Bitcoin mining is a process of using specialized hardware to solve complex mathematical problems in exchange for the reward of Bitcoin. It is designed to be decentralized with miners operating in all countries and no individual having control over the network. Ethereum Mining, on the other hand, is faster than Bitcoin mining because it uses a different kind of algorithm called ‘Ethash’ which cannot be solved by ASICs.
Another difference between Ethereum and Bitcoin mining is that the former uses a GPU-based system, which means that you can mine Ethereum on your computer. On the other hand, Bitcoin mining uses ASIC-based systems, which are generally expensive and powerful as compared to GPU-based systems.
In order to understand what is Ethereum and how does it differs from Bitcoin, we will take a look at this infographic.
There are a number of differences between Ethereum and Bitcoin when it comes to Mining. The difference in the block creation time is one of the major differences between BTC and ETH.
Bitcoin takes approximately 10 minutes to create a new block while Ethereum takes 15 seconds to create a new block.**
Blockchain mining is the process by which new blocks are created and all Bitcoin transactions are verified. Mining is actually a poor name for the process taking place, but caught on due to the hope of completing a block and winning the attached Bitcoin reward.
In Ethereum, instead of mining for bitcoin, miners work to earn Ether, a type of crypto token that fuels the network. Beyond a tradeable cryptocurrency, Ether is also used by application developers to pay for transaction fees and services on the Ethereum network.
Bitcoin mining involves three variables: the block, the mining difficulty and a random number. In Ethereum mining, miners use their computational power to solve a cryptographic puzzle posed by the Ethereum network. If they can do it before any other miner, they win 2 ETH (and get to keep transaction fees).
Mining is a word that originates from the gold analogy of the cryptocurrency sphere. It is not some get rich quick scheme. It requires time and effort to grow especially when you are working alone. The word was adopted because just as precious materials are difficult to see, so are digital currencies. Since mining must take place to increase the volume of precious metals in the market, digital mining must take place to increase the digital currencies in circulation.
The major difference between Bitcoin and Ethereum mining is that while Bitcoin uses the SHA-256 hashing algorithm, Ethereum uses Ethash, a memory-hard algorithm which was designed to prevent ASICs (Application Specific Integrated Circuits) from being created for it. This enables individuals to mine Ethereum at home with their CPUs or GPUs (Graphic Processing Units).
In the simplest terms, Ethereum mining requires a similar investment of time and money as Bitcoin mining to be profitable. However, Bitcoin and Ethereum differ in their technical design and capabilities.
Mining is the process of adding transaction records to Bitcoin’s public ledger of past transactions. This ledger of past transactions is called the blockchain as it is a chain of blocks. The blockchain serves to confirm transactions to the rest of the network as having taken place. Bitcoin nodes use the blockchain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.
Ethereum mining is similar in some ways to Bitcoin mining, but vastly different in others. Where Bitcoin requires specialized hardware for ASIC (application-specific integrated circuit) chips, Ethereum can be mined with graphics processing units (GPUs), which are widely available on consumer PCs these days.
The GPU is a form of ASIC that can perform many different types of calculations – in this case, it will run an algorithm that will attempt to solve a block on the chain, which contains transactions from people who want to send Ether from one wallet address to another. The GPU performs these calculations at much higher speeds than a CPU, which makes it more suitable for mining Ethereum.
This is a very basic explanation of Ethereum mining. This article will explain in layman’s terms the differences between Ethereum and Bitcoin mining as well as factors that affect the profitability of each.
This article is not meant to be a comprehensive guide on cryptocurrency mining, but instead a general overview of how mining works and how it pertains to Ethereum and Bitcoin.
Mining is the process of adding transaction records to Bitcoin’s public ledger of past transactions or blockchain. This ledger of past transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place. Bitcoin nodes use the block chain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.
Mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Individual blocks must contain a proof of work to be considered valid. This proof of work is verified by other Bitcoin nodes each time they receive a block. Bitcoin uses the hashcash proof-of-work function.
The difference between the two is that Ethereum allows developers to build and deploy decentralized applications. In other words, the apps are not subject to the control of the centralized authorities.
Bitcoin is limited to financial transactions, while Ethereum can be used to build Decentralized Autonomous Organization (DAO). DAO is a completely new and innovative way of organizing businesses. It is essentially a self-governing network that cannot be controlled by any single person or entity.
Ethereum mining also uses proof-of-work as its consensus mechanism, but it has its algorithm called ethash that prevents ASIC miners from being built for it. Even if a company like Bitmain were to come up with an ASIC miner for Ethereum, the developer community would likely fork the protocol to ensure ASIC resistance. The goal of Bitcoin was to create a decentralized currency and payment system, but Ethereum was created with a more general purpose in mind: being able to program decentralized applications on top of the blockchain.