exchange values without any intermediary. The Ethereum network works as a decentralized computer that executes the smart contract code. DApps also use smart contracts to maintain decentralization.

Smart contracts contain crucial data about transactions. The Ethereum network ensures that all data operations on the data follow the smart contract code. This maintains data integrity without depending on a trusted authority.


You can consider Ether as the fuel required to run the Ethereum platform. This is used as the cryptocurrency for running the Ethereum platform. It is also used for paying transaction fees and computational costs. Ether can be exchanged between different users and also developers who work on the Ethereum platform.

Developers use smart contracts to receive, store, and send Ether to other developers. You can say Ether is an incentive for developers to build better applications for the Ethereum platform. But before receiving Ether, you need to have an Ethereum wallet. These wallets can be downloaded onto your laptop or mobile.

Ethereum wallets are secure as they have a private key for the owner to authenticate transactions and send Ether to others. The ways to obtain Ether are as follows:

  • You can receive it from another user on the Ethereum platform.
  • You can exchange it for Bitcoin, another cryptocurrency, on transactions that support BTC-ETH pair.
  • It can be earned if you are a miner, by buying a cloud mining contract or becoming a part of an existing mining pool.

Read: All You Need to Know About Bitcoin

What is Ethereum mining?

As discussed earlier, Ethereum mining is the mining of Ether. The verification process used in the Ethereum network is called Proof of Work. You can perform Ethereum mining from your home, with a little knowledge of command prompt and some scripting.

As Ethereum mining takes up a lot of electricity and computational power, you need to have the right system to carry it out. You need at least 2 GB of RAM in your GPU (Graphics Processing Unit), as it is 200 times faster than your CPU (Central Processing Unit). For graphic cards, you can choose between AMD and NVIDIA.

Ethereum Mining Process

Step 1: Download software called Geth, which will connect your computer to the Ethereum network. Unzip the downloaded file and put in the C drive.

Step 2: Open the command prompt and locate the Geth folder using the cd command. Once located, type in the C:\>geth account new to create a new account for Geth. Hit Enter and a password will be asked from you. Type in your preferred password and press Enter again. Your account will be created.

Step 3: Type in geth –rpc in the command line to download the entire Ethereum blockchain and synchronize it with Geth. Be patient as the process takes some time to complete.

Step 4: To start mining Ether, you have to download software such as Ethminer. Install it and then open a new command prompt terminal. Type cd prog and press the Tab key. Press Tab again to see C:/> cd “Program Files. Hit Enter.

Type cd –cpp, hit Tab and then hit Enter. Press Tab again to enter the Ethminer software folder. You will see C:\Program Files\cpp-ethereum on the command prompt.

Step 5: Now you are all set for mining some Ether. Type in ethminer –G  and then press Enter to initiate the process. This is the approach for mining with your GPU. For CPU mining, just type ETHMINER and hit Enter.             

Ethereum mining will be worthwhile in the long run as Ethereum’s value is increasing at a steady pace. It is expected that the Proof of Work system may be replaced with the Proof of Stake in the future.   

Also read: Ethereum vs Bitcoin: Difference Between Ethereum and Bitcoin


There is a rise in careers in blockchain technology and blockchain has tremendously changed the very face of the technology industry forever. If you’re interested to become a blockchain developer and build smart contracts and chain codes, checkout IIIT-B & upGrad’s Advanced certificate program in blockchain technology.

What is Wei, and how is it different from Ether?

Wei is the smallest denomination of Ether, the currency used for facilitating transactions on the Ethereum network. As the value of the cryptocurrencies skyrocketed, the need for a smaller unit of cryptocurrencies arose to facilitate the conversion into existing currencies. As a result, all cryptocurrencies had their smaller units introduced. For example, Bitcoin’s smallest unit is called Satoshi. For Ether, it was named Wei after Wei Dai, the cryptography activist known for supporting the use of cryptography. One Ether equals 1018Wei. There are several other denominations of Ether, such as Kwei, Gwei, microether, milliether, etc.

What is Decentralized Finance or DeFi?

DeFi is a common term for financial services and products available to anyone in a Public Blockchain, specifically Ethereum. It is the new-age financial system whose core principles are the opposite of the traditional or widely prevailing financial systems. It is decentralized, completely transparent, faster, and requires no paperwork. Anyone sitting anywhere in the world can have exposure to the global financial markets provided they have an internet connection. They are maintained and owned by blockchain users with no involvement of a third party. It offers all the services offered by the traditional financial system, such as borrowing and lending money, buying insurance, trade assets, etc.

What are DApps?

DApps are open source software that offers services precisely like the standard apps, but they run on peer-to-peer networks. DApps differ from the traditional apps on many levels, such as data immutability, enhanced security, dependence on a central authority, etc. Even though there are many pros of using DApps, it doesn’t mean they are free from disadvantages. DApps generally have poor user interfaces, although it is said to be seeing improvement over time. It also struggles with low user numbers, which affects its effectiveness. Some currently popular DApps are Pancake Swap, Splinterlands, Opensea, etc.


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