Litecoin Mining: The Complete Beginners’ Guide
Litecoin is undoubtedly one of the fastest-growing cryptocurrencies in the industry. Since its inception in 2013 to date, this crypto asset has grown from about $1.2 billion in market capitalization to about $240 billion. In just 7 years, Litecoin has witnessed substantial rises and falls and billions of dollars in fortunes have been made and lost.
Asides from market capitalization, Litecoin has also grown exponentially in its mining regard.
This article gives you, the reader, insight into Litecoin mining, what it’s all about, how it bears significant importance to Litecoin, and how it can be beneficial to you.
Litecoin runs on a decentralized public ledger that requires external support to verify and complete transactions. This technical support is required by every cryptocurrency that is run on a blockchain that utilizes the ‘Proof of Work’ system.
To gain this support, cryptocurrencies (Litecoin inclusive) create rewarding systems to encourage the public to join their network and complete transactions while simultaneously sustaining the integrity of the blockchain. People who solve blocks or complete transactions on a crypto network are called “miners.” This rewarding system is the major reason why cryptocurrency mining is growing exponentially across the globe.
Litecoin mining, unlike many mining ads you might have come across, is not an easy endeavor. Mining goes beyond just having a desire or a knack for it. It requires skill, experience, and efficient mining equipment.
As the years go by and as the market grows, more and more miners join in on mining platforms which automatically causes mining difficulty to soar. While mining is still a profitable and worthwhile venture, prospective miners need to follow the best mining practices to better guarantee that their entry into the mining space is profitable and worthwhile.
As mentioned previously, this article gives the reader insight into Litecoin mining and provides other relevant information to ensure success in their mining endeavors.
A Brief History of Litecoin
Before we go into a detailed description of Litecoin mining, let’s take a quick look at the broad overview of Litecoin. Firstly, Litecoin is the 7th-largest cryptocurrency based on market capitalization
and is identified in the market with the ticker LTC. It was created in 2011 by Charlie Lee, a former Google and Coinbase worker. Litecoin was created to be an open-source platform run on a public decentralized ledger. This gives users the means to facilitate peer-to-peer transactions almost immediately without restrictions or supervision from governments or financial regulators. The concept behind this cryptocurrency was primarily inspired by Bitcoin.
To bring this payment solution concept into reality, the project was designed based on the Bitcoin client using the Scrypt algorithm. Just like Bitcoin, Litecoin makes use of the Proof of Work system to secure its network and an incentive-based participatory system through tokenized rewarding.
Litecoin has witnessed exponential growth in value over the years. In December 2017, the price of LTC peaked at $375. That said, Litecoin’s valuation is a key determinant of the affairs of its mining. We’ll get into the details of this in a bit.
What Is Cryptocurrency Mining?
To understand why Litecoin needs to be mined, it is important to gain a contextual knowledge of what cryptocurrency mining is.
Firstly, mining is a process involved in the Proof of Work system which secures and sustains the operations of a blockchain network. There are several other blockchain security protocols including Proof of Stake, pre-mined tokens, consensus validation, and many more. All these methods all have a similar purpose; to bind the network’s security to the value of the token while providing a rewarding system for external participation in the platform.
By binding the network’s security to the value of the token, ill-intentioned participants will think twice before causing damage to the system as that would devalue their holdings. This gives participants a kind of responsibility for the security of the network and their funds.
Secondly, mining encourages people to take part in running the network. Aside from electrical and computational assistance, crypto networks also need assistance in translation, marketing, bug finding, and many more. These supports are rewarded with certain amounts of LTC.
So, it can be observed that the prospect of getting rewarded in tokens is a driving force for contributors of resources in a network.
Now that we’ve gotten a good idea of what mining is and the rationale behind it, let’s move on to a more detailed explanation of mining Litecoin.
Evolution of Litecoin Mining
In mining, miners must have a mix of top-notch hardware and software to solve math problems in the contest to solve a block of transactions that will be added to the network’s blockchain. Successfully mining a block is a competition against thousands of miners across the globe, all working towards the same goal. That said, there are no reward guarantees in mining regardless of what resources have been spent by the miner.
Initially, mining Litecoin was easy compared to today as the mining industry was less crowded and the mining difficulty was less complicated. As the crypto market grew, more and more prospective miners came on board causing a tougher competition which automatically led the network’s algorithm to adjust its difficulty accordingly. This was done to make the process tougher for miners while simultaneously maintaining the same time frame for resolving blocks.
As an effect, miners began using more sophisticated mining equipment, started forming larger mining pools, and started creating larger mining farms with significant upgrades.
The steady growth of Litecoin’s value has caused mining rewards to decrease significantly. However, as mentioned previously, Litecoin mining is still a profitable venture even though it is significantly more complicated and expensive.
At press time, Litecoin’s network adds a new block every 2.5 minutes and has a reward allotment of 12.5LTC per block. There’s currently just 25% of Litecoin’s total supply left to mine. The maximum supply is capped at 84 million LTC.
