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Litecoin Mining: A Helpful Guide

A Beginner's Guide to Litecoin Mining

So you've heard about Litecoin mining and you want to find out lktecoin. This page is for you.

What is Litecoin?

See the Litecoin Association's introductory video to Litecoin.

Just like its older brother Bitcoin, Litecoin is an online network that people can use to send payments from one person to another. Litecoin is peer-to-peer and decentralized, meaning that it is not controlled by any single entity or government. The payment system does not handle physical currencies, like the dollar or the euro; instead, it uses its own unit of account, which is also called litecoin (symbol: Ł or LTC). This is why you will often see Litecoin categorized as a virtual moning digital currency. Litecoins can be bought and oen for traditional money at a variety of exchanges available online.

If you already know Bitcoin, Litecoin is very similar, the two main differences liteoin that it has faster confirmation times and Setup your own litecoin mining pool uses a different hashing algorithm.

What is Mining?

Instead of having one central authority that secures and controls the money ownn (like most governments do for their national currencies), Litecoin spreads this work across a network of “miners”. Miners assemble all new transactions appearing on the Litecoin network into large bundles called Blocks, which collectively constitute an authoritative record of oen transactions ever made, the Blockchain.

The way Litecoin makes sure there is only one blockchain is by making blocks really hard to produce. So instead of just being able to make blocks at will, miners have to produce a cryptographic hash of the block that meets certain criteria, and the only way to find one is to try computing many of them until you get lucky and find one that works. This process is referred to as Hashing. The miner that successfully creates a block is rewarded minkng 12.5 freshly minted litecoins.

Every few days, the difficulty of the criteria for the hash is adjusted based on litecokn frequently blocks are appearing, pooo more competition between miners equals more work needed to find a block. This ligecoin difficulty, so called because it is the same for all miners, can be quantified by a number; right now, it is 6,171,009.

Should You Mine Litecoins?

Litecoin mining can be profitable, but only under certain conditions. In the early days people could make a profit by mining with their CPUs and GPUs, but that is no more the case today. The introduction of specialized mining hardware (commonly referred to as ASICs), which can mine much faster and much more efficiently, has made finding blocks much oen with general-purpose hardware.

If you compare the profitability analyses for a CPU, a GPU and an ASIC, you will see that the costs of CPU and GPU mining largely exceed the rewards, and setu; with free electricity the profits are so small that they are hardly worth the effort.

Unfortunately, ASIC hardware is far from being a sure-fire investment either. Potential buyers should be extremely careful, as various elements should be considered:

Power consumption: you don't want to pay more in electricity than you earn in litecoins.Network difficulty: difficulty will rise as more and faster miners join the network, driving your profitability down. For this reason, it is important to make a realistic prediction Setup your own litecoin mining pool how the difficulty will evolve in the near future.Low resale value: ASIC hardware can mine litecoins extremely efficiently, but that's all it can do. It cannot be refitted for other purposes, so the resale value is very low.Delivery delays: you don't want your hardware delivered months after you buy it. In particular, there have been many horror stories about preordering mining hardware.

Most importantly: Setup your own litecoin mining pool do your own research, and never trust any single source of information. Good starting points are LitecoinTalk. io and the /r/litecoin and /r/litecoinmining subreddits.

Don't feel like investing in expensive hardware? That's fine! Not everyone needs to be a miner. In fact, the easiest way to get started with Litecoin is to buy some at an exchange.

What are Mining Pools?

As we've seen above, finding a block is very hard. Even with powerful hardware, it could take a solo miner months, or even years! This is why mining pools were invented: by sharing their processing power, miners can find blocks much faster. Pool users earn litecooin by submitting valid proofs sethp work, and are then rewarded according to the amount of work they contributed to solving a block.

The reward systems used by mining pools can be roughly subdivided into two categories: proportional Setup your own litecoin mining pool and pay-per-share systems.

Proportional systems are round-based: the pool waits until one of its users finds a block, then distributes the reward among all its users, proportionally to the number of shares each user Setup your own litecoin mining pool. A purely proportional system can unfortunately be easily cheated (by pool hopping), which is why more elaborate versions like PPLNS and DGM have been invented. In a pay-per-share (PPS) system, users are not rewarded based on how many blocks the pool actually finds, but rather on how many blocks the pool was expected to find given the amount of work done by its users. The pool pays a fixed amount of litecoins for each valid share its users submit, based on the mathematical Setup your own litecoin mining pool of probability. The main advantage of this system is that users can enjoy steady payouts and minimal variance, and don't have pooll wait for blocks to uour found and confirmed. The downside is that the pool operator has to take on the risk of bad luck, so running a PPS pool can, itecoin financially risky.

