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How to Mine Litecoin
Litecoin is among the oldest cryptocurrencies. It has remained in use since it was launched in 2011. Despite its age, Litecoin has never had as much popularity or name recognition as other crypto coins of similar age like Bitcoin and Ethereum. However, if you are interested in how to mine Litecoin, you are in the right place.
Mining Litecoin Explained
What is Litecoin?
Litecoin (LTC) is the native coin of the Litecoin blockchain. Originally, the Litecoin blockchain protocol was a clone of Bitcoin, modified to better handle large numbers of users.
Unlike many other Bitcoin clones that were developed in the very early days of cryptocurrency, Litecoin has maintained a steady user base and has consistently been among the top 20 cryptocurrencies in the world.
What Is Crypto Mining?
Cryptocurrency mining is the process of doing a mathematical operation called hashing over and over until a correct hash value is found.
A hash is like the ID number for a set of data. Even a tiny change in the data produces a completely different hash. This is one of the keys to crypto mining. The other key is this – finding a hash is difficult, but checking whether a hash is correct is easy. These facts form the basis of a system called proof-of-work.
Proof-of-work is a way to get lots of independent computers to agree that something is true. In crypto, the computers must agree on the money in every account and the transfers between accounts.
Understanding Hashes and Nodes
The best crypto miner is the one that can check the largest number of hashes in the shortest time. However, since the hashing process is pure trial and error, there is a chance that even a low-powered node could stumble upon the correct solution.
Any node that tries to change a transaction that was previously confirmed and added to the blockchain would have to re-hash every block. It would also have to propose the latest block faster than any other node. This gets harder every few minutes as more blocks are added.
Even to rewrite a few blocks of history would require a node to have more computational power than half the network combined. On a large network, it is practically impossible.
On the other hand, it is always extremely quick and easy for any node to check that every new block’s hash matches the previous chain hash. This is the essence of the proof-of-work consensus mechanism.
Litecoin uses proof-of-work consensus.
You can mine Litecoin using your computer only (solo mining) or you can mine Litecoin as part of a group of other miners (a mining pool). Each way of mining Litecoin has its advantages and disadvantages.
How to Mine Litecoin
In this section, you will learn in more detail how to mine Litecoin.
Hardware is arguably the most important piece of the puzzle. Leaving all else unchanged, the more computing power you have, the more rewards you will get.
However, before purchasing or securing specialized hardware to start mining, it is critical to understand exactly what the hardware requirements are.
In the case of Litecoin, the hashing algorithm used is Scrypt, rather than the more intensive SHA-256 used by Bitcoin.
You can install Scrypt mining software on an ordinary computer and begin mining. However, with such a low-powered device, the chances of getting a successful block are very low. You can increase your hash rate by installing a GPU (graphics processing unit).
Another possibility is to create a dedicated Litecoin mining computer. Such a device is called an application-specific integrated circuit (ASIC).
Other kinds of integrated circuits like CPUs and GPUs are designed to handle a wide variety of different tasks reasonably well. ASICs are designed to handle only the kind of calculations associated with mining very well.
You need a Litecoin wallet to receive any block rewards you get from mining. There are many Litecoin compatible wallets.
You should choose one with a good reputation, and strong security. Hardware wallets are the gold standard for crypto wallet security.
The mining software is what is responsible for performing the hashing algorithm, and for communicating with the blockchain. There are many different software packages available that can perform Scrypt hashing.
You should choose the program that is best suited to your operating system and hardware. For example, if you have a GPU, you may want to pick different software than if you are running an ASIC.
You must be very cautious when picking what mining software to use. As with any software downloaded from the web onto your computer, there is a risk of malware being slipped in.
Only download reputable software from a reputable website, otherwise, your operating system could be attacked.
In addition, some dishonest software providers provide packages that will automatically send any mining rewards your computer earns to their wallet, making you in effect a worker for them. Pay close attention when choosing and installing mining software.
Select a Mining Pool (Optional)
If you choose to join a mining pool, the pool’s administrators will inform you of the details to put into your mining software to link your computer to the pool. You can skip this step and operate as a solo miner.
Mine and Profit
Once you have all the pieces in place, your computer will not need much monitoring. You just need to make sure it has continuous access to the internet and electricity.
You should monitor the costs of your mining operation compared to the rewards you are receiving to understand whether you are making a profit.
How Many Litecoin Units Are There to Mine?
One of the modifications that Litecoin’s creator Charlie Li made when cloning Bitcoin’s protocol software was the total supply. Bitcoin’s supply of coins is capped at about 21 million. On the other hand, the total number of LTC units which will be mined is four times that of Bitcoin at 84 million.
How Much Can You Earn Mining Litecoin?
A crypto miner’s earnings in terms of fiat currency depend on what coin they are mining, and how much of it they can mine.
There are also other variables to keep in mind, such as the hash rate (computing power) of your equipment and the electricity it takes to run it, among others.
It is difficult to generalize the earnings of a Litecoin miner because each variable independently affects profitability. In addition, the exchange rate for Litecoin at any given moment also matters a lot in whether it is profitable to mine under given conditions.
To understand the profitability of your mining operation you can use an online crypto mining calculator. The calculator takes in several key variables including:
- LTC/USD exchange rate
- Your computer’s hash rate
- Your electricity cost
- Your internet cost
- How much you paid for your equipment.
This data will be used to calculate how much (if any) profit you can make from mining Litecoin. CoinWarz is one example of a mining profitability calculator.
Joining a mining pool is one way for you to earn a more stable income from mining. Members of mining pools combine their computing power. This increases the chances that one of them will find a correct hash. They then share the block reward amongst themselves depending on who contributes the most computational power to the pool.
An important consideration when mining with a pool is security. You have to trust that the pool will pay you your fair share of LTC when it finds a block. You should do a lot of research before joining a pool to make sure it has a good reputation.
In addition, even the best pools can fall victim to hackers. Always make sure your LTC rewards are promptly moved to your own, secure Litecoin wallet.
- How to Make Money with Cryptocurrency
- How to Withdraw from Binance
- How to Transfer From Coinbase to Coinbase Pro
- How to Transfer from Coinbase to Binance
- How Does Cryptocurrency Gain Value?
- How to Read Crypto Charts
Now you should have an idea of how to mine Litecoin. Mining Litecoin is a little bit difficult if you are not technically-minded. You can use an online calculator to figure out the profitability of mining Litecoin using your equipment setup. If you join a pool, your rewards might be smaller, but more consistent.