ELI5 How to mine Litecoin

ELI5 How to mine Litecoin

Litecoin is a top 10 ranked cryptocurrency that’s been around since 2011. It was forked from the main Bitcoin source code by a developer called Charlie Lee.

Bitcoin’s hashing algorithm, SHA256, is too light weight and can easily be implemented in dedicated hardware called ASIC.

Litecoin substitutes SHA256 for Scrypt, which is a heavier algorithm that consumes more memory in order to perform Proof of Work (PoW).

The high memory consumption by Scrypt makes it more expensive to create specialized hardware. Unfortunately, this type of hardware was quickly developed for Scrypt, making CPU and GPU mining unprofitable.

Mining Litecoin With CPU and GPU

Mining Litecoin with a CPU or GPU is no longer profitable.

CPU mining became obsolete when popular mining programs were migrated to AMD GPU’s.

The Litecoin GPU mining era also ended in 2014 when a bear market caused enormous losses for miners and investors.

During this time Scrypt ASIC machines appeared and, together with the bear market, made GPU mining unfeasible.

How To Mine Litecoin

Litecoin mining requires ASIC equipment.

Photo: Gareth Halfacree from Bradford, UK

Dedicated miners are built and sold by Bitmain and other chip manufacturers.

The basic steps to mine Litecoin are as follows:

  1. Purchase the mining equipment. Antminers are excellent Scrypt processors;
  2. Install the mining equipment. A fast 24×7 internet connection is required, along with proper electrical installations;
  3. Join a mining pool;
  4. Start the miners and monitor their operation.

Now we’ll look at each step in a bit more detail.

Purchase Litecoin Mining Equipment

The most powerful Litecoin miner available is arguably the Antminer L3+.

Made by Bitmain, this miner can be tough to purchase. They’re produced in lots which disappear quickly from the official Bitmain store shortly after they’re released.

For this reason, Antminers are resold in traditional retailers with a premium. If you are unable to grab an Antminer straight from Bitmain when they’re released, then paying the premium is the only choice.

GPU-based rigs do not work for Litecoin. An Antminer or similar is necessary.

FutureBit

FutureBit Apollo LTC is another ASIC option for Scrypt (Litecoin) mining. FutureBit miners can also be tricky to buy and require pre-order registration.

The MoonLander USB Litecoin Miner (pictured below) is available at U$ 49.99 a piece:

FutureBit is based in Brooklyn, NY. Miners can be purchased in loco by visiting their headquarters at :

81 Prospect St
Brooklyn, NY 11201

Gridseed

Gridseed makes small mining ASICs that can be powered off of tiny switch mode supplies. These cannot compete with the big ASIC miners, but will generate something around 1000 DOGE per day.

Here’s a Gridseed Mini ASIC Miner review by MakeUseOf:

We couldn’t find an official website for Gridseed. It seems like their only “official” web shop was via AliExpress.com.

Ehsminer?

Another company called Ehsminer (ehsminer.com – unlinked because their site is currently down) had a Scrypt mining machine called “Wolf”. Although you can find discussions about Wolf, their operational status is unknown at the time of this writing.

Note: Several mining machine manufacturers work by ordering batches of electronic parts from specific providers. In order to guarantee the correct number of units, pre-order systems are normally used to estimate the number of parts.

tl;dr; If you’re buying a brand new dedicated miner then you’ll probably end up with an Antminer L3+.

Should I buy a used unit?

Purchasing a second hand unit can be complicated business.

First of all, there’s the gold mine paradox. If someone is selling their gold digger, it probably means the gold it digs is no longer as profitable.

(To be honest, that’s not always true. Mining requires cash flow, because cryptos aren’t necessarily immediately profitable. In order to keep mining, miners need fiat money to pay for electricity and other costs. Some miners sell their machines because they’re unable to keep up with these operational expenses. Still you should question why someone is selling their golden egg goose.)

Secondly, miners are made up of specialized hardware that operate 24×7 at maximum power. The abuse these machines go through is unparalleled in the tech business. Even large server park CPU’s, like those behind Google or Facebook, have periods of low demand when they can throttle down.

Miners catch no such breaks.

Cryptocurrency mining requires full power operation, 24 hours a day. Therefore when you’re buying a used miner you can be sure to be acquiring hardware that was been through a lot of abuse. Mining machines break down often in large mining operations. Paying qualified staff to monitor machines and substitute bad hardware is one of the biggest operational costs at large mining facilities. When buying a used miner you’re probably buying a machine that has been serviced before.

Keep these points in mind if you decide to buy a used mining machine or GPU rig.

Install Litecoin Miners

Antminers come with good documentation and there’s plenty of community support.

The same can’t be said about other ASICs we’ve mentioned. Gridseed machines are notorious for not including any documentation with them. You must deduce how things work by trial and error or by previous experience.

Bitmain, on the other hand, has plenty of online documentation, firmware updates, discussion forums and social media contacts.

Miner installation consists of three main stages:

  1. Electrical installation
  2. Physical network setup
  3. Software configuration

Electrical Installation

Litecoin mining machines consume lots of power. In fact, Proof of Work mining is basically the conversion of electrical energy into cryptocurrency and heat.