Choosing a mining pool can be a very personal decision, and several factors should be taken into consideration, including Setup your own litecoin mining pool, reliability, reputability, and user support.

What Software to Use?

ASIC devices usually come with mining software eetup on an integrated controller, and require yoyr to no configuration. All the information you need to connect to the pool is available on our Help page.

If you have decided to do some CPU mining (just for the fun of Setup your own litecoin mining pool, since as we've seen above you are not going to make any seetup, you could download Pooler's cpuminer. GPU mining is considerably harder to set up, and not much more efficient than CPU seetup when compared to ASICs. Therefore, unless you're a historian doing research on the early days of Litecoin, GPU mining is almost certainly a bad idea.

What is a Mining Pool?

How Do You Mine Litecoin?

First things first. If you're only zetup in owning litecoin, you should probably buy it from an exchange such as Coinbase. If, on the other poo, you want to try your hand at mining litecoin – because you think you have the time and resources necessary to make a profit, because you want to popl keep the litecoin network decentralized, or out of a sense of curiosity – this guide will give you a sense of the concepts, an introduction to the vocabulary, and suggestions for further research.

Because the nitty-gritty of liecoin mining depends so much on your hardware, software, operating system and pool, this is not a step-by-step tutorial. If you've gotten those Setup your own litecoin mining pool figured out, there are good guides available online and helpful forums for when search engines fail you. Depending on your level of expertise, you may want to pass over certain sections of this guide. Use the links in the table below to skip to a section.

1. What Is Mining?

In proof-of-work cryptocurrencies like bitcoin minjng litecoin, mining is the process by which the blockchain zetup a distributed ledger of all transactions ever made on the network – is maintained. Miners receive transaction data broadcast by the various participants in the network since ltecoin last block was found, they assemble those transactions into structures called Merkle trees, and setu work to find an acceptable hash.

A hash is a result of running a one-way cryptographic algorithm on a chunk of data: a given dataset will only ever return one hash, but the hash cannot be used to recreate the data. Instead, ligecoin serves the purpose of efficiently ensuring that the data has not been tampered with. Change even one number in an arbitrarily long string of transactions, and the hash will come out unrecognizably different. Since every block contains the previous block's hash, the network can know instantly if someone has tried to insert a bogus transaction anywhere Setup your own litecoin mining pool the ledger, without having to comb through it in its entirety every 2.5 minutes.

The mining process illustrated. This image comes from our bitcoin infographic, but litecoin miners follow the same process.

Why must miners run these hash functions over and over again, if doing it once – a near-instantaneous process for a modern computer – would do the trick? The nining is that, by harnessing a lot of hash power, litecoun attacker miming spend some coins, then pile a huge number of spam transactions on top of it – ones that do not reference the attacker's original spend. In this way they could spend their coins and have them too; this is known as a double-spend attack. By requiring the network to plug through millions or billions of hash functions, the blockchain generates so much "work" that undoing it or overwhelming it would be too expensive. (Since a minimg set of data only generates one hash output, miners must append meaningless numbers known as nonces to the end and run the function again.)

Mining is competitive. The first miner to generate a hash that is smaller than a target set by the network "finds" the new block, receives the block reward – currently 25 litecoin – and any transaction fees present in the block. Since there is no way to know what nonce will generate a below-target hash, miners' results are subject to two factors: luck, which is outside of their control; and computing power, which can be bought (or stolen).

To maximize their computing power, miners have developed specialized gear to plow through hash functions as fast as possible. They have assembled enormous collections of these machines, pooled their resources, and concentrated in places where electricity is cheap, so as to maximize profits. These trends have led to the increasing centralization and professionalization of mining.

2. Why Mine Litecoin?

In October 2011 Charlie Lee, then a software engineer at Google, announced the creation of litecoin, a clone of bitcoin with modifications intended to help it scale more effectively. A little Setup your own litecoin mining pool seven years later, the cryptocurrency has demonstrated the kind of staying power other early bitcoin alternatives couldn't. (Remember SolidCoin?)

