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Ethereum Mining & Ethereum Network and Usages

Ethereum currently uses “Proof of Work” Consensus Mechanism.

Mining is the process of creating a block for a set of the transaction to be added to existing Blockchain. This task of Mining is performed by a set of Miner (Anyone can choose to be a miner). Generating a Block need a mathematical puzzle to be solved, whoever among the miners is able to solve that puzzle fastest has to broadcast the new block information to other miner using a Consensus algorithm. Once all miners approve it, the block will be added to the chain and Miner will be awarded Ethers called Block Rewards.

Generating a block requires intense Computing power.

Who can become a Miner?

Anyone can become a miner, but it takes a lot of computing power to mine profitably. So, Miners often buy dedicated Hardware with large computing powers to Mine profitably.

Costs Associated to become a Miner:

  • Cost of Buying dedicated Hardware

  • Electricity cost

  • Taxations as in some jurisdictions, Block Rewards are considered as part of Gross Income.

You can use Etherscan or CryptoCompare like Mining profitability calculator to find whether you can mine profitably.

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