How to Mine Litecoin

Mining is a fundamental incentive for getting people to secure a blockchain. Through the proof-of-work (PoW) consensus mechanism, sufficient decentralization may be achieved by certain chains. 

Miners are incentivized to participate in a decentralized method of processing transactions for the blockchain’s native token for contributing work as compared to the way centralized entities operate using proprietary data centers. 

How to Mine Litecoin

Litecoin (LTC) mining has been around since the network’s genesis block was mined in October 2011, more than two years after Bitcoin’s genesis block was mined. Although the network’s utility has been outclassed by newer blockchains, it is still one of the most profitable coins to mine. 

Graphic processing unit (GPU) card and application-specific integrated circuit (ASIC) miners are two of the most common ways of mining LTC. Although graphics cards can be profitable, they generally require more effort than ASIC miners to get running and are likely less profitable. ASIC miners are dedicated mining machines that can be profitable long term with cheap or even average electricity rates. 

If you are unable to accommodate personal housing space for these loud and hot computers, you have alternatives. One alternative is colocation, where a third party hosts your miner in a facility and you cover the costs. 

These hosts sound great in theory; however, sites with low-priced electricity are already booked for a few years, and higher-cost electricity facilities aren’t profitable long term. You could explore alternatives that allow you to start mining with a personal computer to have a better grasp of how mining works to increase your sense of comfort. 

If you’re betting on a Litecoin bull market, these machines will likely increase in value as long as new ASIC innovation does not severely outpace the bull market. 

Step 1: Buy hashing power.

Buying hashing power can mean purchasing other people’s mining power through marketplaces, but usually profit margins are higher when you buy hashing power hardware at your personal property or at a colocation site. Purchasing hashing power from someone else’s miner is generally not profitable but can be done through websites like Kryptex or Nicehash.

Websites like Compass Mining and Musk Miners offer both hardware and colocation. Purchasing the hardware and self-storing will probably yield a higher return, if that’s feasible for you.

Step 2: Join a mining pool.

You can tap into a number of great pool options such as litecoinpool and f2pool. Nicehash also has an interesting feature where it picks the most profitable pools and takes 1% of the earnings but rewards you in BTC. 

The way a pool works is simple. An individual miner is rewarded in Bitcoin for processing the next block. A new block is mined on the Bitcoin network generally every ten minutes, and the payout is around 3.5 BTC, although that rate will drop over time. A mining pool comes into play by trying to dominate individual miners and pay out all contributors for their effort.

Although it’s possible that an individual miner could mine a block and be rewarded, mining on the Scrypt algorithm without a pool means that you are competing against all other hashing power in the world, so it’s quite a gamble. Pools are the safe way to be rewarded on a consistent basis, and they are fundamental in crypto mining. 

Step 3: Monitor the markets and withdraw to your cryptocurrency wallet.

Mining pools are not optimal for safely storing your crypto, so it should be withdrawn regularly depending on transaction fees. Ledger hardware wallets can be used when you withdraw, but many centralized exchanges — Coinbase Global Inc. (NASDAQ: COIN), FTX, Gemini — are increasing security and cold storage of their own. They are great for exchanging cryptocurrencies, but if you are planning to hold on to your natively mined coins, you can find safer methods, including Trust Wallet, Coinbase Wallet and other options. These wallets give you a seed phrase of usually 16 words to access your wallet. 

Although withdrawing can be done at any time and does not really depend on market conditions, converting mined coins into other cryptos or fiat currency does depend on market conditions.

Most Profitable Litecoin Miners

Of the many Litecoin ASIC miners, the Bitmain Antminer L7 and the Goldshell Mini-DOGE series are the most profitable. Generally speaking, the best amortization rate — the return on investment (ROI) — is priced into the machines on secondary markets. It’s hard to find ASIC miners being sold on primary markets because often the manufacturers are wholesalers. 

The best place to get comfortable and used to how mining works is with a personal computer. Although profitability on a personal computer is questionable (unless electricity is free), it’s a great place to see how crypto can be generated and in your possession without the huge upfront cost of the ASIC miners. 

The Bitmain Antminer L7

Likely the most profitable of all the miners, the Antminer L7 has one of the heftiest upfront costs. For just over $20,000, these miners will bring in over $50 a day without electricity included. These miners aren’t as easy as plugging in anywhere and letting them run. They are loud, hot, power-hungry machines that are generally a nuisance. 

Like most ASIC miners, the ROI of this machine is 400 days without accounting for electricity prices, increasing mining difficulty and price fluctuations. This miner is not a short-term investment. 

The Goldshell Mini-DOGE series

This miner is under $800 for the Pro series and the regular series if purchased from the retailer. Both the standard and the Pro version mine just over $1 per day with the Pro series slightly edging the standard model out. Nevertheless, they are similarly profitable and are both terrific miners. 

In terms of convenience in ASIC mining, Goldshell’s Mini-DOGE series miners are hard to beat. If you’re able to get one for retail price from Goldshell’s website, it could be profitable as well. 

What does convenience mean in mining? While ASIC miners generally need to be far away from people because of the noise and heat, this miner is quiet and small enough to be placed in or near a living space. It is a great first miner to get and to run in general. 

What is the Best Cryptocurrency to Mine?

Mining profitability is largely contingent on token price and network difficulty. The more competition in the network, the less profitable. 

Four main crypto mining algorithms dominate the mining landscape — SHA-256, Ethash, Scrypt and Kadena.

SHA-256 is Bitcoin’s mining algorithm and can be quite profitable. Mining Bitcoin is generally regarded as safe and consequently less profitable because of rampant and increasing competition for hash power. Bitcoin is regarded as a store of value and nearly synonymous with cryptocurrency to the public. 

Ethash is Ethereum’s PoW algorithm, but since the Ethereum network is working on its Merge and transitioning to proof of stake (PoS), the Ethash algorithm will not be nearly as profitable when the Merge completes. For that risk and uncertainty, an ASIC miner may be a risky purchase, but having a graphics card in a computer mining Ether seems risk-adjacent as of now. 

Scrypt is a profitable and long-standing mining algorithm, with good tokens including Dogecoin and Litecoin. It’s likely more profitable than Bitcoin’s SHA-256, but it’s definitely more price dependent on these alternative coins. Seeing how the market plays out and if tokens with minimal-to-no utility drop off are some things to look out for.

The Kadena algorithm mines Kadena, which is a PoW network with a similar structure to Ethereum but trying to improve upon its downfalls. It’s highly profitable right now because of the surge in price and the mining difficulty not quite catching up to it yet. Mining profitability will likely drop substantially soon, but it could still be a good investment for mining while it catches up to other mining algorithms. 

Should You Mine Cryptocurrency?

Mining cryptocurrency is not a get-rich-quick operation. Mining is arguably more profitable than investing in cryptocurrency since it’s similar to a dollar cost average (DCA) structure. Once the machine is paid off, it’s all upside.

Buying crypto works well, especially with high-yield PoS networks, but mining can be a fun, hands-on way of keeping a network afloat, and it’s generally more profitable for large market capitalization coins like Ethereum than to stake. 

Where to buy Litecoin and Other Cryptocurrencies

Buying crypto from various exchanges is another great way of investing in cryptocurrencies like Litecoin. If you think Litecoin has potential and room for growth or if you’re going to convert mined coins, centralized exchanges make the process fairly simple. Gemini, eToro and Webull offer a streamlined process for financing your crypto purchases.