Mining Litecoin is one of the 4 most significant ways in which you can contribute to the money network’s success and well-being — the other 3 being developing software, running your own fully validating node, and increasing adoption by spreading the word, creating educational resources, and using the currency as often as you can to send and receive payments.

However, it’s also a technical and somewhat intimidating endeavor which most users leave to specialists. This article aims to convince you to consider mining Litecoin (and Dogecoin). It also presents all the information you need to get started.

First of all, what is mining and what is the point of it? Well, Proof of Work cryptocurrencies need a decentralized network of miners in order to be secure against double spend attacks. In the absence of a central entity to establish what is valid and what is not, the role of establishing truth is fulfilled by network nodes (which store the ledger of transactions, validate incoming transactions, and relay the data to the miners) and miners (specialized computers that search for the unique hash in order to discover a block and collect the monetary reward).

Through mining, Litecoin gains thermodynamic security. Therefore, the act of trying to attack the network implies a cost in electricity that is usually much higher than simply playing by the rules to obtain financial rewards. In the event of forks and social attacks, mining also helps in determining which one is the real chain: it’s always the longest chain, with the most amount of Proof of Work.

As electricity gets converted into litecoins, the digital money also gets a base valuation and somewhat of an intrinsic value: in a healthy economy where there is enough demand for the existing supply, the price will rarely dip below the average production cost. Of course, we’re not talking about an implementation of the Marxist labor theory of value — it’s just that market participants assess value according to the utility that a decentralized form of money has for them. The fact that they don’t want to let it become unprofitable to produce is a good sign, but not something that should be taken for granted.

Secondly, it’s worth noting that Litecoin uses the Scrypt mining algorithm. It differs from Bitcoin’s SHA256 because it’s much more memory-intensive, and was originally thought out to allow GPU miners (who were made unprofitable on Bitcoin by FPGAs and ASICs) to continue hashing. In the meantime, ASICs were also created for Litecoin’s Scrypt — so today, the most efficient way to mine is to buy one of these specialized devices.

Can you still use your computer’s resources to mine with the gene ral-purpose hardware you already own? Of course, but your effort will be extremely inefficient and your lottery ticket will have much worse odds than even the most affordable ASIC machine on the market. But if you do want to mine with your computer and receive LTC, you might want to look into NiceHash.

Thirdly, it’s very important to know that Litecoin miners have had the option to merge-mine Dogecoin since August 2014. In the beginning, the be nefits of setting up DOGE mining were barely significant. But today, in the era when Elon Musk popularized the world’s best-known Shiba Inu currency to the point that Tesla accepts it in their merchandise store, merge-mi ning is a must. This is also the reason why pretty much all mining pools have integrated merged mining by default: the extended profitability currently pays for the network’s security budget.

"So you decided it’s time to start Litecoin and Dogecoin mining? Well, there are two very important decisions to make: the hardware that you will be using and whether or not you will collaborate with a mining pool or go solo."

Today, there are dozens of Scrypt mining machines from which you can choose. Depending on the amount of energy you can afford to use and the heat/noise you’re willing to tolerate (or else acoustically isolate), you have industrial-scale devices and tiny specialized computers that are made for home use. Sure, you can still mine with your CPU or GPU… but it’s extremely inefficient compared to a much more affordable ASIC.

Even the most underpowered ASIC will be better at hashing Scrypt than the high-end Nvidia or Intel/AMD chips. You can’t beat specialization with general-purpose hardware. For instance, the Lokotech S1 Hashblade (which you can mount in the video card slot of your computer) will make an RTX 3090 Ti video card look like a toy — and it’s about 25% cheaper too! But then again, even a tiny Goldshell Mini DOGE III should perform much better (more hashes, smaller electricity consumption) than the Nvidia graphics card.

Of course, you can use your video card to mine via NiceHash and receive LTC payouts. But you’re not mining Litecoin and you’re not granting the Litecoin network any security benefits with your contribution. Instead, NiceHash decides which cryptocurrency is most profitable for your chips to mine, sells the hashrate to somebody who is interested in boosting their security, then sends you LTC and takes a cut for intermediating the business. It’s not the ideal way to mine, but if you only have a GPU and want to earn some litecoins, then it’s probably better than running Scrypt cycles in an inefficient and uncompetitive way.