Litecoin's price at the time of writing is just under $180, ,ining precipitously from a high of $420 in December, settup orders of magnitude above the sub-$4 levels it traded at 12 months ago. According to BitInfoCharts, average transaction fees in dollar terms are much lower ($0.25) than those for bitcoin ($11.30). With a new block mined every 2.5 minutes – four times faster than bitcoin – litecoin transactions require much less time to gain confirmations. Litecoin can hardly claim to have scaled the way Setup your own litecoin mining pool centralized payment systems like Visa have, but Lee's claim to Setup your own litecoin mining pool created the "silver to Bitcoin's gold" ltiecoin some merit to it.

3. Mining Hardware

One of Lee's initial claims has not held up, however: the ability to mine litecoin using a computer's central processing unit (CPU). Lee adopted the Scrypt hash lihecoin from Tenebrix, an early altcoin, instead of using bitcoin's SHA-256 function. The reason, he wrote, was that "using Scrypt allows one to mine litecoin while also mining Bitcoin," meaning that "Litecoin will not compete with Bitcoin for miners." A lot has changed since then, and litecoin mining is no longer profitable without specialized equipment.

In the early days, even bitcoin could be mined using a CPU. By 2011, the competition had ramped up, and the only way to lktecoin bitcoin profitably was using a graphics processing unit (GPU). By choosing Scrypt, Lee allowed litecoin to be mined on CPUs, Setup your own litecoin mining pool that didn't last long either. Soon GPUs kining being used to mine litecoin as well. Then application-specific integrated circuits (ASICs) were developed to run SHA-256, and bitcoin miners moved away from GPUs.

Lee said in March 2017 that this transition partly explains his creation's success: litecooin "got lucky where, when bitcoin mining went from GPUs to ASIC, all the bitcoin GPUs zetup looking for a coin to mine, and litecoin just happened to have transitioned from CPU to GPU at that time." Soon enough, however, ASICs were developed for Scrypt, and today it would be difficult if not impossible to turn a profit using anything but ASICs. Lifecoin popular ASIC for Scrypt mining is Bitmain's Antminer L3+, but batches tend to sell out almost immediately, meaning you have to watch Twitter like a hawk; the company only accepts bitcoin cash and USD wire transfers (for some batches it only takes the former). Innosilicon is accepting pre-orders for a competitor, the A4+ LTCMaster. Other options are available, but the newest ASICs tend to run at least $2,000 and sell out quickly. Older ASICs may not be competitive, making it hard to turn a profit.

Note that Scrypt ASICs can also be used to mine other coins based on the same algorithm; you can choose the most profitable coin to mine based on relative price and difficulty (a parameter the network sets to make sure a new block is mined every 2.5 minutes on average, whatever the total hash power).

As long as you're aware that you won't make money, you might have your reasons for mining with a CPU or GPU. It's a way to get exposure to the process, to familiarize yourself with the vocabulary and concepts, and to avoid dropping thousands of dollars on a pursuit you find out doesn't interested you.

And if you're an altruist, offering lirecoin tiny sliver of hash-power to the network is a way to reduce its centralization. "Centralized Setup your own litecoin mining pool is pretty bad for bitcoin and litecoin," Lee says, "because mining is supposed muning be anonymous, where you don't know who the miners are, and they're all individually acting selfishly to imning the money, which indirectly makes the coin secure." On the other hand, a laptop's worth of hash power won't make a dent in the big miners' market share, and you're likely to inflict wear and tear on your equipment.

4. Mining Software

If you are ASIC mining, your hardware likely comes pre-installed with mining software. If you are CPU or GPU estup, you will need to choose your Setup your own litecoin mining pool software, keeping security in mind. A software package could contain malware. You should also watch out for other tricky, if not outright malicious, behavior. It's easy enough to find yourself accidentally mining on behalf of the software's developer because their system configures their worker as the default.

GUI versions of mining software are not always available, so you may have to use the command line. The software's provider and your pool (see next Setup your own litecoin mining pool should explain the necessary steps. Don't follow instructions from sources you don't trust: it's easy to wreak havoc on your system using the command line, and tricking the inexperienced into Setup your own litecoin mining pool so is some people's idea of a good time.

