This past week, altcoins have started gaining traction, and are increasing prices alongside Bitcoin. If you are interested in mining, this guide will give you basic knowledge on how to mine Litecoin (LTC), including the software and hardware required to mine LTC successfully.
What is Litecoin?
Litecoin (LTC) is a digital currency that was founded by an ex-Google employee Charlie Lee way back in 2011, which aims to be an open source project on Github. LTC is actually a part of Bitcoin and was created to improve the initial inadequacy of the Bitcoin blockchain protocol. LTC has more total supply of coins, pegged at 81,000,000, has less block generation time of 2.5 minutes, and handles the common scrypt hash algorithm.
Litecoin is one of the limited cryptocurrencies that still uses a proof-of-work consensus mechanism that can still be mined to generate block rewards. Litecoin is one of the top 5 cryptocurrencies by market cap (~ $8 billion). LTC requires Application Specific Integrated Circuits (ASICs), a specialized hardware that is specifically programmed to mine LTC. Litecoin cannot be successfully mined using a common consumer hardware like CPUs and GPUs.
When it comes to mining, you have to decide first if you are going to solo mine or pool mine. LTC is no longer productive to solo mine, so the best option would be to join a pool. Pool mining has associated costs like pool fees, but you will have rewards faster and there will be less conflict on rewards compared to solo mining. Here is a breakdown of the elements of mining Litecoin for you to have a complete understanding of how the process.
Litecoin Mining & Consensus Mechanism
Litecoin is based on the Scrypt hash algorithm, a Proof-of-Work (POW) consensus mechanism. This is the universal PoW algorithm which is still being used by different mineable cryptocurrencies. Algorithm was adopted by Charlie Lee from an early altcoin called Tenebrix,. The Scrypt algo is assimilated to the elements of SHA-256 algorithm but has a better serialised calculations. Instead of raw processing power alone, large amounts of high-speed RAM are preferable when using Scrypt.
Litecoin Mining Hardware
Before, people were able to mine LTC by using consumer hardware like CPUs and GPUs, but it is no longer productive to do as Scrypt based ASIC miners were released. Mining with CPUs and GPUs may not be cost effective now. However, using CPUs and GPUs could probably be a good way to learn how to mine. Consider using them to familiarize yourself with the mining terminology, have more knowledge on the process, setup, and a very low cost way to find out if you are really into mining before spending thousands on an ASIC miner.
Litecoin Mining Software
The software used to mine LTC is so important just like its hardware. Most ASIC miners come pre-installed with software. You will need to follow the instructions and it should be fair to get started using Antpool and BitMain. Joining a mining pool gives you more chance of having profit and lessens conflicts on rewards. It will be complicated to be a solo miner as you have to compete with the hashpower of pools. It is best to join a reliable pool to have more profit.
Litecoin Mining Difficulty & Profitability
Overall, the global hashrate for Litecoin has been increasing continually over the past few months that simply indicates that there is an increase in total mining power (more ASIC miners are being used) to mine LTC. The hashrate is relevant to the price of the coin, and the complication tracking the hashrate.
When the bear market happened during the past four months, many miners found mining to be unproductive and unprofitable. However, as the market starts to rebound, profitability will also surely increase proportionate to the increase in Litecoin prices. Happy mining!