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Understanding Ethereum mining requires knowing the structure of Ethereum itself. As with Bitcoin, Ethereum depends on a decentralized group of computers to process and record transactions on the network. In order to add a new block of data to the Ethereum blockchain, computers need to solve a mathematical problem called a hash. If your computer is the one that solves the current hash, you earn 5 Ether. At the time of writing, 1 Ether is worth $299.32 (but as we already mentioned, the price fluctuates a lot). So solving one of those problems earns a miner just shy of $1,500 today — and it might be worth even more tomorrow.

In other words, your computer could essentially print money for you, in $1,500 chunks, without you having to do much of anything at all.

At this point, you're probably ready to sign up. But before you get started mining Ethereum, you need to understand a few things.

First, the total amount of Ether available to mine is currently capped at 18 million per year. If you do the math, that means that no more than 49,315 Ether can be mined per day (about one every 15 to 17 seconds). In practice, however, around 30,000 new Ether total for all the miners worldwide represents a pretty good day of mining. That represents more than $8.9 million per day at today's prices.

But in order to get a piece of that money, you'll be competing against all the other Ethereum miners to be the first to solve a hash. Some miners have set up data centers with multiple high-powered systems. In order to be competitive, you'll need a pretty robust system.

Because of the way Ethereum hashes work, miners need to have systems with graphics cards with specialized graphics processing units (GPUs) and a lot of memory. Experts are recommending graphics cards with at least 3GB of RAM to get started today. Those high-powered graphics cards can be expensive, and the popularity of Ethereum mining has led to a shortage in the supply.

Also, the hashes, the mathematical puzzles that the computers must solve in order to earn Ether, keep getting harder. As time goes on, you'll need more GPUs and more memory in order to stay competitive. In addition, more time will likely pass in between solving blocks. You might go weeks or even months before you solve your first block and earn your first 5 Ether.

Plus, mining Ethereum takes a lot of electricity and generates a lot of heat. Be prepared for a huge increase in your electricity bill, which will cut into your profits.

Go now to: Ethereum Mining: Getting Started - Datamation