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As the digital silver to Bitcoin’s digital gold, Litecoin (LTC) has remained a popular and reputable altcoin for over a dozen years now. Like Bitcoin, which was the template, it can be mined. Learn how and prepare with the instructions from the ChangeHero team!
Key Takeaways
- Litecoin (LTC) is a Proof-of-work cryptocurrency, which means it can be mined. Cryptocurrency mining is a process of running specialized mining software to add new blocks to the blockchain.
- Mining supports the decentralized network, so it is a popular activity in the Litecoin community even on a not-for-profit basis. Nevertheless, for most miners, it is primarily a revenue source.
- LTC is best mined with ASIC (application-specific integrated circuits) miners. To break even and profit, one would need considerable computational power, so unless you can provide it, consider joining a Litecoin mining pool.
Understanding Litecoin
What is Litecoin and its Purpose?
Litecoin is a digital currency created in 2011 as a code fork of Bitcoin, so the two do not have a shared history. It operates on its own blockchain and has gained popularity as a reliable and secure digital currency.
Litecoin has gained the moniker “digital silver” as an alternative to Bitcoin, the “digital gold”. Its protocol modified the Bitcoin code in very particular details: LTC’s blockchain moves at four times the speed of Bitcoin’s, with a new block every 2.5 minutes. To compensate, the total supply is four times larger, 48 million LTC, but the reward-having rate is the same as in Bitcoin — roughly every four years.
How Does Litecoin Work?
Litecoin utilizes a proof-of-work consensus mechanism to validate transactions and secure the network. A distributed set of independent nodes keeps thousands of blockchain copies and compares them to maintain consensus.
When you send a Litecoin transaction, you broadcast it to the rest of the network. The nodes check their own copies of the blockchain to ensure the transaction is valid, i.e. if you have the funds to spend. If it is, it goes into the queue called mempool.
Miners pick up the transactions from the mempool, prioritizing the ones with higher fees, and propose blocks for inclusion. After that, miners compete to include their block in the chain by guessing the hash, because the one to discover the correct combination gets to collect the miner fees from the transactions they included and the block reward.
If your transfer was included in the next valid block, it will show up on the blockchain in around 2.5 minutes. However, most recipients such as exchanges and crypto services prefer to wait until 11 more blocks before considering LTC finally received. This makes the safe Litecoin confirmation time around 30 minutes.
Litecoin Mining Basics
What is Litecoin Mining?
Therefore, Litecoin mining involves verifying and adding transactions to the Litecoin blockchain. Miners use purpose-built hardware and software to solve complex mathematical problems (hashes) to add new blocks.
From a mathematical standpoint, solving a hash is better described as guesswork, so even though miners with powerful hardware have more chances, there is still a probability of a smaller miner finding the next block.
To keep the block time stable at around 2.5 minutes even if the miner numbers change rapidly, the protocol adjusts mining difficulty. Without going into too much detail, higher difficulty means miners have to contribute more computing power to guess the hash.
Litecoin and Dogecoin can be merge-mined, meaning you can mine both simultaneously with the same resources. This factor somewhat improves the Litecoin mining profitability.
Litecoin Mining vs. Bitcoin Mining: Key Differences
We have already mentioned that Litecoin mining is four times faster than Bitcoin mining. Litecoin miners receive rewards more frequently, provided they produce blocks.
Litecoin and Bitcoin mining difficulty retarget is every 2,016 blocks. However, due to the block time of Litecoin being shorter, the difficulty changes every 84 hours.
Litecoin mining uses the scrypt hashing algorithm, which is different from Bitcoin’s SHA-256 algorithm. In practice, it means that you cannot mine Bitcoin on the same hardware, and vice versa.
Selecting the Right Mining Hardware for Litecoin Mining
ASIC Miners
ASIC stands for “application-specific integrated circuits”, and ASIC miners are specialized integrated circuit chips designed for cryptocurrency mining. They are more energy-efficient and outperform general-purpose CPUs or GPUs.
The “application-specific” part points to these processors being advanced mining hardware. These machines cost $7–11 thousand each and require high energy efficiency.
GPUs
Theoretically, GPUs or graphics processing units can run the algorithm, so they can be used for Litecoin mining. They are generally less expensive than ASIC miners but are slower and less efficient for mining cryptocurrencies.
Realistically, Litecoin mining hash rate as of June 2024 is a little over 1 petahash/second, and major mining pools contribute up to 24% to the hashing power. With competition like this, it would take years to find a block in the best case — worst case, you would just ruin the hardware before gaining anything.
Litecoin Mining Process Considerations
Impact of Electricity Costs and Mining Efficiency
Electricity cost and mining hardware efficiency are two significant factors that can impact your mining profitability. Miners must consider these factors when selecting mining hardware and setting up their mining operations.
Hardware Maintenance
Crypto mining is sometimes described as a passive income but it still requires initial investment and continuous involvement. For one, the hardware has to be online at all times and properly cooled to prevent overheating and premature failure.
Mining Litecoin Solo vs. Pooled
Solo Mining Litecoin
Solo mining Litecoin involves mining independently without joining a mining pool. Unless you have the computing power to compete, it is unlikely to yield sustainable returns.
Even with the most powerful currently available scrypt ASIC miner (Elphapex DG1+), you would need a few to break a profit. Considering how much they cost, it would take years to cover the hardware expenses.
Pool Mining Litecoin
To better your chances and lower the hardware requirements, you can join a mining pool. Pool mining Litecoin involves combining resources with other miners and increases the chances of solving a block.
Pool mining can be a more profitable option than solo mining, as miners receive a portion of the payout based on their hash power. Even though you have to share your block reward with others, a mining pool can find blocks more consistently.
