How to mine Ethereum after hard fork

How to mine Ethereum after the update?

With the activation of the London update, the rules for miners changed significantly. The Ethereum team continues to change the configuration of the system before fully switching to the Proof-of-Stake algorithm; therefore mining has changed. Let’s discuss these changes in more detail.

What changed in Ethereum mining?

Earlier, mining of Ethereum was based on the classic Proof-of-Work algorithm, with the rules of mining being close to standard.

This policy provided for maintenance of mining profitability at a rather high level and also allowed for an opportunity to mine priority blocks. The more fees were paid in the block, the faster it was sent for processing. This, however, will no longer be the case after the introduction of the new rules.

After the changes, the possibility of mining with hardware still remains. This means that the miners will be able to continue to mine ETH with video cards, GPUs and ASIC miners. However, the calculation of the commissions changed. Ethereum excluded transaction fees from the calculation of the reward for mining. After activation of London hard fork, the commissions only include base reward, with the miners no longer getting paid through the fees.

In order to reduce the losses of the miners, a decision was made to introduce voluntary reward, where each participant of a transaction was able to voluntarily send ‘tips’ to the miners. These methods, however, did not increase income by much and the people who made their money from mining Ethereum still faced considerable losses.

There is another important change that is imminent. Ethereum is planning to push the so-called Difficulty Bomb – to considerably increase the difficulty level of puzzles. Initially, this change was planned for the summer of 2023, but before the London update, the date of the bomb was pushed to December 1, 2023. Therefore, miners will either have to update their equipment or fully abandon mining of Ethereum with hardware.

Current reward for Ethereum mining

Therefore, per each 100 Mh/s of calculating capacities, with energy consumption at 400 Watt and electricity price at US$0.1 per kilowatt, miners will be able to earn $6.96 per day or $2,540 per year. However, these data will remain relevant only until January 2023, because as soon as the Difficulty Bomb is introduced, mining difficulty will increase substantially and these figures will take a turn for the worse for the miners.

What will happen to transaction fees?

After the update, the principle of priority of blocks based on fees no longer plays such an important role. From now one, there will be equal fees in each block and the part of the fees that exceeds the pre-set value will simply burn.

Miners will no longer earn additional income from transaction fees. It is still possible for the moment, as there are both transactions of the new and old types in the network. As soon as the old-type transactions disappear, the miners will no longer receive the reward.

As for the current level of fees, as of 22.10.2023, it was 0.079 ETH per financial transaction. After the hard fork, a substantial hike in the fees was observed, reaching its peak level in the middle of September. However, after that, they dropped and are currently at an average level.

Ethereum transaction fees in the past six months

How to mine Ethereum: a step-by-step guide

If you are still set on mining Ethereum, you will require special hardware and software. Here’s a step-by-step guide on how to start mining cryptocurrency.

Step 1. Choosing the place for mining and electricity price rate

Electricity bills are one of the key expenses. The more hardware you have the higher the bills will be. Therefore, you need to switch to a better tariff or move to an area where the electricity costs less.

In the example above, per each 100 Mh/s of calculating capacities, with energy consumption at 400 Watt and electricity price at US$0.1 per kilowatt, the profit will be $6.96 per day or $2,540 per year. If the price of electricity is $0.2 per kWatt, the profitability of mining will drop to $6 per day or $2,190 per year at the same other criteria.

Step 2. Buy hardware

Mining by the Proof-of-Work algorithm is done with hardware.

Step 3. Choose software

Software is essential for mining. You won’t be able to mine Ethereum without special software. Therefore, you need to install suitable software.

ASIC miners have pre-installed software, and therefore software is required only for the mining farms, which you make yourself.

Step 4. Choose a wallet

You will also need to choose a cryptocurrency wallet, where the coins you mined will be credited to. There are several types of cryptocurrency wallets.

For mining, it is better to choose MyEtherWallet, because it is the official Ethereum cryptocurrency wallet and has good security.

Step 5. Choose a pool and start mining

After that you need to choose a pool for mining. Independent mining is practically impossible in the current conditions. Therefore, you need to join one of the large mining pools.

After you purchased the hardware, installed the software, opened the wallet and set up your equipment, you can start mining. The only thing left to do is to launch your farm or ASIC and start mining cryptocurrencies.

Where to buy Ethereum in 2024?

Many cryptocurrency exchanges offer to buy Ethereum, and it is important that you find the one that offers the very best conditions. Traders Union analysts recommend buying ETH via Binance, ByBit or Kraken exchanges. These cryptocurrency exchanges occupy high positions in the TU rating. They have proven that they are reliable, offer a good choice of markets and low commission for trading Ethereum.