What Is Litecoin (LTC) Mining?
Litecoin mining is the process of validating transactions in the Litecoin blockchain, closing the block, opening a new one, and receiving a reward. Litecoin uses the proof-of-work consensus mechanism, which uses computational power to solve the hash that secures the block. The hash is an alphanumeric sequence of numbers (a hexadecimal value) that is the result of encrypting the information in a block. Litecoin is rewarded to the miner who generates a hash equal to or less than the network target.
Like Bitcoin, it can be mined on computers using central and graphics processing units. However, it isn’t as profitable or competitive as purchasing an application-specific integrated circuit (ASIC) and joining a mining pool.
Key Takeaways
- Litecoin mining is similar to Bitcoin mining in that it requires specialized hardware and software for operations.
- While it can be mined on computers, to be competitive, Litecoin requires one or more ASIC miners.
- Solo Litecoin mining profitability is extremely low because cryptocurrency mining networks have become very centralized.
- Profits from Litecoin mining are a function of your investments in hardware and software, pool fees, electricity costs, and Litecoin’s market price.
Understanding Litecoin Mining
Litecoin mining is very similar to Bitcoin mining. A mining program runs on a machine, computer, or device. Often, mining is described as a complicated mathematical process; however, the mining software randomly generates encrypted numbers and letters to attempt to guess a value lower than or equal to that of the target hash—a hexadecimal value set by the mining network that creates the mining difficulty level.
Miners are connected to the internet and form a mining network. There is no limit to the number of mining program users within a network of miners, so anyone attempting to mine a Litecoin is competing with all other miners in the network to solve the hash.
The first miner to guess a hexadecimal value smaller than the target hash set by the blockchain protocol wins a reward of 6.25 Litecoin. The reward is reduced in half every four years—this is called a halving. Litecoin’s next halving is expected to occur sometime in mid-2027.
Litecoin price
How to Mine Litecoin
To get started, you will need to invest in hardware mining equipment and software to run the mining process itself. The state of the Litecoin mining network is such that a single miner with one ASIC, a computer, or a laptop stands a very limited chance of solving a hash to win a reward. However, you still may be unable to keep up with the mining network and large farms and pools of miners with one or even two ASICs.
For example, the Litecoin Miner L7 can mine at 9.5 GH/s (gigahashes per second, or nine billion hashes per second), while a CPU generally mines in thousands of hashes per second (KH/s). A Litecoin mining pool can produce trillions of hashes per second. For instance, ViaBTC mined Litcoin at a hash rate of 281.42 TH/s (tera hashes per second) on Dec. 12, 2023.
To begin mining Litecoin, you’ll need to purchase one (or several) ASIC miner(s) and connect to the internet. You’ll then need to choose a mining pool to mine with, set the miner up using the pool’s instructions—usually posted on the pool’s website—and begin mining following the instructions for your machine, software, and pool.
You’ll also need to choose a wallet to store your private keys in. You could use wallets like Exodus, Electrum, or Mycelium.
How to Select Mining Hardware
There are several factors that you should consider while looking into mining hardware or software for Litecoin:
- Your goals and expectations
- Price
- Energy use and cost
- Hashrate
- Whether to join a pool
Your Goals and Expectations
Most importantly, you’ll need to identify your goals for mining Litecoin. For example, you might want to mine for some extra spending money or hold the Litecoin you receive, hoping for growth. Whatever your reasons, you’ll need to make sure that you can get the returns you want before investing in expensive hardware.
Price
The mining pool, F2Pool, lists current ASIC mining costs and revenue. The Litecoin Miner L7 is one of the most profitable Litecoin miners, but with a price tag of about $5,000, it could take a few years to recoup the purchase cost, depending on the pool you join and energy used. The amount you spend will dictate how productive and profitable you are as a miner.
Energy Use and Cost
You should consider the amount of energy used by an ASIC miner. The Litecoin ASIC miner, the Antminer L7, uses approximately $10 per day in energy. Your energy bill would increase by more than $3,800 per year (at $0.13 per kW/h), further reducing your yearly profits.
This cost represents only the energy used to power the miner. ASICs produce a lot of heat while they run—to be most profitable, they need to run 24 hours a day. An ASIC will run up your cooling bill unless you can find a way to vent the heat outside your home.
Litecoin hashrate distribution
Hashrate
Hashrate is another crucial consideration. The faster your ASIC can hash, the more competitive you’ll be on your own or in a pool. Many mining pools split the cryptocurrency they’re rewarded, but most base individual rewards on the amount of work done per miner.
If you have a slow ASIC, your profits will likely be much less than a miner with a faster mining rig or setup.
Joining a Pool
Once you’ve decided what equipment you’ll use to mine, you need to decide how to mine: solo or in a pool. Mining alone, you risk going long periods without finding a block. However, if you’re lucky enough to mine a block solo, you’ll keep the entire 6.25 LTC plus fees.
Pool mining, in which many miners combine and distribute the proceeds according to the hashing power contributed, is still subject to luck: your pool might open three blocks out of 10, then wait for 200 blocks to open another one. Your earnings are almost certain to be more steady with a pool; the tradeoff is that you only earn a small cut of each block the pool finds.
How Long Does It Take to Mine 1 Litecoin?
Litecoin’s mining reward is 6.25 Litecoins per block. The average block mining time on Litecoin’s blockchain is about 2.5 minutes. You can’t mine one Litecoin (yet), but if you could, it would be about one Litecoin every 24 seconds at the current reward rate.
Is Mining Litecoin Profitable?
Litecoin mining can be profitable if you have the proper setup and join a pool that profitably splits rewards.
What Is the Best Way to Mine Litecoin?
The best way (realistically, the only way) to stand a chance of winning a reward is to buy one or more ASIC miners specifically designed for Litecoin and Scrypt and join a mining pool. Otherwise, you simply will not have enough hashing power to compete.
The Bottom Line
Litecoin is mined using specialized equipment like ASICs. It can also be mined on GPUs, but these units are much slower. Litecoin mining is also much quicker than mining Bitcoin—but even with the faster processing times, the chances of successfully mining Litecoin on your own are very low. Also, rewards are lower than other coins because LTC market value is significantly lower. You’ll have to figure out if mining Litecoin will be rewarding enough to justify the expenditures and whether you might be more profitable mining another coin. Regardless, it’s important to join a mining pool to increase your chances of success.
The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info. As of the date this article was written, the author does not own cryptocurrency.