With everyone in the crypto space complaining about Ethereum gas fees, it is easy to think, “Is Ethereum Mining Profitable?”.
Many are left wondering about the importance of mining a crypto coin that will charge you nearly half of your profits when cashing out.
Ethereum
Ethereum is a cryptocurrency that uses ERC20 tokens and smart contracts to allow for scalability on the blockchain. Developers can use the tokens to create other projects. Therefore, the token has a high demand.
As a result, many people speculate that Ethereum mining will never cease. Ethereum miners make a profit by confirming the most recent transaction and adding it to the blockchain. The fastest to add and confirm the transaction gets the mining fees as a reward.
Ethereum Mining
One would think that cryptocurrency mining is cheaper than real-world asset mining. However, cryptocurrency mining is no different from actual mining; it equally consumes energy, time, and space. Ethereum Network has many users, which means its energy consumption rates and electricity costs are unusually high.
Requirements for Mining Ethereum
- Mining application with Ethash algorithm
- GPU drivers with a decent hash rate, GTX 1070
- Mining pool address
- Operating system, preferably Windows 10 64-bit
- Crypto wallets
- Graphics card with 3GB RAM
- Space
- Electricity cost of $0.15
Is Mining Ethereum Profitable?
$ETH miners made more profits in 2020 and 2021. However, this does not mean it is profitable. The miners make an estimated profit of about $1,522 per month, which is 0.38 ETH.
Therefore, $ETH mining is undoubtedly expensive; 0.38ETH per month is very little to incur all costs listed above. Ethereum is a profitable asset, but mining is a risky process due to energy and space consumption. The requirements are too expensive for returns worth 0.38ETH per month.
Even new technologies on the network, such as NFTs, are performing way better than mining. A single Crypto Punk NFT sold for 450 ETH. However, the mining profits double monthly, making it a worthy task, but not for long.
Ethereum’s Difficulty Bomb
Ethereum might not be profitable for long because the process is becoming difficult over time; a “difficulty bomb” is ticking, simply waiting for an explosion.
A difficulty bomb is a series of puzzles in the mining algorithms that makes the mining process complex. The puzzles are used to reward miners; therefore, a complexity will render Ethereum mining less profitable for miners with less powerful equipment, hence the name “Ethereum’s Ice Age.”
Vitalik has nothing to do with this, but it is an introduction by EIP, and it is constantly evolving. Despite the methods to help miners continue mining amidst this, Ethereum’s difficulty bombing is also set to deter miners who will continue with PoW methods after the introduction of PoS. The complexity is increasing day by day.
Profitability of Ethereum Mining
Although Ethereum has high gas fees, the current market trend shows hope. Despite the Ethereum Improvement Proposal stating that the time for the actuation of the difficulty bomb in December this year Ethereum mining could be profitable if the market trend it something to by.