Surprisingly, all you need is an AWS EC2 instance to start mining Ethereum.
I’m sure you’ve already heard of the cryptocurrency craze way before reading this post. Cryptocurrencies are slowly and quietly revolutionizing the way financial systems and transactions work (and should work in my opinion).
With Bitcoin hitting its $18K mark not awhile ago, a current total of $316B in market cap and hundreds of ICOs (Initial Coin Offering) conducted since August, it’s sure to say there’s a bubble in the cryptocurrency space. What’s more, is that it doesn’t seem this bubble is going anywhere, anytime soon.
As you can see in the graph below, the total market cap of cryptocurrencies has grown from under $50B to over $150 in under a year!
So what would be the best way to enter this space and enjoy the growth? I’m not a cryptocurrency expert, however, from my research I’ve found that the answer is pretty clear across all opinions:
If you’re looking for quick earnings, just invest in coins.
I highly recommend purchasing coins with the exchange Binance or Coinbase (if you just want Ethereum). Binance has by far the most variety of tokens to invest in, Coinbase has an amazing user experience and both are considered extremely secure. To purchase coins with Coinbase click here, or with Binance click here.
To learn how and what other coins to invest in, read my latest post here.
Personally, I’m very interested in Ethereum, and have found an effortless way to start mining it quickly on AWS! This post will walk you through the process.
But before we start, let’s go over some basics. If you’re already familiar with them, just scroll down.
What is Ethereum?
Ethereum is an open software platform based on the blockchain technology that enables developers to build and deploy decentralized applications. The advantage of Ethereum over Bitcoin, is that it can support many different types of decentralized applications.
Ethereum has the second largest market cap after Bitcoin, and has gained massive growth in the last year with over 230% as you can see below:
However, increasing growth in the price leads to an increasing demand for Ethereum mining and therefore to an increase in mining difficulty:
If you were to start mining Ethereum in May, you’d be seeing significantly higher earnings than if you start now.
What is crypto mining?
Mining originates from the gold analogy of the cryptocurrency sphere. In simple, cryptocurrency mining is a process of solving complex math problems. “Miners” are people that spend time and energy solving these math problems. They provide the solution to the issuers, who verify it and reward the miners with a block of Ether. Intuitively, an increase in mining difficulty means it becomes harder to solve complex problems, and therefore to fewer rewards. We’re at a current peak in Ethereum difficulty due to its very high demand and popularity.
Is mining Ethereum still worth it?
As more miners join the Ethereum network, the harder it becomes to solve the problem, which leads to an increase in the mining difficulty. This is why it’s currently costly to mine Ethereum. The returns are very low and equipment is still pretty expensive. However, as Ethereum price continues to rise, it could become worthwhile in the future.
Nonetheless, Ethereum is reportedly switching to a proof-of-stake framework later this year, which means Ether mining could no longer be relevant. Take in mind, that this could also lead to a significant increase in Ethereum price.
So you might consider purchasing some coins as well. As I’ve stated above, Binance or Coinbase would be your best option in my opinion.
If you’ve reached this far and are still eager to mine Ethereum, let’s get to it!
UPDATE [5/5/2018]!
Amazon Web Servers [AWS] has introduced their blockchain template for Ethereum and Hyperledger fabric. The templates allow users to create and launch secure blockchain network using open source frameworks in a fast and easy way. In addition, the template has a set of nodes that implement and responds to the RPC protocol. It also supports the EthExplorer and EthStats status page and Ethereum mining. For official documentation click here.
Scroll down to continue with my original approach for mining Ethereum…
How to start your AWS Mining instance
The steps are pretty simple:
- Go to your EC2 console in AWS and change the zone to US East (N.Virginia). This zone happens to be the cheapest for the type of instance we’ll be using, and also contains a community AMI that has all the required mining libraries already installed for instant use.
- Under Instances, select Spot Instances and click ‘Request Spot Instances’.
- Search for a community AMI called ami-cb384fdd and select it.
- Under Instance type choose g2.8xlarge.
- Review and Launch!
How to start mining
To start mining, you’ll need an Ethereum wallet and to join a mining pool.
To generate a wallet, simply go to https://www.myetherwallet.com and follow the steps. By the end of the process, you’ll receieve a wallet address.
We’ll be using Dwarfpool for mining, which is rated in the top best mining pools. Feel free to use others if you like.
Simply SSH to your instance and type:
> tmux
> ethminer -G -F http://eth-eu.dwarfpool.com/{WALLET ADDRESS}/{YOUR_EMAIL ADDRESS} --cl-local-work 256 --cl-global-work 16384
Tmux allows you to keep a process running after closing your SSH connection.
Ethminer is an Ethereum GPU mining worker. Entering your email address allows you to receive notifications on payouts. The other parameters are for mining optimizations.
That’s it!
You should soon see a DAG file generated and right afterward, your mining should start. To view your stats, simply go to https://dwarfpool.com/eth and in ‘Worker stats’ enter your wallet address.
Personally, I’ve concluded that due to the very high Ethereum mining difficulty, it’s not actually worth it in the short and mid-term. An hour of running a g2.8xlarge instance currently costs around $2.6 per hour. The current gains in mining Ethereum is around $2.6 a day!
No one can know for sure what the future of cryptocurrencies holds and if this is just a bubble that will soon pop. Some even say cryptocurrency trading is equivalent to buying lottery tickets.
However, being a tech enthusiast and a believer in disruptions, I truly believe there’s a bright future for cryptocurrencies. If I’m right, the current rise in Bitcoin and Ethereum is just the start. And one coin might be worth 100x its price today, which might justify mining it today.
To learn how and what coins to invest in cryptocurrencies, read my latest post here.
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