Ethereum Mining vs. Bitcoin Mining: Which is More Profitable?

Ethereum Mining vs. Bitcoin Mining: Which is More Profitable?

This article by F5 Operations was originally published at

There are some critical differences between Ethereum vs. Bitcoin mining, which originate from the fact that these two cryptocurrencies developed with very different purposes in mind. At first glance, it may be difficult to determine the variances between these cryptos, but dig a little deeper, and you discover a glaring contrast between them. Let’s take a moment to discuss the critical differences between these cryptos and how they affect the Ethereum vs. Bitcoin mining processes.

Understanding Bitcoin Mining

Bitcoin is a decentralized peer-to-peer electronic cash system as described by Satoshi Nakamoto, the cryptocurrency’s anonymous creator. The protocol functions by utilizing a mathematical equation that adds blocks to a chain of transactions known as a blockchain. Each block uses a hash code from the previous block to timestamp the newly added block. Blocks are added to the blockchain every ten minutes via miners who compete against each other to figure out a mathematical equation (SHA-256) whose answer must begin with four zeroes. The process requires extensive computer processing power, which equates to electrical usage. The first miner to discover a suitable solution to the equation receives an award of 12 BTC. Every miner (node) on the blockchain works together to ensure the longest chain of transactions is the valid chain. As long as fifty-one percent of the nodes are honest, the blockchain remains honest. The act of validating the chain is called consensus. This proof-of-work system is at the core of Bitcoin’s protocol.

Bitcoin UTXO Blockchain

Bitcoin utilizes the unspent transaction output (UTXO) scheme to eliminate double spending on the network and track the database. In this protocol, users don’t send Bitcoin during their transaction. Instead, what they are sending is the hash of the previous block, digitally signed, and the public key of the new owner. In essence, Bitcoin holders don’t hold their Bitcoin per say. In the Bitcoin UTXO blockchain protocol, users keep the output to a specific number of tokens, which can be signed over to a new owner to transfer control over the Bitcoin. If this sounds confusing, let’s examine the three basic rules of this protocol to get a better understanding.
  1. Every transaction’s sum of inputs must be greater than the sum of its outputs.
  2. All referenced inputs must be valid and not show as spent.
  3. Every input requires a signature that matches the owner of the input.
These rules mean that every Bitcoin transaction must have both inputs and outputs to be completed. The only time this is not the case is during the creation of a new Bitcoin during the mining process. This transaction will only have outputs and is known as the Coinbase transaction.

Bitcoin Mining Difficulty

Bitcoin mining difficulty increased significantly over the last two years as a result of added hash power on the network. Bitcoin network difficulty is adjusted to compensate for increased hash power in order to ensure block times remain consistent at around ten minutes. In 2015, Bitcoin miners saw the beginning of a considerable rise in network hash power, primarily due to the introduction of Bitmain’s Antminer line. Antminer utilized specially designed application specific integrated chips (ASIC) that were thousands of times better at completing the SHA-256 algorithm Bitcoin’s proof-of-work system uses. These hardware advancements increased the difficulty and start-up costs required to mine Bitcoin. You will need an ASIC miner to be competitive in today’s mining conditions. Also, you will want to join a mining pool. Mining pools leverage your efforts by combining the computing power of the entire pool.  A miner’s contribution level determines their mining rewards.

Understanding Ethereum vs. Bitcoin Mining

Ethereum differs from Bitcoin in many aspects. For one, Ethereum is a centralized software platform. Unlike Bitcoin, Ethereum has a central office and a well-known founder, Vitalik Buterin. Ethereum supports a dual account structure where both private key, controlled, and contract-code accounts exist, the latter being known as smart contracts. Smart contracts execute predetermined actions upon receiving crypto to the contract’s address. Ethereum uses the Solidity programming language, which provides for easier smart contract integration. Ethereum’s smart contracts help facilitate token creation using the ERC-20 and ERC-721 protocols. ERC-20 has become the primary token creation protocol in the crypto space, while, ERC-721 continues to see adoption thanks to an increase in the tokenization of both digital and real-world assets. The main difference between the two is that ERC-20 tokens are fungible.

How Does Ethereum Mining Work?

The primary functions behind Ethereum’s mining process are the same as Bitcoin. Nodes compete against each other to complete a mathematical equation. The node to add the next block to the blockchain receives a reward of around 3.5 ETH. A block is attached to the ETH blockchain every 14-16 seconds. Ethereum utilizes the ethash mining algorithm rather than the SHA-256 algorithm found in Bitcoin’s mining process. Both mining processes use proof-of-work systems. Consequently, both cryptos consume large amounts of electricity when mined.

