What is Mining?

Mining is the process of creating new blocks of transactions for the Ethereum blockchain. It enhances security and was crucial when Ethereum used Proof-of-Work (PoW) for consensus. Miners validated transactions and created new blocks. Ethereum upgraded to Proof-of-Stake in September 2022, reducing energy use by 99.95%. Miners play a pivotal role in securing the network. Thanks to LearnWeb3 for the insights!

What Consensus Mechanism does Ethereum currently use?

• Proof of Work

• Proof of Stake

• Proof of Authority

• Proof of Space

Why do miners exist?

Miners ensure transaction order agreement in decentralized systems. They validate transactions, preventing double-spending. Their work produces a certificate of transaction legitimacy, challenging but easily verified. Miners are rewarded with new coins. Ethereum miners initially earned 5 ETH/block, reduced to 2 ETH after upgrades.

Who can become a miner?

Anyone can technically mine Ethereum by running Ethereum node software, but profitable mining often requires specialized hardware. Mining rewards are roughly 2 ETH/block. Profitability depends on equipment and electrical costs.

How are Ethereum transactions mined?

Transactions are signed, broadcasted to the network, and added to a local mempool by nodes. Miners create blocks, verify transactions, execute them on a local Ethereum Virtual Machine, and produce Proof-of-Work certificates. Other nodes verify the block, update their local copies, and remove transactions from the mempool.

Different Methods of Mining

CPUs: Slow and impractical.

GPUs: Common for maximizing computational power.

ASICs: Specific to Ethereum, but expensive.

Cloud mining: Leverage dedicated facilities without hardware.

Mining Pools

Mining pools combine computational power for better chances of mining blocks. Rewards are proportionately distributed.

Credit to LearnWeb3 for valuable insights on Ethereum mining.