Charlie Lee sought to make Litecoin an easy-to-mine cryptocurrency with the implementation of the Scrypt algorithm.
Scrypt is a memory-hard algorithm that favors users to mine Litecoin using their home PCs and diminishes the power of ASIC rigs. However, through the years this situation has slightly changed, and large mining devices have been optimized for the Scrypt algorithm.
Mining is a process that requires computational power to solve complex mathematical puzzles. Once a puzzle is solved, a new block of transactions is verified and incentivizes the contributors (miners) with new Litecoins.
Mining is an expensive activity influenced by numerous parameters like electricity consumption, mining difficulty, and mining hardware investment. A prospective miner should always consider these factors and is strongly advised to consult one of the profitability calculators, which may be found online. Mining profitability varies based on location, hence purchasing Litecoins in the open market could be more sensible than mining them. There can be occasions that mining Litecoin may not be profitable at all.
Miners should always be aware that mining is a dynamic environment that could change in both directions, as more miners enter. Profitability is not guaranteed in the long-term, similar to mining hardware that could become obsolete and non-effective.
How to mine Litecoin
- The first step is to choose a reliable, Litecoin-compatible wallet that will store your minted Litecoins securely. There is a wide selection of wallets available, each one offering additional features. The official Litecoin wallet can be downloaded at www.litecoin.org. When the wallet is initially launched, it will start to download the Litecoin blockchain. As this will store all the transaction history, you will need to make sure that you have adequate storage on your device. At the time of writing (June 2018), the Litecoin blockchain requires almost 17.2GB of available space.
- Following the wallet selection, comes the mining hardware. Depending on the power of the mining rig, a miner has to decide if he will mine independently or join a mining pool. As a general suggestion, miners using home PCs are advised to join a mining pool. As a mining pool combines the computational power of multiple users, it has higher probabilities of success over solo mining. On the downside, the reward for discovering a new block will be distributed across every contributor, whereas in solo mining the user gets to keep all the newly-generated Litecoins. Again, before purchasing mining hardware, a miner should consult an online profitability calculator.
- Depending on the type of mining, miners have a narrowed selection of software to choose from. Cgminer, a program that is adaptable for CPU or GPU mining. cudaMiner, a mining software that is optimized for use with Nvidia graphics card, and cpuminer, the most famous mining program for CPU mining.
After these steps are followed, the setup is ready to start mining Litecoin. As mining pushes the hardware to its limits, a miner should always be careful that his/her system doesn’t reach high temperatures, which could reduce the hardware’s lifetime. Additionally, the miner should always follow up with the actual metrics to ensure that mining Litecoin is a profitable business.