The electrical installation must be able to support the mining machine’s rated power plus at least 30 to 40% extra. This gives the wiring some headroom to operate safely.

If you’re not familiar with electrical power calculations, then by all means hire a professional to perform this work for you.

Good, stable electrical power is at the heart of a successful mining operation.

Physical Network Setup

Network wiring must be separated from the power lines. The electrical power cables that feed the mining machines must be routed through a different path from the network cabling. Usually there’s at least 2 different ducts, one carries power (usually metallic ducts are used for this) and other ducts route the network wiring.

It’s important to use switches instead of hubs when interconnecting several mining machines. Switches route frames from host to host, without broadcasting every frame on the network, unlike a hub does.

The internet connection is the next most important component of a profitable mining operation.

If your internet is intermittent, dropping packets, causing DNS lookup delays or presenting other deficiencies, then all the mining power is going to waste. If you solve a block and your contribution is not received by the pool before other solutions, you will lose the reward. If you receive work with a significant lag, then other miners will have an advantage over you with every job.

It is crucial, then, to have a low latency network connection to the mining pool.

This involves several components you should pay special attention to:

  • Quality LAN wiring. Nothing less than 5e cabling will do.
  • Quality switch that has a connection to the WAN.
  • High quality connection to the Internet. Fiber is recommended.

Create Litecoin Address

You’ll a Litecoin wallet in order to mine. Whenever rewards are paid out by the pool to this address.

If you run a full node it’s trivial to create a new address. Do not reuse previously created LTC addresses. Create a new address for every mining pool you join.

Take note of this address, you’ll need it next.

Join a Mining Pool

Litecoin mining requires you to sign up with mining pools. We recommend that you choose any popular pool that isn’t close to 50% total network hashrate.

A mining pool with too few users will never solve a block. And a mining pool too crowded will yield low rewards for everyone. Choose one in between that hasn’t received too many negative reviews.

When you mine using a pool, you’re essentially trusting the pool with your block rewards.

A pool has full control over the mining operation. So make sure to choose an honest pool with plenty of good reviews online. A simple Google search should yield dozens of LTC pools you can use.

Litecoin mining pool examples:

When you’re all set up with one of these pools, insert your Litecoin address into your pool profile so you can receive payments. Every block you contribute to will yield a certain amount of LTC.

Software Configuration

Once you’ve got a mining pool to work with you’ll have a host:port to connect to along with an optional username/password.

Enter your miner’s control panel. The miner documentation should have specified how to connect to it on the local network. (Note: This panel should be inaccessible from the WAN port, for obvious reasons. Make sure that your WAN interface (fiber or ADSL) does not forward access to this internal port. Blocking outside traffic should be the default behavior, but with cryptocurrencies you can never be too safe.)

Once you’ve logged into the mining machine’s control panel, configure the mining pool parameters. Enter the host:port, user/pass if necessary or enter your LTC address. Some mining pools identify you by the LTC address, so no username/password is necessary.

Save the settings and fire up the miner. You should see successful contributions to the pool on the mining log. Otherwise check the error messages and seek the miner’s documentation or online forum for a solution. For Antminers it should be easy to solve any problem via material found online.

Start Mining and Monitor the Operation

Now you’ve got a humming miner that is churning out hashes. Maintaining this system online in healthy state then become a miner’s full time job.

Constance is one of the most important aspects of cryptocurrency mining.

Owning very fast mining machines will not be useful if your internet connection or electrical installations keep failing.

Miners must stay in sync with the mining pools in order to receive new work as soon as it’s available and to return proof of work before it becomes stale.

It’s important to monitor the miner logs and to watch out for too many rejected shares and other errors. These could indicate a problem with the internet connection.

If possible, use IP addresses instead of hostnames whenever possible, this saves DNS lookups. Look for mining pools geographically close to your miners. Network latency play a significant role in crypto mining.

If you solve a block, you must be the first one to submit the solution to the mining pool. It’s no use have great mining hardware if a slow network causes your shares to get lost or arrive after other miners’ own solutions.

Although mining is a cooperative effort, there’s much competition happening at any given time. Keeping the whole operation working 24×7 with good performance and no hickups becomes a near full time job for miners.

Conclusion

Although Litecoin mining isn’t as hot as it was a few years ago, it can still be worth it if the intention is to trade for Bitcoin or to hold LTC for long periods.

While mining Litecoin is not immediately profitable a future bull market could change all that.

Plus, there’s something magical about the hum and buzz of miners churning numbers into the night in exchange for silver crypto!

Litecoin and Dogecoin work together well on the same miner. Some pools allow you to mine both at the same time, maybe you can earn a few DOGE bonus along with your precious LTC!

We hope this starter guide has helped you get a better idea about the Litecoin mining process. Mining can be a very rewarding occupation, but it also requires hard work and attention to detail. Once you get your mining system up and running there’s lots to do to optimize it.

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Photo credit: Gareth Halfacree from Bradford, UK



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