How Do You Mine Litecoin (LTC)?

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 proof-of-work in its consensus design, which uses computational power to solve a cryptographic puzzle. Litecoin is rewarded to the miner who generates a solution that is 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.

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 generates a hash from the information in a proposed block and appends (adds to the end) a number to it called the nonce (number used once) and hashes it.

As a hexadecimal number, this hash has a value. This value must be equal to or less than the target hash—a hexadecimal value set by the mining network that creates the mining difficulty level. If the hash is more than the target, the nonce is increased by a value of one, then it is hashed again. The entire network does this until a miner guesses a value that meets the criteria.

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 cut in half every four years—this is called a halving and occurs every 840,000 blocks (Bitcoin's is every 240,000 blocks). Litecoin's next halving is expected to happen sometime in mid-2027, and the reward will be reduced to 3.125 LTC. This will continue until all 84 million LTC are in circulation, which is expected to occur in 2142.

How to Mine Litecoin

To get started, you will need to invest in hardware and software to run the mining process itself. The state of the Litecoin mining network is such that a solo miner with one ASIC, a computer, or a laptop stands a very limited chance of receiving rewards. You can still join a mining pool with one of these setups, but your rewards are likely to be much smaller as pools usually use a payout scheme where you receive a payout proportional to the amount of work you contribute.

After purchasing your mining equipment, you'll 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 in which to store your private keys. 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

Mining pools generally list current ASIC mining costs and revenue. The Antminer 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 the energy used. The amount you spend will dictate how productive and profitable you are as a miner.

Rewards

In a pool, your rewards are based on your contributions to the work done. The Litecoin Miner L7 can mine at 9.5 GH/s (gigahashes per second, or 9.5 billion hashes per second), while a CPU generally mines in thousands of hashes per second (KH/s). A Litecoin mining pool can produce hundreds of trillions of hashes per second.

The mining pool F2Pool mined Litcoin at a hash rate of 141.19 TH/s (tera hashes per second) on May 2, 2024. Even with the L7, your share of one reward might be only a few dollars. For example, on May 1, 2024, the L7 averaged a 24-hour payout of $17.49 (which included a Dogecoin payout) before accounting for energy use and how long it might take to pay off the mining rig. There are more profitable ASICs, but they are cost-prohibitive for smaller miners.

Energy Use and Cost

You should consider the amount of energy used by an 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.

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 determine 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.

The Bottom Line

Litecoin can be mined using personal computers and GPUs, but these units are much slower than ASICs. 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.