How does Ethereum mining work?

Ethereum uses a Proof-of-work consensus mechanism for which mining is essential. Ethereum miners use their time and all of their processing power to solve the cryptographically difficult puzzles. If miners are successful, they can add the blocks to the Ethereum blockchain and can earn the reward in return.

Different Types of Mining:

  1. CPU mining – This is one of the most basic forms of mining. Anybody from anywhere in the world can use the computer to mine. However, this is not applicable anymore.

  2. GPU mining – GPU is a graphic processing unit, and it is a part of a video rendering system on the computer. The GPU functions to assist in rendering the 3D visual and graphic effects. GPU is a far stronger system than CPU for mining. Some coins like Monero are mined via GPU. However, as the difficulty increased, mining became more difficult.

  3. FPGA Mining – FPGA is a device having a series of gate arrays to create truth tables and to calculate inputs from the data stream in order to get the desired result. FPGA makes any task possible such as mining hash to create an output that results in a successful hash.

How will the Ethereum scale?

From the past few months, we all are hearing that the Ethereum platform is going to fail due to its inability to scale. The main problem with Ethereum scalability is the network protocol that each node in the network needs to process in each transaction. The miners have to race to find the nonce to meet the target difficulty. Each node should verify that the miner’s work is valid and should keep an accurate copy of the network state. The entire process limits the capability of the transaction process.

Sharding is the process that offers the scalability problem of Ethereum. Sharding means partitioning the huge database into small and faster pieces known as Shards. Each shard is going to have its own transactions chain. Ethereum accounts will be assigned a shard, and the transaction with other accounts can happen on that shard. The idea is to facilitate cross-shard communication. While sharding offers the benefits of scalability by splitting the load of network transactions, it also poses some new security problems. With Proof of work, an attacker will need 51% of the hash rate to launch the attack. Now that the network is split into many shards, it will only take less of the hash rate to attack a shard successfully. While developers have proposed some solutions to this problem, they still need to be tested.