How is crypto currency produced

Ether: This is how you produce the cryptocurrency yourself

Thomas Joos

You can produce cryptocurrencies yourself on your own computer - this is called mining. This is not only possible with Bitcoin, but also with Ether.

EnlargeYou can create the cryptocurrency ether yourself on your computer
© Fotolia / rcfotostock

The three most famous cryptic currencies are Bitcoin, Ethereum (Ether) and Ripple. The alternatives to Bitcoin are also known as Altcoins. The Ethereum platform works with the cryptocurrency Ether.

As with the production of Bitcoin, powerful graphics cards from AMD and Nvidia are also used to generate ether - you need the latest hardware with a fast graphics card to calculate the cryptocurrency.

Ethereum has a lot of supporters. This includes large companies such as J.P Morgan, Microsoft, and Samsung. The Enterprise Ethereum Alliance (EEA) summarizes and bundles the support of the individual participants. So Ether will definitely have a future. Of course, it is not possible to say exactly how this will affect the course. The platform behind Ether offers more functions than Bitcoin, as exchanges and services can be more easily integrated here.

As with Bitcoin, the computer has to run for a long time to calculate ether, ideally all day. Here you have to calculate whether the expected revenues in the form of ether are not already being eaten up by the electricity costs. At a rate of around 300 euros / ether, you can assume that you will calculate around 0.01 ether per day - this will give you around 5 euros / day.

These are of course very rough estimates, but they show that you can't make hundreds of euros in a day if only a single computer is used.

Put on the right graphics card

The more ether generated via Ethereum, the more difficult it becomes to generate more ethers, as the algorithm is intended to prevent the market from flooding. Bitcoin and Ethereum do not differ from each other here.

According to various sources, current graphics cards from AMD are currently problematic in order to calculate blocks for Ethereum in the future. However, AMD responds and offers new drivers. Nvidia graphics cards of the types 1060, 1070 and 1080 should also be able to cope with the DAG blocks to be calculated in the future.

However, users should regularly check the Internet about which graphics cards and drivers are currently best suited for calculating Ether. When new blocks are generated, other products may be the better choice within a few days. However, this also has an effect on the prices of the graphics cards, which fluctuate very strongly and rise immediately if they are the more ideal solution for the calculation.

Ethereum, like other cryptic currencies, works in blocks when calculating. If the maximum amount of a block is reached, the currency's algorithm switches to the next block. Such a process is known as the "DAG Epoch". With a change, the computing power required to generate new ethers increases. With Ethereum, graphics cards from 6 GB of RAM are currently useful, cards with 8 GB of RAM are more suitable.

Choosing the right platform for mining

Many tools for calculating cryptic currencies are optimized for one currency, i.e. Bitcoin or Ether. There are also tools that work directly with a mining pool provider such as Minergate's Cryptocurrency GUI Miner and Mining Pool. The advantage of using Minergate is that you can use the software to calculate various cryptic currencies, including ether.

Use wallet and pool

As with Bitcoin, you need a digital purse, the wallet, to create Ether. All ethers that you produce or buy via exchanges are stored in the wallet. From the wallet you can also pay with Ether or have Ether paid out as a conventional currency. You can book a wallet from various providers, for example from Jaxx.

Jaxx also provides apps for various systems, including smartphones and tablets. The creation of a wallet is free of charge. To register, you will be given a sequence of words that you should remember. You can only access the ether in your wallet with this set password.

Your wallet will be given an address. You need this address for your mining tool. The ethers that the tool then creates are stored in the wallet.

EnlargeYou set up the Jaxx wallet using software that is available for various operating systems

As part of the setup, you specify the cryptic currencies for which you want to create the wallet. Jaxx can also create a wallet for Bitcoin.

EnlargeWhen you set up the wallet, you determine which cryptic currencies you want to store in it

After a few seconds the wallet is available and shows the available ethers and other cryptic currencies. You can also see the address in the wallet, which you can use for the mining tool.

EnlargeJaxx also shows the address in the wallet that you can use for the mining tool

Of course, you can also rely on any other provider, for example My Ether Wallet.

Pool, cloud mining or local mining

When you have created the basis for the mining, you can determine whether you want to mine for ether locally on your computer or calculate ether together with other users in a pool. Pools such as slush pools are ideal here. The pool is supported by most applications for the production of bitcoins, but also knows many other cryptic currencies, such as ether.

All participants in a mining pool collectively calculate Ether, which is shared between the participants. Slush Pool was the first mining pool for Bitcoin and is especially suitable for beginners because the operator is very serious. Search the Internet for "Mining Pool", but you will find numerous other providers and various comparison sites. Chinese mining pool providers such as DiscusFish / F2Pool dominate the market. But even within mining tools, there are many pools that you can log into.

If you want, you can also mine via a cloud provider, for example Genesis Mining. Here you pay a sum of money to gain access to the provider's cloud data centers. The ethers are then calculated in the data center. This saves you electricity costs, but you have to pay the provider for it.