The Real Cost Of Mining Ethereum, and Why Is It So Expensive

 

Yes! Mining Ethereum is expensive but why? 

As a Crypto Enthusiast & according to many experienced people who are an active part of this huge and profitable community, it seems like 2021 is the best year for Ethereum. In fact, it is worth mining Ethereum instead of Bitcoin.

To fully understand Ethereum mining, let’s go back to the basics, how it really starts?

 Quick History of Ethereum

Ethereum is the second-largest cryptocurrency by market capitalization, next to Bitcoin. It was proposed in 2013 by programmer Vitalik Buterin with an initial supply of 72 million coins and the network went live on July 30, 2015. Ethereum is a decentralized, open-source blockchain with smart contract functionality.  Ethereum is the most actively used blockchain.

They’re a lot of people confused about Ethereum & Ether especially the newbies of Crypto world and they consider Ethereum as a currency, and since a lot of them think the same, it was widely accepted like that. But, today, we hope these things are clear, since the coins are Ethers (ETH), and the A blockchain-like network is named Ethereum.

 The Real Cost of Ethereum Mining

Anyone can mine Ethereum, you can even use your regular gaming computer; however, to make it as efficient as possible, you can build a unit that’s the only purpose is to mine Ethereum.

To give you the detailed information on how expensive Ethereum Mining is, let’s start at the beginning:  Let’s construct a hypothetical mining rig, plug in some mining GPUs that work best for Ethereum and come up with a pragmatic analysis of how much you can earn through Ethereum mining.

The Cost of Building an Ethereum RIG

GPU (Graphics Processing Unit) or also known as Video cards, Graphics card, etc. is the most important component in building a profitable Ethereum Mining Rig.  GPUs give high-end gaming computers the capability of running the spectacular graphics of modern PC games. They’re also great for making as many guesses at the hashes of Ethereum blocks in a short time as possible.

To have a proficient Ethereum rig you must have at least two GPUs to mine Ethereum; however, you can plug as many as you can as long your Motherboard is capable of handling it. The more GPUs you have, the higher the electricity cost will be, good for you if you belong to the countries that have the lowest electricity cost.

There’s a lot of GPUs that work perfectly with Ethereum. However, I particularly recommend one of these GPUs for your Ethereum Mining Rig.

·         NVIDIA GeForce GTX1070.

·         AMD Radeon RX580.

·         NVIDIA GeForce GTX1060.

·         AMD Radeon RX Vega 56.

·         NVIDIA GeForce GTX1080 Ti.

·         NVIDIA GeForce GTX1070 Ti.

When it comes to the prices for these GPUs, I recommend Amazon if you want to buy brand new items or eBay if you want the used ones. However, to tell you frankly these mining GPUs are overpriced right now because of the demand. Even the used GPUs now cost more than the retail price of brand new GPUs way back in 2020.

Warning: Beware of online scammers offering lower prices of these mining GPUs. There’s a lot in eBay be very careful. We don’t want your money to go to waste.

 You can view here the comparison of the best GPUs used to mine Ethereum, click here.

Based on the table above, our hypothetical mining rig is more efficient and profitable than some of the best mining equipment on the market right now. We are assuming that four GPUs will mine 40 MH/s each. The hardware specs are four GPUs, plus a processor, a motherboard, and a power supply rated at 1,000 Watts of electricity. The cost of this rig would be approximately $3,000.

 Running Cost Ethereum Mining RIG

In mining, Electricity is everything, I mean the lower the cost of your electricity the higher your profit will be. Based on the data we have gathered, the average price paid per kilowatt-hour (KWh) for Bitcoin miners is estimated at about 5 cents per KWh, while Ethereum miners are assumed to be paying 10 cents per KWh on average. This is due to the fact that Ethereum runs Ethash, an “ASIC-resistant” proof-of-work algorithm. Application-specific integrated circuits (ASICs) led to the industrialization of Bitcoin mining, while Ethereum mining is done with Graphics processing units (GPUs) found in every home computer.

However, Ethereum promised to change its proof-of-work algorithm to an energy-efficient proof-of-stake algorithm called Casper for sustainability.

What we learn so far

Mining Ethereum can be very expensive but surely rewarding. As the saying goes from Crypto Miners, “Mine and Hold” baby. 

It’s also not worth buying second-hand GPUs for your mining rig. They might save you a little money upfront but they’re unlikely to run as efficiently as new ones and their life expectancy will be much lower!

When it comes to making a profit, many people choose to trade Ethereum. If that's what you decide to do, then go for Coinbase, Binance, or Coinmama. These cryptocurrency exchanges are among the most reliable ones. 

As we move into a world with more decentralized services that pay in Ethereum directly, or services that pay in other crypto-assets, mining may become less favorable due to the large depreciating investment in hardware.