Missed Out On The Bitcoin Gold Rush? Get In On The Litecoin Silver Rush Instead

2013 07 03 07.20.11   Missed Out On The Bitcoin Gold Rush? Get In On The Litecoin Silver Rush InsteadIf you missed the Bitcoin mining craze and still want to get in on pick-axing a virtual currency, you’re in luck! In 2011 Litecoin established itself as a major player within the world of electronic money, gaining prevalence when Mt. Gox announced plans to trade in it. The new currency operates on the same principles as other cryptographic coinage, where miners solve cryptographic puzzles and receive Litecoin when a “block” is solved.

The big difference between Litecoin and Bitcoin lies in Litecon’s Scrypt-based design. Scrypt, unlike the underlying technology behind Bitcoin, provides several advantages: First, you don’t need a specialized ASIC miner to produce Litecoin. Second, it provides better security against attack. Additionally, Litecoin’s design pays out over four times as many coins as Bitcoin and its transactions are almost five times faster.

Getting started with Litecoin is extremely easy. Simply install and run the Litecoin client, register with and configure a mining pool and then run your mining software.

Will I Actually Earn Any Money?

Whether or not you earn any actual money depends on three primary barriers: First, the places where Litecoin is accepted are quite few and your idea of profit may require that it gain wider acceptance. Second, your hardware and power costs may not allow for profitable mining, depending on your region and component costs. Third, the price of Litecoin could plummet in the future which would make it not only a complete waste of your time, but also possibly a waste of hardware.

In short, whether or not you make a profit depends on the future value of Litecoin and the wattage requirements of your system VS its ability to solve cryptographic puzzles. My mining rig couldn’t hit more than 175 KH/second due to an unknown configuration issue. This causes some disappointment, because properly configured my rig should hit about 250 KH/s. Its low-wattage requirements, at 200-250 watts at max draw, makes it fairly efficient for mining Litecoin.

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You can find the hashrates of most CPUs and GPUs on this page. If you’re interesting in calculating your profitability, check out this page – the author does a complete return on investment (ROI) analysis, which the fastidious can apply to their own rigs. Another handy tool to have is a mining calculator, which suggested either BBQCoin, Litecoin and Feathercoin as the most profitable cryptocoins for me to mine. I went with Litecoin because of its growth potential.

Another handy article to read is Danny’s breakdown of the most efficient GPUs for mining Bitcoin.

Below is my Dual Graphics Radeon 6670 + A10-5800K miner rig:

hashing machine   Missed Out On The Bitcoin Gold Rush? Get In On The Litecoin Silver Rush Instead

Background and What is Litecoin

Litecoin developed as a potential successor to Bitcoin, soon after Bitcoin began its explosive rise in value in 2011. While it never matched Bitcoin’s popularity, it’s regarded as the silver to Bitcoin’s gold. As mentioned earlier, it uses the Scrypt hash function to create hashes, which means the ASIC miners that devastated GPU mining’s feasibility have not been developed for it. That will not last, however, if Litecoin becomes popular.

For most users, making money mining Litecoin requires joining a “mining pool”, which coordinates the hashing efforts of all the computers within the pool. There are various pay-out options for whenever a block is solved.

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Another key consideration is whether or not you plan on mining using your CPU or GPU. The software used in this article, GUIminer, only uses the GPU by default. However, many other kinds of software exist, such as CPUminer. It’s important to note, however, that GPU mining is far more efficient than CPU mining.

 Getting Started: How-to Mine Litecoin

There’s a huge variety of resources available for those considering Litecoin mining. It differs little from mining Bitcoin, in that you require the following three items:

  1. A client, which syncs your computer with the Litecoin network. The client is referred to as the “Wallet”.
  2. An account with a “mining pool”, which coordinates individual miners efforts toward solving a hash. There are many mining pools out there – this tutorial recommends using Coinotron.com, which was extremely easy to get started with.
  3. Mining software, which solves the cryptographic puzzles. I used GUIminer, on Danny Stieben’s recommendation. It has its quirks but overall simplifies the mining process. I highly recommend using Danny’s guide.

After acquiring those three items, start setting it up. It took me about 15 minutes to go from finishing the syncing process to mining Litecoin.

