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Bitcoin’s biggest rival just hit a record high — here’s how to mine for ethereum

Bitcoin’s biggest rival, ether, blew past $4,000 on Monday to hit a new record high. The cryptocurrency is up more than 400% so far this year.

While it is easier than ever to buy a fraction of one ether using an app such as Coinbase, that is not the only way to get your hands on crypto cash.

You can also mine for it.

How mining works

Building a rig

To mine ether, you’ll need to build a custom mining rig. To learn how to do this, CNBC teamed up with Jordan Leigh, a full-stack software engineer and longtime miner.

The main components of any mining rig include a power supply, a motherboard, an operating system to run on your motherboard, computer memory, and a GPU, or graphics processing unit.

“An ethereum mining rig is just like any other computer you would build on your own; only instead of having an actual case that all the components live in, it’s in an open area,” explained Leigh. “You need to do this because when the GPUs are running, they get really hot, and it’s important to have a lot of air circulation.”

This rig, with only one graphics card, can run roughly 27 million math equations every second.

That sounds like a lot, right?

But on ethereum’s network right now, there are 600 trillion math operations happening every second.

That is why people join something called a mining pool. A pool lets a single miner combine their hashing power with thousands of other miners all over the world.

“They could be in Afghanistan. They could be in Dubai. They could be in Europe or South America,” said Leigh. “You’re all sharing your resources together, and it doesn’t matter where you’re physically located.”

The only other thing left to do is to create a wallet. You can think of it like a digital address for crypto cash. There are dozens of options, ranging from physical hardware wallets that let you store your crypto offline, to web wallets that allow you to interact with your account via a web browser.

Once you connect the rig to a power source and link it to the network, ether starts to go into your crypto wallet within minutes.

Profitability of mining

With one graphics card, the rig we built costs roughly $1,400. Tack on five more GPUs, and the price rises to $4,400.

If the rig runs at full capacity with all six GPUs, it can earn about 0.348 ETH/month, which is roughly $1,425, at today’s prices.

Mining rigs require quite a bit of power, so electricity cost is a big factor when computing whether mining can be a profitable venture. Location matters, since there are stark differences in electricity prices from state to state

Alaska, Hawaii, California and Connecticut have the steepest electricity costs in the country. New York is also one of the priciest states for electricity bills. 

In contrast, Washington state has some of the cheapest power sources in the U.S. And outside the U.S., the prices drop even lower. 

A study released in 2018 by Elite Fixtures showed that countries such as Egypt and Kuwait are among the places where it is least expensive to mine for crypto cash. 

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