How to mine ethereum: A 25-year-old who pays $42 a month in exchange for half an ether monthly explains how he does it- and an expert breaks down the impact of the blockchain’s recent upgrade on…

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Grant Mitterlehner, CEO MittGroup and Mitt Blockchain

  • Grant Mitterlehner hosts his ether miners with a company that only charges him $.04 per kilowatt.
  • As a result, he pays about $42 a month per miner and earns about .47 ethers a month.
  • But margins may shift depending on how miners are impacted by Ethereum’s network upgrades.
  • See more stories on Insider’s business page.

Grant Mitterlehner started his career off with a bang. After dropping out of college, and at only 24 years old, he became the founder and CEO of MittGroup, a renewable energy firm focused on residential solar panels.

He’s been an avid promoter of clean energy – and cryptocurrency.

He first learned about ethereum back in 2017 when crypto started becoming mainstream. Bitcoin was the main headline grab while ethereum was the second-most discussed crypto.

Once he realized the use cases ethereum’s blockchain brought to the table, he knew it was here to stay and began seeing it as an amazing long-term investment.

But it wasn’t until the end of 2020 that he decided it was time to start mining, the process by which computers process transactions and create new blocks.

“Mining is like the real estate of crypto,” Mitterlehner told Insider. “In my opinion, I think that’s the best way to compare it. It’s literally like buying rental properties, but it’s producing crypto. The biggest upfront cost is the miner itself. And then second would be the power that you’re paying to run the machines.”

He initially thought he’d need to secure a location that would grant him industrial electricity costs, which are substantially lower than residential costs per kilowatt, and then build a rig on his own. But after doing his research, he realized it wasn’t cost-effective.

“What I found is the most efficient way is to buy the miners, make sure they’re good, and find a host that already has the infrastructure set up with the rigs, the technology, and the power production. Simply, they could handle all that back end,” Mitterlehner said. “So instead of spending money on building the infrastructure, I could spend the money on buying more miners.”

He purchased four A10 720 pro miners that retailed at the time for about $8,000 and registered them under his company Mitt Blockchain so that he could gradually scale. The price of a miner varies based on demand and ETH’s price. He has them hosted at Navier, a company where electricity costs are about $.04 a kilowatt rather than the $.12 to $.14 per kilowatt he would have paid residentially.

He told Insider his monthly hosting costs about $42 per miner and each miner generates about 0.47 ether a month. At ETH’s current trading price of $2,882.67, that’s $1,354.85.

He used the website ASIC Miner Value to pick the miner’s profitability and which manufacturers he could purchase it from. Mitterlehner warns about purchasing a miner from an unknown source or manufacturer. He recommends watching YouTube videos to see what other miners are using and reaching out to them.

He also recommends speaking to hosting companies and getting their guidance on recommended miners because it benefits them to assist you. This process will also allow you to compare the hosting fees and benefits across multiple companies. Some hosts will charge additional fees, while others will only charge for electricity and repairs.

The impact of Ethereum’s upgrade on mining

While these charges are substantial relative to most investment vehicles that provide a type of passive income, the rates don’t remain the same, especially now that ethereum’s network is undergoing updates.

On Thursday an upgrade codenamed EIP-1559 took place, which contains five Ethereum improvement proposals or code changes. And by early 2022, a bigger overhaul called Ethereum 2.0 will move the network from a proof-of-work system to a proof-of-stake system.

Mark D’Aria, the CEO of Bitpro, a mining consulting firm that also liquidates mining rigs and farms that are no longer profitable, says EIP 1559 removes a source of potential additional income for miners.

However, the impact won’t be felt immediately and it will be difficult to predict how much of a loss miners will feel going forward.

“Several months ago, fees comprised the majority of income for miners, but this has been on a downward trend for months due to scaling efforts and reduced activity on Ethereum since the price crash in May,” D’Aria told Insider in an email.

But he noted that those few months of high fees were an anomaly and that historically, transaction fees were so minimal that they were not really part of a miner’s calculations.

“So in a sense, this is a return to normal, and it remains to be seen if fees spike again dramatically in the future. Otherwise, in the present, it represented a roughly 15% hit to income,” D’Aria added.

However, he points out that ETH’s price has risen by a good amount, making losses potentially a wash. The speculation surrounding Thursday’s upgrade caused ETH’s price to spike by about 17% since August 3.

As for the 2.0 upgrade, when Ethereum will move from proof-of-work to proof-of-stake, D’Aria told Insider although the impact remains unknown, there will likely be resistance from miners because it would be an existential threat to their earnings.

“The only sure thing that GPU miners know right now is that the crypto market and the mining industry is so unpredictable and volatile that anything can happen, and nothing ever goes to plan. So because of that, miners are generally taking a ‘wait and see’ approach,” D’Aria wrote.

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