The document provides an overview of ether mining, detailing what ether is, its volatility, and how mining operates using proof of work and hash algorithms. It outlines hardware requirements, software options, and profitability calculations while discussing potential challenges and monitoring solutions. Additionally, it mentions the shift to proof of stake and the implications for mining ether in the future.

1. Ether Mining 101
Conor Svensson
@conors10

2. What
• Ether is the fuel of the Ethereum blockchain
• Pays for smart contract execution in the
Ethereum Virtual Machine (EVM)
• Also a stand alone crypto currency (Gemini
recently licensed for trading it by NY regulators)

3. Why?
• Speculation
• Where will Ether be in a year?
• Fun
• Combines DIY, computer hardware assembly,
operating system installation/management,
scripting + Ethereum

4. Price Performance
• Highly Volatile (68–95–99.7 rule)
• Annualised standard deviation (volatility)
119.63%
• ASX volatility during this period 21.95%

5. USD/ETH Price History

6. How does it work?
• Miners continually trying to verify blocks for the blockchain
• 5 ether reward for each solution
• Based on Cryptographic hash function
hash(<block>) =>
a7ffc6f8bf1ed76651c14756a061d662f580ff4de43b49fa82
d80a4b80f8434a
• Miners applying hash function millions (mega) of times/sec = MH/s
• Single GPU generates 5-30 MH/s
• CPU ~ 0.25 MH/s

7. Ethash Algorithm
• Ethash Proof of Work algorithm (formerly Dagger
Hashimoto)
• SHA3-256 variant hashing function
• Memory-hard computation
• Memory-easy validation
• Can’t use ASICs (Application Specific Integrated Circuits)
• Uses 4GB directed acyclic graph file (DAG) regenerated
every 30000 blocks by miner

8. Proof of Work Difficulty
• Hashing blocks
• Difficulty - dynamically adjusts parameter defined originally in genesis block
(one block produced every 12s)
• Started at 0x400000000 (0.017 TH)
• Now at 0x3205AF767000 (55 TH)
• Simplified example:
nonce = random int
while hashimoto(block, nonce) * difficulty > threshold
increment nonce
return nonce
Fetches bytes from DAG +
combine with block
Returns SHA3-256 hash
Solution

9. Genesis Block
{
"nonce": "0x0000000000000042",
"timestamp": "0x0",
"parentHash": "0x0000000000000000000000000000000000000000000000000000000000000000",
"extraData": "0x0",
"gasLimit": "0x8000000",
"difficulty": "0x400000000",
"mixhash": "0x0000000000000000000000000000000000000000000000000000000000000000",
"coinbase": "0x3333333333333333333333333333333333333333",
"alloc": {
}
}
Set to a low value in test networks

10. Getting Started…

11. Profitability
Ether mined * ETH price
-
(Hardware + software + power + hosting + your
time)
= Profit

12. Hardware
Parts:
• 4-6 x GPUs - Radeon series (better OpenCL support), avoid Nvidia
• Motherboard - lots of PCIe slots
• PCI Risers (try fitting > 2 GPUs on a single board)
• Decent power supply ~ 1000W for 3 GPUs
• Cheap CPU
• 4-8GB RAM
• Power switch - to avoid this

13. Motherboard
PCIe slots
(ASRock H81 Pro BTC)

14. Motherboard quirks
• Some boards require jumper cables in their PCIe
slots

15. Risers
Motherboards can only hold 1-2 GPU cards

16. Case
• Build or buy?
• Considerations
• Budget
• How comfortable are you with DIY?

17. Case - Wood*
Cost ~$25 AUD
* Combusts at ~300°C

18. Case - Wood & Metal
Cost ~$50 AUD

19. Or even milk crates…

20. Case - Buy
$200 USD from GPU Shack

21. Software - OS
• Linux
• Ubuntu 14/15 with fglx AMD GPU driver
• Avoid Ubuntu 16 (http://www.omgubuntu.co.uk/
2016/03/ubuntu-drops-amd-catalyst-fglrx-driver-16-04)
• Windows
• EthOS ($40 USD)
• Ether mining Linux OS from GPU Shack

22. Software - Ethereum
• Geth/Eth
• Run full Ethereum node
• Or
• Connect to a mining pool (see next slide)
• ethminer
• C++ mining client
• Connects to Geth/eth

23. Mining Pools
• Block reward is 5 ether
• For small rigs => long wait (weeks)
• Steady stream of income (pool splits block reward between
contributing members)
• ~1% fee of all ether mined
• Provide UI for monitoring workers
• Usually go via a proxy (eth-proxy/qtMiner)
• Provides automatic failover in event of pool failure

24. Begin Mining w/Pool
• Start proxy:
$ python eth-proxy.py
• Start the miner
$ ethminer --farm-recheck 200 -G -F http://
127.0.0.1:8080/<node-name>

25. Mining
Hashrate
Submit proof of work

26. http://ethermine.org/

27. Other Considerations

28. Power is Expensive in
Australia
Source:
https://www.ovoenergy.com/
guides/energy-guides/
average-electricity-prices-
kwh.html

29. Power
How much are you paying per kWh?
• Australian plans often have an advertised rate
cap - e.g. quarterly cap of 4000 kWh
• 1 x 1000W PSU (3-4 GPU rig) running 24/7:
1 * 24 * 30 = 720 kWh per month

30. Power Meters
Measures:
• Current
consumption (W)
• Consumption used
(kWh)
Costs ~$30

31. Managing Failure
Multiple points of rig failure
• Hardware - GPU x 4-6, risers x 2-5,
motherboard PCI slots => lots of variables
• Software - problematic device drivers
• Time consuming trial and error to isolate
issues - e.g. jumper cables required on some
model PCIe slots

32. Monitoring
Various components:
• Node or Pool connectivity
• ethminer
• it occasionally falls over
• GPU temperature
• On Linux requires X Server to be running
• CPU temperature
• OS crash

33. Monitoring
• You’ll need to write various scripts (or use
EthOS)
• Take action
• Send alerts - email/SMS
• Restart component
• Power off rig

34. What about the cloud?
You’ll need lots of AWS credit…
AWS Spot Instances
• g2.8xlarge instance contains 4 x Nvidia GPUs
• Hashrate of 24 MH/s
• 0.0077 Ether/hour ~ $0.10 USD/hour
• Low spot instance price $2.66 USD/hour

35. Proof of Stake
• Nodes with greater stake (e.g. total # of ether,
duration of holdings) more likely to generate
valid block
• No longer possible to profitably mine ether (if it
ever was…)
• Expected early 2017

36. Location
• Do you have space?
• Make sure you get partner/spouse approval…

37. Thanks
conor10@gmail.com
@conors10

38. Resources• Mining algorithm
• https://github.com/ethereum/wiki/blob/master/Dagger-Hashimoto.md
• https://github.com/ethereum/wiki/wiki/Ethash
• Costs
• http://etherchain.org/api/statistics/price - Ether price history
• https://etherscan.io/ether-mining-calculator - Mining calculator
• Parts
• Ebay
• http://gpushack.com/collections/gpushack - ready made rigs (US based)
• Pools
• https://github.com/Atrides/eth-proxy
• http://ethpool.org/
• Rig building
• https://www.youtube.com/watch?v=Jnp9Ka8WVpA - metal/wood rig
• http://highoncoins.com/litecoin-rig/how-to-make-diy-wooden-frame-for-litecoindogecoin-rig/ - wooden rig
• web3j
• https://github.com/web3j/web3j - Java library for working with Ethereum nodes