Cloud Mining Litecoin
Finally, cloud mining Litecoin involves paying a monthly or annual subscription to a cloud mining service provider. They promise to take care of the whole process on their side while you cover the expenses and pocket the reward in proportion to what you pay.
Cloud mining seems like an attractive choice as it eliminates the need to buy and run mining equipment. However, it can be hard to verify and there are very few trustworthy platforms.
Profitability and Strategies
Factors Affecting Profitability in Litecoin Mining
The profitability of Litecoin mining depends on various factors, including hash rate, electricity costs, mining difficulty, and market conditions. While mostly it is not something you can take direct action on, miners must regularly assess the profitability of their mining operation and consider these factors.
Strategies to Increase Profit
What can you do to make sure you profit from Litecoin mining? Invest in high-performance hardware, join a mining pool or change it, and keep the Litecoin mining software updated.
New ASIC miners get released every few months, so stay on the lookout. Even if you do not plan to upgrade, new hardware increases the mining power across the board, forcing you to adapt.
If you are not getting the wanted results from joining a mining pool, consider changing it. Mining pool rankings change often, so you might want to track if the one you are a part of or consider joining is on the top of the game.
Setting Up for Litecoin Mining
Now that we have covered the basics and given you some food for thought on how you want to mine Litecoin, let’s go through the process step-by-step.
Choosing a Litecoin Wallet
First of all, you would need a crypto wallet to manage the freshly minted Litecoins, if you don’t have one already.
Desktop Wallets
The official Litecoin Core client doubles as a desktop wallet that is widely regarded as the safest option for storing Litecoin. It is a full node with full capabilities for your coins which also supports the Litecoin network.
If you need to manage more than just Litecoin (LTC), try the desktop version of the Arctic crypto wallet. You can use it on a PC connected to the Internet to avail of its many features or on an offline device for maximum security.
Hardware Wallets
Ledger Nano S Plus is a hardware wallet that enables users to store Litecoin and other cryptocurrencies offline safely. Trezor Model T is another hardware wallet that supports LTC and hundreds of other digital assets. Bear in mind that both are dedicated devices and require extra investment. However, if you hold substantial amounts of Litecoin or other cryptocurrencies, the expense might be worth it.
Mobile Wallets
To manage small amounts with a smartphone, Edge Wallet is a mobile-only wallet with Litecoin support. You can manage various other cryptocurrencies with it and it has an easy-to-use UI.
Setting Up the Mining Software
Once you are done with preliminary prep, download the appropriate software to mine Litecoin. The software generates encrypted variables randomly to find a value less than the nonce.
Popular mining software packages that support scrypt and by extension, Litecoin are MultiMiner and CGMiner. Kryptex and CudoMiner are also some popular options for mining Litecoin.
How to Join a Mining Pool
A mining profitability calculator can help you decide between mining Litecoin solo or joining a mining pool. Make sure you can provide adequate mining efficiency with your Litecoin mining hardware either way.
Miners can join a mining pool by registering on the pool’s website and following the instructions. The next step would entail configuring mining software with the necessary information.
Litecoin Mining and Network Security
Why even mine Litecoin, aside from the Litecoin mining rewards? As one of the longest-running altcoins, it has a respectable reputation in the crypto world and a strong community. Mining Litecoin is one of the ways to meaningfully contribute.
Role of Mining in Preventing Double Spending
The mining process plays a crucial role in preventing double spending and maintaining the integrity of the blockchain. If nodes in a decentralized network fall behind consensus, a malicious user can use it to “spend” more than they have. The goal of crypto mining is to make it costly and unfeasible to tamper with the network so that any theoretical gain is negated by the cost of attack.
Thanks to the mining process, Litecoin has been up and running with almost no downtime for 12.5 years. Litecoin’s hash rate and mining power are sufficiently decentralized, and even if there were enough hash rate to rent with cloud mining, overtaking the consensus would cost about $90,000 an hour.
Influence of Mining on Blockchain Integrity
Mining not only generates new Litecoins but also contributes to the overall security of the network. Each block on the Litecoin blockchain contains a record of transactions, making it publicly accessible and transparent.
Moreover, the question of censoring transactions on the blockchain is an open one. Miners are directly involved as network participants who decide what gets in the ledger. It’s important for miners to compete so that no single entity dictates the contents of the blockchain.
Final Thoughts on Litecoin Mining
Litecoin mining can be a profitable business endeavor provided you invest in the right technology and have a steady source of inexpensive energy. Even after starting mining Litecoin, miners must stay on their toes and respond to changes in the market and the Litecoin network to keep the mining profits.
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Frequently Asked Questions
What is the best way to mine Litecoin?
As of 2024, the optimal mining strategy is to join a Litecoin mining pool with your own mining equipment. To estimate the investment and breakeven timeline, check a Litecoin mining calculator beforehand.
Can you mine Litecoin on your own?
Yes, solo mining LTC is possible and can be profitable with specialized mining hardware. However, due to competition from large pools, profits from solo mining are very inconsistent.
Is it still profitable to mine Litecoin?
As of 2024, it takes substantial investment into hardware and energy to mine LTC for profit. According to MiningPoolStats, a Ghash/s of mining power yields roughly 25 cents.
How to mine LTC for free?
Anyone can start mining Litecoin on compatible hardware for free but it will not be profitable unless you have mining devices with enough power.
Is mining Litecoin profitable?
In terms of profit, Litecoin is not the best cryptocurrency to mine in 2024. LTC mining is dominated by participants with ASIC mining machines, which can keep up with increasing mining difficulty.
How long does it take to mine one Litecoin block?
The Litecoin blockchain protocol works so that a block is produced every 2.5 minutes. If the network starts moving too fast or slowly, a difficulty readjustment will bring the target time back in 3.5 days.
