Ether (ETH), the digital currency on the Ethereum blockchain, has grown to become the second largest cryptocurrency, commanding an aggregate market value of just around $1 billion - behind Bitcoin with a market cap of around $10.5 billion. While people may buy ether in the open market (for around $11.50 per ETH currently), others may choose to "mine" for ether by using their computer's power to validate and confirm transactions on the Ethereum blockchain, in a process known as proof-of-work (PoW). These miners are rewarded with blocks of ether -- currently the reward is 5 ETH per block, and a block is expected to be found, on average, once every 12 seconds. Bitcoin miners can use specialized hardware known as ASIC chips to solve the mining algorithm, but Ethereum's mining algorithm is purposefully ASIC-resistant, requiring computer memory as well as processing power. Also, Ethereum is meant to transition ultimately away from PoW and to proof-of-stake (PoS), whereby mining is replaced by "stakers" who are rewarded for holding on to quantities of ETH. (Related: Ethereum Community Agrees on Hard Forking, Fixing DAO Hack)

How to Mine for Ether Indirectly

The easiest way to mine for ether is to do so indirectly, via cloud mining services. Here, individuals can buy contracts to mine virtually, often employing the resources of a company such as Genesis Mining, the largest ether cloud mining service currently. Contracts are generally long-term - 1-year or longer - and come at a fixed cost to the buyer, right now at $37 per MH/s of computational, or "hashing" power. Like Bitcoin mining, ether mining's profitability fluctuates based on its market price, as well as the mining difficulty, which is a function of how much aggregate mining power is on line.

How to Mine for Ether Directly

While home bitcoin mining has become quite user-friendly, ether mining using the CPU or GPU on your computer is a bit more hands on. Here is a basic overview of the steps required:

1. Create an ether wallet. This can be done for free by downloading wallet software, or by creating one via a web wallet service such as myetherwallet. This wallet is your virtual ether account that holds your digital currency and where you can send and receive coins. Amy mining rewards you earn will go to this wallet.

2. The next thing you will need to do is download a program called Geth, which is program that talks to the Ethereum Network and serves as the relay between your computer's hardware and the rest of the distributed network. When a block is mined by another computer, your Geth program will receive that information and update your copy of the blockchain. Geth comes zipped and is a command-line program with no windows or graphical user interface.

3. You will then have to download another piece of software to actually initiate and process the mining activity, known as Ethminer. This is also a command-line only program, and can only be started after you have downloaded and synchronized the entire Ethereum blockchain with Geth.

For an in-depth, line by line tutorial on how to get about mining following these steps, please follow this link.

The Bottom Line

Obtaining ether via mining can be done indirectly with cloud mining, or directly on your computer by harnessing the power of its CPU or GPU. Doing it yourself is a bit cumbersome still, and involves some familiarity with command line operations on your PC. Also, as solo mining gets more difficult, miners may find it optimal to join a pool, where they can aggregate their mining power with many others and receive a pro-rated share of discovered ether.

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