In the table below, you will find some of the most popular ASIC miners for the Scrypt algorithm. These devices will merge-mine both LTC and DOGE. The ASIC prices and probabilities reflect the values on July 1st 2024, when the average hash rate is that of 891.1 TH/s.
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Keep in mind that the ASIC prices will keep going down as more innovation happens in the chip manufacturing industry, while the probability to solo mine will diminish as hash rate increases. In some cases, it might also be a good idea to buy used mining machines from professional farms that up graded their rigs — if you don’t want to commit a lot of money when you first start your hobby, it’s a good option. Just make sure that you buy some thing that functions within the speci fied specs and doesn’t show signs or wear and tear.

How hard is it to connect your ASIC miner to a pool? It’s no biggie: after you plug the device to your home router via ethernet cable (recommended due to better stability and no variance of signal strength), you switch it on and use your computer to scan for the IP address of your miner on the home network. Programs such as Advanced IP Scanner (on Windows) and Angry IP Scanner (on Mac and Linux) will help you identify the address of every device that’s connected to the same network. The IP should look like this: 192.168.1.X (X being the unique number that’s associated with your miner).

Type that IP address into your internet browser’s address bar, then hit the ”Go” button and you will be greeted by the interface of your ASIC miner’s firmware. In most cases, you will be asked to type the username and password — both of which you should find in the device’s instruction manual or on a label that’s attached to the back of the machine. Afterwards, configure how your will be mining (solo or exchange) and to which address your want to receive your LTC (preferably, use a full node wallet that you back up properly).

As you can see in the chart, not even the most powerful ASIC miner can guarantee the discovery of a block within 24 hours. Sure, your chances are pretty high with something that outputs more than a dozen gigahashes per second, but there is never any guarantee of payout. This is why mining pools were invented: to collaborate towards finding blocks, to split the rewards according to individual contributions, and to offer a more consistent and predictable pay even when the luck runs out for a while.

Essentially, solo mining is like buying lottery tickets — the more terahashes per second you purchase, the higher your chances to win the jackpot become. But if you’re serious about being a full-time miner, then it’s probably a good idea to compromise a little bit on the reward size and opt for more regular small rewards instead.

But how will you choose from the dozen of Litecoin mining pools? Well, there are multiple factors that you must weigh in: the minimum amount that you must withdraw (basically how much you have to commit to work with the mining entity before you request a payout), whether or not you will be merge mining Dogecoin to increase revenue, where the pool is located (very important for censorship resistance and geopolitical game theory), to which extent you can mine without registering with your ID card or passport, the size of the pool fee (basically the cut that the operator takes for putting everyone together), and the amount of hashrate (the higher the pool’s hashrate, the more frequent but small rewards the participants will be getting).

Of course, the mining pools that own a larger piece of the pie can ask for higher fees. But their competition must provide incentives to attract users — so they will lower the fees and also offer extra bonuses such as firmware updates that increase your machine’s efficiency and special promotions. In the end, a healthy mining ecosystem will constantly promote competition and prevent centralization. Since its creation in 2011, Litcoin has performed pretty well and there are lots of options from which you can choose for the purpose of maximizing your chances and keeping the largest chunk of the rewards.
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Last but not least, you should factor in the single most important criterion for determining profitability: electricity cost in your area. Sure, you can become a mining hobbyist and HODL the rewards for years to come just because you can afford to pay the electricity bill. But if you become serious about mining Litecoin, then you will have to make special deals with the electric company or else relocate in places where power is much more affordable.

Proof of Work mining is a race to the bottom in which only the most efficient miners can survive long-term. Naturally, lots of participants can run miners at a loss — but the question is how reliable will their activity be over the years? Nakamoto consensus dictates that miners deal with reward halvings every four years (840.000 blocks in Litecoin). So realistically, there are only two ways to compensate for the 50% split of rewards: either through collecting more fees from participants, or by having the price double every four years. In very extreme cases, users can vote for taxation or even lift the supply cap in order to add the kind of inflation that solves momentary crises but destroys the spirit of a beautiful project.

However, Litecoin’s hashrate shows signs of healthy and perpetual growth. Over the last year alone, this metric has grown by more than 25% even if the price action didn’t live up to expectations. Which is encouraging and proves that the Litecoin and Dogecoin miners are committed to seeing their favorite projects succeed on the long term. On the other hand, even if the price of LTC and DOGE doesn’t increase exponentially, a boost in transaction fees can successfully compensate — so if more people use Litecoin for their purchases, while other use cases such as tokens (OmniLite, Ordinals & Runes) and pegged sidechains that pay miners (Drivechains) get enough traction, then the network will remain profitable to mine without significant adjustments.

So if you ever want to use some of the excess energy you produce with solar panels, you have access to fairly accessible energy, or you simply want to support the Litecoin network because you love it, then you have all the information you need to get started.

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