Bitcoin Mining vs. Ethereum Mining: What Are the Differences?
Since its invention in 2010, the value of a single Bitcoin has gone from $0.0008 to over $42,000.
Many other cryptocurrencies have entered circulation, with one of Bitcoin’s main competitors being Ethereum. You can earn crypto through mining, but if you’re comparing Bitcoin mining vs. Ethereum mining, which is better?
For a rundown on each type check out this Bitcoin and Ethereum mining guide.
What Are Bitcoins and Ethereum?
Bitcoin and Ethereum are two of the most popular blockchains in the world. They are digital currencies that operate on decentralized ledgers and they have exploded in popularity since their inception.
Bitcoin was the first cryptocurrency in the world and has remained the most widely used since it was first created. Ethereum is a newer blockchain but has gained a lot of traction over the years for the benefits it has.
Both blockchains (as well as many others) are powered and secured with the help of miners all over the world.
Bitcoin Mining
Bitcoin mining verifies transactions and helps put new bitcoins into circulation. The mining process requires a lot of energy, so powerful processors are needed. These processors solve complex equations to mine new bitcoins.
The incentive for miners is that they receive payment in the form of Bitcoins, so it works as a form of passive income. This is paid to the miner who solves an equation first, meaning those with more powerful hardware are likely to benefit the most.
Mining is the only way to mint new coins. Besides those created in the very first block, every Bitcoin in the world came from miners.
Originally, a standard home computer could be used for Bitcoin mining. As the technology has grown miners now need incredibly powerful hardware such as GPUs (graphics processing units) or an ASIC (application-specific integrated circuit) which can cost tens of thousands of dollars.
Modern ASICs are incredibly powerful and are designed only for mining Bitcoins. The main downside of using all this power is it can be very expensive.
Natural gas bitcoin mining is a more cost-effective solution as natural gas can be significantly cheaper than electricity.
Ethereum Mining
Ethereum mining works in a similar way to Bitcoin mining. Miners offer computer power to solve equations that process transactions and protect the blockchain from hacking and malicious attacks.
Ethereum mining (like Bitcoin mining) currently works on a proof of work (PoW) incentive model, but there are plans to change this to proof of stake (PoS) at some point in 2022.
The main difference between these models is the security of the network. For someone to attack a PoW chain they need over 50% of the computing power of that network. An attack on a PoS system needs more than 50% of the coins.
Mining Ethereum takes less power than Bitcoin, so it’s still possible with more basic GPU setups. This makes Ethereum mining much cheaper to start with, and GPU miners are not restricted to Ethereum as they can also mine other cryptocurrencies.
Bitcoin Mining vs. Ethereum Mining – Which Is Best?
When it comes to Bitcoin mining vs. Ethereum mining each has advantages and drawbacks. Things are always changing, so staying up to date is essential.
If you’re on more of a budget you may want to opt for Ethereum mining as you can set up a rig for a lower cost. Bitcoin is more scarce than Ethereum, which means there is potential for much larger gains.
If you’re interested in more tech and investment articles, check out some of our other blog posts.
