How Ethereum Mining Works?
Today, miners play an essential role in ensuring how the Ethereum functions. However, this role isn’t immediately apparent.
Many of the new users think that the primary purpose of mining is to produce ethers in a way that doesn’t need a central issuer. The tokens associated with Ethereum are created using the process of mining at a rate of 5 ether for one mined block.
Generally, banks are considered the in charge to keep appropriate records of transactions. They make sure that money isn’t produced easily, and that users do not cheat as well as spend their funds more than once.
However, blockchains introduce an advanced way of record-keeping, where the whole network, instead of an intermediary, authenticates transactions and adds them to the public ledger.
Though a ‘trustless’ monetary system is the aim, someone still requires securing the financial records, making sure that nobody cheats.
Mining is an innovative process that makes the decentralized record-keeping process possible.
Miners come to a consensus regarding the transaction history while preventing fraud and scams, an issue that hadn’t been solved in digital currencies before the introduction of proof-of-work blockchains.
Although Ethereum is finding other ways regarding the validity of transactions, mining holds the platform altogether for now.
How does the mining function?
For each block of transactions, miners utilize computers repeatedly to quickly find out answers to a problem until one of them solves that.
More particularly, the miners will function the block’s specific header metadata (including a timestamp as well as software version) using a hash function that will return a specified-length, scrambled string of letters and numbers which appears to be random; by changing the ‘nonce value’ that affects the resulting hash value.
If the miner becomes successful in finding a hash matching the current target, the miner is being awarded ether, and then miner broadcasts the block throughout the network for each node to authenticate and adds to their own copy of the ledger. If other miner finds the hash, the previous miner will stop working on the current block and will repeat the same process for the next block.
It’s next to impossible for miners to cheat in this process. There’s not an option to fake this work and then come up with the right puzzle answer. That is the reason why the puzzle-solving method is known as ‘proof-of-work.’
On the other side, it takes almost negligible time for others to authenticate that the hash value is up to the mark (correct), i.e., is what each node does.
If miners begin to solve the problems more quickly or slowly than 12-15 seconds, the algorithm auto-adjusts the difficulty of the puzzle so that miners spring back to the 12-seconds’ time.
The miners earn these ether randomly, and their benefits are totally luck-based.
The special proof-of-work algorithm that Ethereum uses is known as ‘ethash,’ designed to ask for more memory to make it more difficult to mine through expensive ASICs – specified mining chips, which are now the only profitable way to mine bitcoin.
In other words, ethash might have accomplished that purpose, since devoted ASICs aren’t available to mine Ethereum (till now).
Going further, since Ethereum intends to transition from proof-of-work to ‘proof of stake’ mining– buying an ASIC might not be a good option since it won’t prove to be useful for long-term.
Shifting from Proof-of-Work to Proof-of-Stake
Ethereum might not require miners all the time. Developers intend to ditch proof-of-work, i.e., the algorithm that the network presently uses to define which transactions are valid and secure it from tampering problem, in favor of proof-of-stake, in which the owners of tokens protect the network.
Proof-of-stake may prove to be a means to achieve a distributed consensus that uses lesser resources.