Mining is an automatic activity and can be done using either a Central Processing Unit (CPU), which is a program that is in-built into our everyday computer, or with Graphics Processing Units (GPU). While mining using CPU is possible, it is not an advisable option of use. Mining with CPU, in the long run, is unprofitable and inefficient which defeats the primary purpose of mining.
Cryptocurrency mining is an intensive process and subjects the equipment being used to wear and obsolescence. However, there are mechanisms for preserving your mining hardware like efficient cooling systems and general supervision of hardware performance.
Litecoin mining is quite exhaustive on the hardware being used as the network uses a Scrypt Proof of Work hashing algorithm instead of the general SHA-256.
An efficient alternative would be to use dedicated hardware like a powerful graphics card to deal with the arduous computational task involved in mining. However, for those looking to test the waters of mining, going all out on mining equipment might not be necessary.
Depending on the style of mining, the software requirements might vary. For prospective miners who use CPUs, there is a software called CPU miner available for download from SourceForge. Likewise, prospective miners who use GPU will need a software called CGminer.
Simple Steps to Begin Mining Litecoin
- Create a Litecoin wallet: Before you begin to mine, it is necessary to set up a personal wallet where your funds or mining rewards can be securely stored.
- Select your preferred hardware: Make a quick research on the available Litecoin mining hardware options and choose the one that suits your style. You could either choose to set up a mining rig with multiple graphics cards or you could invest in an ASIC miner. Remember to always put the cost of power, space, and ventilation into consideration when setting up your mining rig.
- Install your software: If you choose the ASIC miner option, there wouldn’t be any need to go through any hassle of installing any software as the ASIC hardware comes with pre-installed mining software. If you’re using a graphics card, however, you’ll be required to download and install adequate mining software. Always make sure to only download your software from trusted websites.
- Start mining: All you’ll have to do now is to follow the instructions in your mining software package and begin making a profit.
At this point, you now know how to set up your mining rig, install your software, and begin mining. However, there’s one crucial element that needs to be looked into.
To succeed as a miner, you simply have to successfully solve a block before the next person. To do this, you need to be efficiently equipped with top-notch mining hardware and software.
That said, in the mining space, there are networks known as “mining pools” which consist of several miners, all working towards the same goal; to successfully solve blocks. Mining pools are made up of miners who pool computation power and other resources to increase their chances of securing mining rewards. This makes the mining competition even more difficult.
That said, to better improve your chances of succeeding in the mining space, it is advisable to join a mining pool. In mining pools, however, rewards are shared amongst every miner that participated in solving a block, meaning that the reward obtained from mining a single block in a pool is significantly lesser compared to when you’re mining alone (solo mining). Although, this issue is offset by the ability of pools to solve multiple blocks at the same time a solo miner would solve one, giving you an almost certain steady influx of reward. The larger the pool, the better.
However, you need to carry out proper research before joining a mining pool lest you become a victim of a scam or unfair pool terms and conditions.
Evaluating the profitability of your mining activities relies on some crucial factors including hashing rate, mining pool fees, electricity costs, cost of acquiring equipment, and the price of Litecoin. There are some mining profitability calculators available on the internet today which makes it easier to calculate your mining profitability.
Hopefully, this guide has given you better insight into the concepts involved in mining Litecoin, how to get involved with it, and what the requirements are. You’ve probably garnered enough knowledge to go out there and test this knowledge. However, if you have more questions relating to your pool, hardware, software, or wallet do well to scour the internet to get more information on those topics.
Frequently Asked Questions (FAQs)
How many unmined Litecoin tokens are there?
The total number of Litecoin in circulation at press time is 62,983,450. If the maximum supply is 84,000,000, that would leave the total unmined tokens at 21,016,550.
What is the time frame for mining one Litecoin?
The average block generation time for one Litecoin is 2.5 minutes.
Is Litecoin easier to mine than Bitcoin?
Yes. Mining Litecoin is considerably easier than mining Bitcoin. It is also cheaper and less equipment-intensive to mine Litecoin than Bitcoin.
What is the best Litecoin miner?
ASICs are regarded as the best available Litecoin miner.
How do I start mining Litecoin?
You can go through this article to understand the step-by-step procedure as well as the necessary hardware and software involved.
What is the hash rate?
Simply put, the hash rate is the speed at which your mining rig can mine. Here’s how the units work for better understanding.
1 kH/s equals one thousand hashes per second
1 MH/s equals one million hashes per second.
1 GH/s equals one billion hashes per second.
1 TH/s equals one trillion hashes per second.
1 PH/s equals one quadrillion hashes per second.
1 EH/s equals one quintillion hashes per second.
1 ZH/s equals one sextillion hashes per second.
What is a Litecoin mining rig?
A Litecoin mining rig is the setup of several complex hardware units. Rigs are used to create higher hash rates and block generation. Mining rigs can be built from scratch or can be purchased from various online vendors.