Step 1: Setting up the Litecoin client: Setting up your Litecoin Wallet only requires that you download and install the client software. After installing, it will attempt to sync your Wallet to its network, which will take a few hours. After it syncs you can move onto the next step.

Step 2: Register and configure with a mining pool: In this highly effective tutorial, the author suggests using Coinotron.com. The setup process is pretty straightforward. Sign up for an account and then add a machine to your account.

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Adding a “worker” requires that you input a password and your username, including the name of the machine. For example, if your user name with Coinotron is “papasmurf” and you designate your machine as “gargamel”, your machine’s username will be “papasmurf.gargamel”, which you will enter in GUIminer, later on. Be aware that the screenshot below is a bit off — “papasmurf” is the username and “gargamel” is the name of the mining rig.

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The password can be anything you want it to be — just remember to record this password, because you will input it into GUIminer in the next step. Finally, hit the “add” button, which is located to the right. Also make sure the coin denomination is “LTC” and not “BTC”.

Step 3: Run GUIminer: Running GUIminer may require that you add it to your list of excluded processes in whatever virus scanner you use. For example, in Microsoft Security Essentials, I just clicked on the settings tab and in the left pane went to “Excluded processes”. Don’t worry it’s not a virus.

GUIminer isn’t an installed program. You actually have to locate it from within its unzipped and downloaded folder. It’s called “guiminer.exe”.

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After activating the program, you must enter in the following data, except input your username and password as indicated above:

For example, if your username was “papasmurf” and your machine’s (or worker’s) name is “gargamel”, you would enter “papasmurf.gargamel”, without the quotation marks. Also, if you elected to use the Coinotron mining pool, make sure you enter “3334″ for the port number.

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Finally, you’ll want to turn on the Stratum Proxy and enable it in your settings.It will allow your miner to perform more efficiently. Simply locate the Stratum executable in your GUIminer folder and run it. For additional Stratum configuration tips, check out this site.

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When finished, hit the “Start” button from within the GUIminer interface and the mining will begin in a few seconds.

Conclusion

Mining Litecoin can be profitable if your power and equipment costs are eclipsed by your mining rig’s hashing ability plus the present value of Litecoin. This is profitable because ASIC miners haven’t yet entered the Litecoin marketplace. To get started, simply install the Litecoin software, register with and set up a mining pool, and then start mining. It takes no more than a half hour or less to properly set it up.

Anyone else mining Litecoin? Let us know in the comments.

 

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13 Comments -

0 votes

Joshua Chen

Pretty bad tutorial. First, how do you get to that window in the GUI miner, and second, doesn’t tell you how to convert LTC into USD currency or other currency.

0 votes

Kannon Yamada

Good point, I should have clarified. Converting to USD from LTC requires that you use Bitcoin as a medium. You would also need to use two different exchanges – I know, it’s crap. Even through this is intended to show how it’s possible to earn Litecoin, I should have touched on how-to convert into USD and how to move it into your LTC wallet. My apologies Joshua, I’ll try to make up for it here:

First, you would input your wallet address into the payout methods in the mining pool. You can find your address from within the Litecoin client/wallet by clicking on the “receive” tab in the menu bar.

Second, log into the mining pool site (for me this was Coinotron.com) and copy the wallet address into the pay-out options. Make sure you select an automatic payout of more than 5 LTC, because otherwise you’ll take a penalty.

Third, now that you’ve successfully setup your payout option, you can now get paid in LTC. Now you will convert it into Bitcoin using the exchange Vircurex. Vircurex allows buyers and sellers to exchange cryptocurrencies with each other. Unfortunately, their money managing system went down, and probably won’t ever be getting up, so you will have difficulty getting USD from this site. Another exchange is required to convert BTC into USD. If Vircurex ever sorts out its money exchange system, it will be a one-stop shop for getting USD.

Fourth, and finally, you will register with Mt. Gox and then exchange the Bitcoin for USD or whatever currency you wish.

1 votes

Rodrigo Graça

Converting LTC to USD requires that you use Bitcoin as a medium? wtf?

…. https://btc-e.com/ ??? LTC to USD ….

0 votes

Kannon Yamada

Nice! Thank you Rodrigo! I seriously couldn’t find an exchange that converted from LTC to BTC. Really appreciated!

