The rise of BitCoin (BTC) has been front page news for the past year or so and unless you just emerged from the Jungle you will have followed its ups and downs. Unfortunately BTC is now too difficult to mine for your average build and require very specialised rigs to even break even. Looking around for the next best thing, I decided to give LiteCoin mining a try – at time of writing the second largest crypto currency by capitalisation.
- Mining is extremely addictive, but do it for fun and not for profit as most crypto currencies are now no longer profitable to mine
- Mining can be done from any hardware / CPU, but it only really makes sense to do it from a GPU (Graphics card) on a desktop or dedicated rig – laptops will burn out and CPUs are too slow
- Join a pool if you want to mine, WeMineLTC.com is the largest LiteCoin pool
Getting Started – Litecoin basics
Before you do start mining, you should get yourself a Wallet – this is where your coins will be held. There are online options and offline versions which you just hold on your PC. Given the number of virtual hack attacks against Bitcoin site, I decided to hold mine offline. The first time you run the wallet it will need to do a long sync as shown below – go watch a watch.
There are a variety of different ways to get started with mining if you haven’t done so before, I wont go into details here – you can find step by step guides towards the bottom of this blog in the references section. I just used my personal PC for this little adventure, i.e. no custom brought GPUs etc.
- CUDA Miner (This is currently the only sensible choice for Nvidia GPUs, everything else is too slow for Nvidia)
- Joined WeMineLTC.com (The largest LiteCoin mining pool)
- Used GPU-Z to monitor my GPU temperature
Why mine LiteCoin as opposed to Bitcoin?
One reason why people have started to move away from Bitcoin is because it uses the SHA-256 hashing algorithm. This involves calculations that can be greatly accelerated in parallel processing. It is this characteristic that has given rise to the intense race in ASIC technology, and has caused an exponential increase in bitcoin’s difficulty level.
Litecoin, however, uses the scrypt algorithm which incorporates the SHA-256 algorithm, but its calculations are much more serialised than those of SHA-256 in bitcoin. Scrypt favours large amounts of high-speed RAM, rather than raw processing power alone.
The consequences of using scrypt mean that there has not been as much of an ‘arms race’ in litecoin (and other scrypt currencies), because there is (so far) no ASIC technology available for this algorithm. However, this will eventually change and we will be back to ASIC units for LiteCoin mining.
Buying and Selling Litecoins
While buying and selling (and spending!) of bitcoins is now fairly common place, adoption of Litecoins is still light. While USD and EUR to LiteCoin conversion is fairly common, GBP is more difficult. The best site I found was Bittylicious, its interface is simple and offers a large number of ways to pay.
Spending Litecoins I found challenging as most retail sites only accept Bitcoins, the only places which accept Litecoin as payment currently seems to be Crypto currency related website.
For general gaming, I would argue that Nvidia GPUs has always had the slighly edge over AMD/ATI. However for mining, historically AMD/ATI has beaten Nvidia hands down to such a degree that it has not been worthwhile to mine with Nvidia until recently.
While mining is fun, its important to not get too excited and end up overheating your GPU. Remember at the end of the day, unless you have a custom rig, chances are your GPU wont have enough fan power for you to over clock it and use it to mine 24/7. I strongly recommend you always use a GPU monitoring tool whenever you are mining with GPUs. I use GPU-Z as shown below.
Hire a miner / Rent a rig!
One of the most interesting developments in the mining world is the growth in the rent a rig or hire a miner business. Simply put, this is someone who has a lot more hashing power than you and you pay them to mine for you for a period of time.
You will find contracts for hire everywhere from ebay to special mining brokerages such my personal favourite Betarigs. This is also known as cloud mining, i.e. similar to cloud storage. Now you might wonder why someone would offer their hashing power to make a profit for you, the answer is they arent. You always pay more to rent the rig than what the rig will ultimately mine for you! Sounds silly at first, but then you are also paying for electricity and hardware if you were to do it on your own so maybe not so different after all.
Why Mining is unprofitable for your average enthusiast
I started this blog by saying how addictive mining is but also that it wasn’t profitable for your average enthusiast. I will finish by mentioning some of the hidden costs involved and why if you only want to speculate on the future value of BTC / LTC, you should just buy the currencies rather than mining them yourself.
The biggest obviously cost most people will have to spend to have any chance at mining profitability is to buy the latest and most expensive gear. This could be thousands of pounds equipment and cost of which will take you many months to simply recuperate.
The other big killer is electricity – yes that hidden cost which you may not care about when running your average PC, which when you have a custom mining rig, this is one of your biggest costs. This has become such an important area due to rising electricity prices that Nvidia has recently brought out new cards which aim to half the running voltage and this is expected to be a killer features in its race with AMD/ATI.
Even with the fact that mining isn’t profitable, I still absolutely love it. Also don’t say I didn’t warn you, it is amazingly addictive, what are you waiting for? START TODAY!