What does Ethereum mean?
Ethereum can be a suburbanized blockchain platform that establishes a peer-to-peer network that firmly executes and verifies application codes referred to as good contracts.
Good contracts allow participants to interact with each other without a secure central authority.
Group action records are immutable,verifiable, and securely distributed across the network, giving participants full ownership and visibility into transaction data.Ethereum accounts created by users are where transactions are transmitted and received.
A sender should sign transactions and pay Ether,Ethereum's native cryptocurrency, as value for transacting on the network.
What is Ethereum mining?
Solving difficult mathematical puzzles is the process of mining cryptocurrency.
Miners are essentially the cornerstone of many cryptocurrency networks, as they spend their time and computing power to solve these mathematical problems and provide what is called a "proof-of-work" to the network that verifies Ether transactions (ETH).
Ethereum, like Bitcoin (BTC), currently uses a Proof-of-Work (PoW) consensus process and will soon move to a Proof-of-Stake (PoS) mechanism.
In addition, miners are responsible for creating new Ether tokens through this process, as they receive a reward in Ether for successfully completing a PoW task.
PoW relies on the basic properties of the hash function, an "encrypted" unit of data that is procedurally derived from an arbitrary input. The difference between hashes and standard encryption is that the process is one-way.
The only meaningful way to find out what input was used to generate a particular hash value is to try to hash all possible input combinations and see which one matches. This is made even more difficult by the fact that tiny changes in the initial data lead to completely different results.
Proof-of-work starts by determining a list of desired hashes based on the "difficulty" parameter. Miners must brute force a combination of parameters, including the hash value of the previous block, to produce a hash value that satisfies the conditions imposed by the difficulty.
This is an energy-intensive task that can be easily regulated by setting the difficulty higher or lower.
Miners have a set "hash rate" that determines how many combinations they try in a second, and the more miners participate, the harder it is to replicate the network for outsiders. Miners protect the network by performing actual work.
Why should you mine Ethereum?
Mining turns securing a network into a complex but usually quite profitable business, so the main motivation for mining is to make money.
Miners receive a certain compensation for each block, plus transaction fees paid by users. The fees tend to be a small contributor to overall revenue, although the boom in decentralized finance in 2020 has helped change that equation for Ethereum.
There are other reasons why someone might want to mine Ethereum. An altruistic community member might decide to mine at a loss just to help secure the network, since every additional hash counts.
Mining can also be useful for acquiring Ether without having to invest directly in the asset.
An unconventional use for mining at home is a form of cheaper heating.
Mining devices convert electricity into cryptocurrency and heat - even if the cryptocurrency is worth less than the energy cost, the heat itself could be useful for people living in colder climates.
Will the proof-of-stake conversion spell the end for Ether mining?
A common concern for any budding Ethereum miner is the Ethereum 2.0 roadmap, which unveiled plans to transition to Proof-of-Stake, a consensus algorithm that would discard miners as all existing Ethereum miners have a limited time to earn a return on their investment. But fortunately, PoW mining will likely continue to work until around 2023.
The Ethereum 2.0 Phase 0 launch, expected in 2020, is a separate blockchain that will not affect mining in any way.
Mining might not become obsolete until Phase 2, but there are no concrete plans yet for that transition in October 2020.
Phase 2 is anticipated to start towards the end of 2021 or the beginning of 2022. However, it's worth noting that Ethereum has a long history of delays on its roadmap - in 2017-2018, it was widely assumed that the transition would be complete by around 2020. No one really knows when Ethereum 2.0 will be ready, but most estimates suggest that new miners should have enough time to recoup at least a significant portion of their investment in hardware starting in October 2020.
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