0 votes

Kannon Yamada

To answer your first question – when I first startup GUIMiner, it starts with the “default” window, which is a duplicate of the window seen in the screenshots. If that’s not opening try this:

“File” -> “New Miner” -> “CGminer”

Then it should open up another window that’s a duplicate of the default window.

0 votes

Ryszard G

To download guiminer-scrypt shown here in a screenshot go to:
https://bitcointalk.org/index.php?topic=150331.0
beside lack of this link and how to convert LTC into USD, as mentioned above, that’s a quite good tutorial and I hope i’ll get some income out of litecoin.

0 votes

Kannon Yamada

Thanks Ryszard – I just filled in the blanks (hopefully) above.

I may have a slightest different version of GUIminer, though. By default it opens up the window in the screenshots. If that’s not working for you, try doing this:

“File” -> “New Miner” -> “CGminer”

Then it should open up another window that’s a duplicate of the default window.

0 votes

cliff

sounds way to complicated to me!

1 votes

Kevin

The resource links in this article are a little messed up. For example, the link to compare mining hardware points to Bitcoin information. Why do I care about hash rates for Bitcoins if I’m going to mine for Litecoins? Maybe they’re similar, maybe they’re not.

Here’s a similar link for hardware used in mining Litecoin (with scrypt-based hash rates):

http://litecoin.info/Mining_Hardware_Comparison

For this article, I don’t think the reader should be concerned about Danny’s article on Bitcoin hardware. Based on everything I’ve read, that’s comparing apples and oranges.

0 votes

Kannon Yamada

That’s a good point. Your link is much, much better. Thanks Kevin!

Miners for SHA-256 (Bitcoin, Terracoin, etc) have a much faster hashrate than miners on Scrypt (Litecoin, Feathercoin). That’s because Scrypt is a more resource intensive hash function. Normally they measure the hashrates of Litecoin in KH/s and Bitcoin in MH/s.

I’ve read that they are fairly comparable. A fast miner for SHA-256 is also a fast miner in Scrypt, even though they report different speeds. Danny’s guide really opened my eyes as to the importance of MH/j and MH/$ analysis.

For example, when Danny does the MH/j or MH/$ analysis, that’s also an analysis that one should apply to any GPU that’s mining Litecoin. If you look at Danny’ reccomendation, the 5970 and the 5850, you’ll see it’s also one of the best (per watt) miners for Litecoin. They hit somewhere in the range of 750-850 KH/s at a wattage of around 235 watts. That’s really good.

There was another miner that did 350 KH/s at a reported wattage of 50watts – I believe that was the 7750 or the 7850, but I can’t remember at the moment.

However, you’re absolutely right – I should have clarified why Danny’s article was useful. Thanks for the comment, it’s much appreciated.

0 votes

James fred

Great article, very explanatory for those who want to mine the currency. For me, Mining is a slow, free process that can damage your hardware easily.. You didn’t mention the fact that we can also trade litecoin without mining.

Just go on btc-e and trade, buy low, sell high.

Do you think the value of litecoin is going to go higher? It’s currently at 2.79 USD.

thanks

0 votes

Kannon Yamada

Thanks James. I should have gotten back to you earlier, my apologies.

And thank you for mentioning the possibility for hardware damage. I want to make that point extremely clear to the readership.

Normally when we value USD it’s based on supply vs demand. And the supply and demand is heavily impacted by the balance of trade. More or less, exports minus imports. When a country exports more than they import, this has a appreciative effect on the value of that nation’s currency.

Cryptocurrencies are not backed up by anything other than the power of belief.

Justin Pot wrote a really interesting article where he compared Bitcoin/cryptocurrencies to Polynesian societies that used giant stone wheels as currency. Basically, money can be anything and it will retain its value provided that individuals believe in it.

Litecoin, if given the same credibility as Bitcoin, should have 1/4 its value as it has 4 times the amount of currency floating around. From what I’ve read, its use of Scrypt, as opposed to SHA-256, makes it harder to attack. So in theory it should be worth more than 1/4 – but it would require widescale adoption to reach that point.

To be honest, I don’t think it will reach 1/4 Bitcoin’s value anytime soon. Just a feeling.

0 votes

messiah

http://www.litepool.eu has less than half the fee’s Coinotron has as a pool, and is the lowest fee Pay Per Share Litecoin Mining Pool.

Try it out