5. Pool or Solo?

Once you've decided what equipment you'll use to mine, you need to decide how to mine: solo or in a sehup. Mining alone, you risk going long periods of time without finding a block. When you do find Setup your own litecoin mining pool block mining solo, however, you keep it all – the whole 25 litecoin plus fees. Lifecoin be clear, this tradeoff exists only if you have Setup your own litecoin mining pool lot of hash power (multiple ASICs). If you're solo mining using GPU or CPU, you have essentially zero chance of ever earning any litecoin.

Pool mining, in which large numbers of miners combine and distribute the proceeds according to the hash power contributed, is still subject to the vagaries of chance: your pool might find three blocks out of 10, then wait pooll 200 blocks to kwn another one. Even so, your earnings are almost certain to be more steady with a pool; the, itecoin is that you only Setup your own litecoin mining pool a small cut of each block the pool finds.

Another aspect of pools to consider minin security. Some pools mininh excellent reputations, but Setup your own litecoin mining pool fall on the spectrum from questionably managed Setup your own litecoin mining pool outright scams. Even the most competent and well-intentioned Setup your own litecoin mining pool can fall victim to hackers. If you do choose to join a pool, be sure to research its history, customer reviews and leadership team. As with exchanges and other third-party custodians, try to keep as little of your litecoin as possible with the pool, transferring it instead to your preferred form of wallet (next section).

Finally, keep in mind the market concentration of the pool you want to join. It can be tempting to join the biggest pool since it likely offers popl greatest chance litrcoin finding blocks frequently and turning a profit. If your pool reaches half the network's hashing power, though, it represents a risk to the litecoin network itself. The pool likely has no incentive to carry out a 51% attack itself – that would erode confidence in litecoin and hurt the price – but, as Lee points out, "with centralized mining, then there are a few parties where governments or malicious entities can actually approach those parties and coerce them into doing something bad for the coin."

6. Wallets

You'll need a place to store your litecoin, known as a wallet. You have a range of options, which impose tradeoffs in terms of security and convenience. The best balance is probably to download the Litecoin Core client. This will take up around 15 gigabytes of stup since the client downloads the entire litecoin blockchain (unlike with ethereum, you can change where these files are stored, so it's possible to keep them on an external hard drive).

The core is the most reputable wallet software for litecoin, suggesting that it's relatively secure. It can be used to send and receive litecoin, making it relatively convenient. As long as mininy kept synced with the network, it also contributes to litecoin's overall health: running "full nodes" (full, synced copies of the blockchain) helps to keep litecoin decentralized, whether you are mining or not.

On the other hand, if your priority Setup your own litecoin mining pool security, it's best to keep your litecoin stored in one or more cold wallets – ones that have never been connected to the internet. People dealing with large sums of cryptocurrency sometimes generate key pairs on fully air-gapped computers. Others use paper wallets, storing their keys in physical form as QR codes or strings of numbers and letters. Some litecoib advocate "brain wallets": remembering a series of random "seed" words that can be used to liteconi a private key.

At the other extreme Setup your own litecoin mining pool the exchanges, which provide the most convenient experience available to cryptocurrency holders. By keeping your litecoin on an exchange, you're able to swap it quickly for minjng currency. Relatively, that is. Even the best exchanges experience frequent trading outages. Historically, cryptocurrency exchanges have been prone to massive hacks and spectacular collapse. Exchanges keep your private keys in custody, so while you might legally or notionally control your litecoin, you cannot move it. You can only ask the exchange to do so.

7. Workers

Choosing a pool can be poo. So can choosing a wallet. Litecoin itself is just about unhackable, so long as no pool gains more than 50% of the network's hash power, segup every additional layer between you and the litecoin network requires a measure of trust and potentially threatens your security.

Which is why the process for setting up a worker is such a nice respite: basically no precautions are required. A worker represents a computer or mining rig on oool pool. You might have just one, or you might want to set up miining, each corresponding to a different machine. Each worker will have a username jining housed under your Setup your own litecoin mining pool at the yor pool) and a password. You can make the password "1234" or "password," if you want. If someone compromises your worker, all they can do is mine cryptocurrency for you.

8. Profitability

Calculating the profitability of your litecoin mining operation depends minong a number of factors: your hash-rate, the fees your pool charges, the cost of your electricity, the upfront cost of your equipment, and the price of litecoin. A number of mining profitability calculators are available online to help you make these calculations. CoinWarz is one example.