Ethereum Account Based Protocol

Ethereum employs a more simplistic and familiar approach to the problem of double spending.  Transactions tracking operates similarly to traditional bank accounts. Unlike Bitcoin, Ethereum users are sending their tokens and not just signature hash inputs. This difference means that each Ethereum account experiences information and direct value transfers with each transaction. There are a few reasons why Ethereum chose this protocol over Bitcoin’s UTXO blockchain version. For one, account-based protocols are only possible when you have centralization. Ethereum’s development team ensures that when a person sends ETH that they have the token in their wallet before they send transaction request approval. This centralization also means that the developers could void, refund, and reverse transactions if they feel the need to do so. They already showed this ability during a decentralized autonomous organization (DAO) hack on June 17th, 2016. In this incident, developers refunded fifty million in stolen Ethereum by initiating a hard fork thereby creating Ethereum Classic (ETC) and Ethereum (ETH).

Mining Difficulty

Ethereum miners experienced increased hash rate since 2016, but nothing even close to Bitcoin’s numbers. Ethereum is still mined using graphics processing unit (GPU) miners. While these devices are far more powerful than central processing units (CPUs), they can’t compare to the capabilities of ASIC miners. GPU miners have some distinct advantages and disadvantages when compared to ASIC miners. GPU miners can mine multiple cryptocurrencies, regardless of their hash algorithm. For many miners, this flexibility is paramount to their mining strategy. GPU miners are much cheaper than ASIC mining rigs, but they are lacking in performance capabilities. Additionally, GPUs are not standalone devices; whereas ASIC mining rigs usually require only a power supply.

Ethereum vs. Bitcoin Mining: Changes are Coming

Ethereum developers announced that in the coming months they plan to move away from the proof-of-work system and institute a proof-of-stake system for mining. The main difference between the two is that the latter doesn’t require expensive hardware or massive computing power. Users stake their coins in their wallets on the blockchain to receive a reward based on the number of coins you hold. This decision to change to a proof-of-stake protocol helps reduce centralization on the blockchain. Five mining pools dominate the Ethereum mining sectors currently. According to recent reports Ethermine, f2pool_2, and are responsible for 85 percent of the Ethereum network’s hash rate. These changes will reshape the reward system for Ethereum miners. Developers intend to create a hybrid system until the conversion to proof-of-stake is complete. This hybrid will allow miners to opt into the changes as the network implements these changes slowly.

Ethereum vs. Bitcoin Mining: Profitability Comparison

It is difficult to compose a legitimate Ethereum vs. Bitcoin mining profitability comparison because there are so many factors to consider. Both cryptocurrencies will require a substantial investment to start up a mining operation. You should take into account the fact that Bitcoin is much scarcer than Ethereum. This scarcity could result in substantial gains in the value of Bitcoin in the future. However, Ethereum serves a unique purpose in the crypto space, and both their ERC-20 and ERC-712 protocols are the backbone of the majority of the tokens in the marketplace. This dependency could lead to a scenario where Ethereum overtakes Bitcoin regarding total market capitalization in the coming years.

Ethereum vs. Bitcoin Mining – Now You Know

Now that you have a better understanding of the key differences between Ethereum and Bitcoin, you‘re ready to start researching hardware prices and calculating your profitability.   The post Ethereum Mining vs. Bitcoin Mining: Which is More Profitable? appeared first on CoinCentral.
A Beginner’s Guide to Stellite

A Beginner’s Guide to Stellite

This article by F5 Operations was originally published at

What is Stellite (XTL)?

 Stellite is a privacy-focused cryptocurrency project that aims to improve the functionality of Proof-of-Work. Let’s dive into all the details about the project’s mission, the Stellite Wallet, technical features, and potential use cases.

Stellite Project Mission

The main goal of Stellite is to solve issues that have affected traditional Proof-of-Work coins (i.e. Bitcoin, Ethereum, and others). According to the project whitepaper, hard-code trusted nodes and peers create security vulnerabilities. For example, whenever a hacker gains access to a node, this often presents long-term problems for the creation of future nodes. In turn, these and other types of blockchain hacks dissuade potential user adoption. To solve this issue, Stellite devised an innovative solution. Its blockchain uses IPFS as a type of permanent storage of the node list and ZeroNet as a dynamic front-end of this permanent storage. As a result of these and other technical improvements, Stellite plans to provide a solution for true mining on all devices (i.e. smartphones, smart televisions, etc.). This type of mining is in direct contrast to existing forms of mobile mining for popular cryptocurrencies on the market, which are mostly just simulations.
Logos for IPFS, ZeroNet, and Stellite

Stellite combines IPFS and ZeroNet technologies to create a decentralized, censorship-resistant network.

What About the Stellite ICO?

Unlike the vast majority of cryptocurrencies on the market, Stellite did not conduct an ICO or even a pre-sale. Instead, 0.6% of the total coin supply (126 million XTL) was pre-mined. Outside of the pre-mine, zero coins were locked. Reading through the project website and whitepaper, it’s not clear why there wasn’t an ICO. Neither is it clear where the funding for the project’s development is coming from.

