What is ethereum mining

To do this processing in a very secure way, these computers need to perform very complicated calculations that take a lot of computing power, and in turn, require a lot of energy and expensive and specialised processing equipment. Someone - the owner of the computers - needs to pay for all this equipment and electricity, so they need to be compensated for all the money and effort they are putting into making this network work.

They earn this compensation through newly minted Ethereum - so in short all new Ethereum that is created acts as a reward and incentive mechanism for people to contribute their computers to the system to help process transactions.

With Ethereum mining, the cost of this global system has just been spread over thousands of computers, and they recoup their cost through newly minted Ethereum. Buy, store and learn about Bitcoin and Ethereum now.

We are using cookies to provide statistics that help us give you the best experience of our site. You can find out more by visiting our privacy policy. By continuing to use the site, you are agreeing to our use of cookies. BitX is now Luno. Price charts Bitcoin Price Ethereum Price. Back to Learning Portal What is Ethereum mining? Previous Is Ethereum used by criminals? Next What are Ethereum private keys? The basics of a financial revolution. Where did Bitcoin come from?

The origins of a trustless system. Bitcoin as a payment system Advantages for consumers and merchants. Bitcoin as digital gold A new digital asset class to consider. Bitcoin as the internet Global, open to all for innovation and use. How do I get Bitcoin? Learn about earning, trading, buying and mining. How is the price of Bitcoin calculated? A primer on supply and demand. Is Bitcoin used by criminals? What is Bitcoin mining? Here's how to set your etherbase and then start mining:.

Its goal is to protect miners like yourself so that you will only ever need your home computer to remain competitive. The DAG should take about 10 minutes to generate and as soon as it finishes, Geth will start mining automatically. If you are serious about mining on the live ethereum network and getting real ether rewards, then you should use a dedicated computer with very powerful graphics cards in order to run the network. If you are using Eth then GPU mining comes out of the box.

There are currently two options for GPU mining in Geth available. You can read a more detailed description of how to install it on this mining post. This is a version for the pro miners. Go experimental GPU branch. It's experimental so you need to build go from source to get it. This version is focused on hobbyists and developers.

To install it, clone geth from source and then switch to the GPU Miner branch. You can read all about the theory behind this and its design in the Ethereum gitBook, mining chapter. Note that for Serenity a future release, a major milestone on the Ethereum development roadmap we are planning to switch to Proof of Stake PoS.

Mining prowess roughly scales proportionally to memory bandwidth. Empirical evidence has already confirmed this, with R9 x regularly topping benchmarks. Don't expect to see them on the market, and if you do, proceed with extreme caution. Ethereum would never be possible without bitcoin—both the technology and the currency—and we see ourselves not as a competing currency but as complementary within the digital ecosystem.

Ether is to be treated as "crypto-fuel", a token whose purpose is to pay for computation, and is not intended to be used as or considered a currency, asset, share or anything else. If so desired one could trade bitcoins for ether with the purpose of executing contracts and trade it back immediately in order to keep their value pegged and secured by the bitcoin network.

The latest version of the wallet includes an automatic conversion between ether and bitcoin. Use a pegged derivative: Ethereum is a great tool for creating complex trading between multiple parties. If you have a source for the price of Bitcoin that all parties trust, then it's possible to create an ethereum based currency whose value is pegged to the market value of Bitcoin. This means that you could trade bitcoins to a token that is guaranteed to always trade back to the same amount of bitcoins while still being fully compatible with other ethereum contracts.

Use a Bitcoin relay to convert a 2-way peg: This means that you can use Bitcoin's native limited scripting capability to lock a bitcoin into a contract that is directly connected to an ethereum contract, which can then issue an ethereum based token that is guaranteed to be backed by bitcoin. The relay is under development and as implementations are tested and proved to be secure, we will list them here.

Ethereum addresses don't have built-in checks on them yet. That means that if you mistype an address, your ether will be lost forever, without a secondary confirmation window. If you are moving a significant amount, start with smaller quantities that you can afford to lose, until you feel comfortable enough.

There are two types of accounts in Ethereum: In this section, we focus on the former. The remainder of this guide will be dedicated to the latter. Similarly, your transactions are also of two types: Before you execute your first ether transfer you need a friend to send your ether to. Assuming you created a second account to send the ether to:. The first two lines set local variables with account numbers for easier access later.

Change the sender and recipient addresses to whatever you like. The third line converts the chosen amount to the network's base unit wei. Although there are many names for ether denominations, we will use only two: Wei is the atomic unit of ether, and is the one used on the system level.

Most day-to-day transactions will be done with ether, which is equivalent to one quintillion wei, or a 1 followed by 18 zeros. Waiting a few seconds, the transaction should be complete. To check the balance of an account, simply type:. If you are using Geth then you can just use eth instead of web3. Anytime you create a transaction in Ethereum, the string that is returned is the Transaction Hash. You can use those to keep track of a transaction in progress, or the amount of gas spent in a past transaction using eth.

Here's how to use it:. We've built easy to use graphical tools , but if you are a developer you probably want to install the command line tools. Ether The crypto-fuel for the Ethereum network. Did you buy ether during the presale?