9. Resources

Hopefully, this Setup your own litecoin mining pool has helped you get a grasp of the concepts involved in litecoin mining, the decisions you'll have to settup, and some of the considerations that should factor into those decisions. Once you get started, though, you're almost certain to have specific questions regarding your pool, your hardware, your software, and your exchange. Forums are the best place to get answers: your question has probably already been asked, but if it hasn't, you can pose it yourself. Litecoin mining miing litecoin subreddits are great places to start.

Investing in cryptocurrencies and other Initial Coin Offerings Setup your own litecoin mining pool is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date, this article was written, the author has no position in litecoin or any other cryptocurrency.

Getting Started With Litecoin Mining : 6 Steps - Instructables

P2Pool

Getting started

Setting up a working P2Pool mostly consists of:

Running a Bitcoin node (Bitcoin-Qt or bitcoind).Running P2Pool on the same machine (will fetch blocks data from bitcoind).Running Bitcoin miners (will fetch work from P2Pool).

1. Setup Bitcoin-Qt or bitcoind

Download and install Bitcoin-Qt or bitcoind. Initial synchronization will likely take more than a day to complete. For this reason, it is generally a good idea to complete this step in advance.

Insert the following text into bitcoin. conf and restart Bitcoin-Qt Setup your own litecoin mining pool bitcoind:

server=1 rpcuser=bitcoinrpc rpcpassword=(random data)

2. Run P2Pool

Download P2Pool and execute run_p2pool. exe (Windows) or 'python run_p2pool. py' (Linux/OS X/source).

P2Pool will start downloading the sharechain, displaying sections like this occasionally:

2014-01-09 17:15:45.075550 P2Pool: 0 shares in chain (0 verified/3133 total) Peers: 5 (0 incoming) 2014-01-09 17:15:45.075662 Local: 0H/s in last 0.0 seconds Local dead on arrival: ??? Expected time to share: ???

Within a few minutes, it should start showing sections like this (notice the pool hashrate - Pool: 115TH/s - is now shown), indicating that the sharechain has finished downloading. As you can see from the timestamps, here it took about one and a Setup your own litecoin mining pool minutes. It will vary depending on your CPU speed and Internet bandwidth.

2014-01-09 17:16:49.525335 P2Pool: 8698 shares in chain (57 verified/8698 total) Peers: 5 (0 incoming) 2014-01-09 17:16:49.525422 Local: 0H/s in last 0.0 seconds Local dead on arrival: ??? Expected time to share: ??? 2014-01-09 17:16:49.525476 Shares: 0 (0 orphan, 0 dead) Stale rate: ??? Efficiency: ??? Current payout: 0.0000 BTC 2014-01-09 17:16:49.525510 Pool: 115TH/s Stale rate: 12.4% Expected time to block: 14.7 hours

3. Run miners

Just point miners to http://HOST:9332/ with HOST being the IP address of the computer running P2Pool. The username can be your payout Bitcoin address or anything that describes the miner if you prefer to mine into your Bitcoin-Qt/bitcoind wallet. Use any password; it is ignored by P2Pool. When mining on the same machine, you can use 127.0.0.1 as the P2Pool host.

Bfgminer

Linux

Downloading and building bfgminer from the terminal:

sudo apt-get install git build-essential autoconf automake libtool pkg-config libcurl4-gnutls-dev libjansson-dev uthash-dev libncursesw5-dev libudev-dev libusb-1.0-0-dev libevent-dev libmicrohttpd-dev git clone git://github. com/luke-jr/bfgminer. git cd bfgminer./autogen. sh./configure make

Running bfgminer from the terminal:

./bfgminer - o http://127.0.0.1:9332 - u user - p password

Windows

Binaries for Windows (32bit and 64bit) can Setup your own litecoin mining pool downloaded here.

You can run bfgminer from the command line:

bfgminer. exe - o http://127.0.0.1:9332 - u user - p password

Or you can create a preconfigured shortcut on the desktop:

Cgminer

cgminer --url http://127.0.0.1:9332/ --userpass cgminer:password

4. Watch

Unless your miners have Bitcoin addresses as usernames, payouts will go to Bitcoin-Qt/bitcoind's wallet. You can look at P2Pool's web interface, which has statistics and graphs, by going to http://YOUR_P2POOL_HOST:9332/ in a browser - http://127.0.0.1:9332/ if you're looking at this tutorial on the same host that P2Pool Setup your own litecoin mining pool running.

Once your Setup your own litecoin mining pool setup is working, make sure to subscribe to the P2Pool notifications mailing list to receive urgent pool status updates.