Stellite Wallet

Both GUI (Graphical User Interface) and CLI (Command Line Interface) wallets for Windows, Mac, and Linux are available. Additionally, Cheddur app, a mobile wallet available on both iOS and Android, has integrated the Stellite wallet. Detailed installation instructions for each type of Stellite wallet can be found here.
Sample image of a Stellite Wallet

Users can access Stellite wallets on a variety of devices.

Privacy Features

Another important feature of Stellite is its ability to facilitate untraceable payments. To do this, the protocol utilizes the CryptoNote algorithm, an important component of popular privacy coins like Monero and Bytecoin. Stellite’s CryptoNote algorithm eliminates the possibility of tracing payments by automatically creating multiple unique one-time keys, derived from a single public key, for each P2P payment. The project does this by modifying the well-known Diffie-Hellman exchange protocol. Originally, this protocol allowed two parties to produce a common secret key derived from their public keys. With Stellite, the sender uses the receiver’s public address and randomized data to compute a one-time key for each payment.

Confirmations and Throughput

Throughput is one of the biggest issues that many blockchain projects are hoping to solve. Whenever a sender wants to send funds, the recipient usually has to wait a variable amount of time, ranging from a few seconds to many hours. This delay is due to the fact that each transaction takes time to be added into blocks. For blockchain and cryptocurrency payments to gain mainstream adoption, faster transaction speeds are needed. Stellite’s potential solution for throughput is to create a custom point-of-sale system that works with mobile wallets. With this technology, merchants (a.k.a. recipients) can accept payments with zero confirmations. Additionally, each recipient can choose to customize the number of confirmations needed. By offering this functionality, Stellite may be able to ensure both high security and throughput. This is especially important as many privacy coins tend to have longer transaction completion times over non-privacy coins. Still, there isn’t much information on the number of transactions per second that Stellite is capable of handling. It would also be interesting to see a statistical breakdown of how many confirmations users accept on average. Stellite is also simplifying the use of nodes through an application called StellitePay, which uses a single server (much like a centralized exchange) before committing onto the network. The purpose of this application is to further the possibility of user adoption for novice users that would otherwise not want to undergo the node setup process.
Image of Stellite's block explorer

Stellite allows users to view up-to-date transaction information via its own block explorer.

ASIC Resistance

The Stellite project team also takes the ASIC vs. non-ASIC debate seriously. As seen with Bitcoin (BTC) and other ASIC-friendly cryptocurrencies, centralized mining can have a large effect on coin supply distribution. To solve the ASIC mining dilemma, Stellite changes its PoW algorithm (CryptonightV7) slightly in regular protocol upgrades/hard forks. This is because ASIC rigs are meant to be used only for one specific function. By going with this decision, Stellite works to give CPU and GPU miners an equal chance of earning XTL.

Team and Future Roadmap

The Stellite team consists of ten people, eight of which are core members. Stellite does offer free and open-source software that can be viewed on the project’s Github page. This allows tech-savvy users to understand how the project is progressing. According to the project website, Stellite has made significant progress in Q1 and Q2 2018. Accomplishments include exchange listings, a new difficulty algorithm, GUI wallet, GUI miner, and much more. Most of the project’s core features, however, are still in the making. As of September 13, 2018, it’s unclear when the project aims to complete several key features. The list of uncompleted features includes StellitePay, smart mobile mining, ZeroNet & IPFS as well as other tasks in design, marketing, and business developments.
Photo of Stellite's core team members

This project has eight core team members.


As of September 13, 2018, Stellite is listed on at least four exchanges: CREX24, Bisq, TradeOgre, and CMC. Future plans for exchange listing are not known. In terms of exchange volume, stats from CoinGecko show that TradeOgre currently plays the biggest role at over 90% for XTL/BTC trading and around 7.5% for XTL/LTC trading. Meanwhile, CREX24 is at a little over 2% for XTL/BTC.

Potential Use Cases and Conclusion

For anyone who wants to easily mine cryptocurrency, Stellite is a project to watch out for. While the project already offers features that simplify this process, most of the innovation that Stellite promises to offer is still in the works. It’s also important to note that the Stellite team is clearly committed to keeping its egalitarian Proof-of-Work algorithm and has a firm stance on ASIC-resistance. This means that miners don’t have to worry about buying the latest high-priced mining rig with the possibility of it becoming obsolete overnight. Additionally, for cryptocurrency users who want to utilize a privacy coin but don’t want the inconvenience of slow transaction completion times, Stellite could offer a good option. It’s true that there isn’t much info available on how well the zero confirmation transaction technology works in the real world. However, the mere fact that Stellite is able to provide this option while also utilizing a well-tested privacy algorithm is a promising sign. The post A Beginner’s Guide to Stellite appeared first on CoinCentral.