What is Litecoin Mining?
Litecoin mining is the process of discovering the next block's hash that fulfills certain requirements. A mining machine, whether an ASIC or a set of graphic cards (GPU) will test hashes of the block and its transactions against a target.
Litecoin uses the Scrypt mining algorithm and strictly speaking, mining Litecoin is also known as Scrypt mining, which makes it radically different from Bitcoin mining.
Scrypt is a faster and simpler algorithm for hashing, or calculating blocks. New cryptocoins often give preference to this algoritm and Scrypt mining is a growing way of acquiring cryptocoins. Initially, this form of mining was introduced to make Litecoin immune to specialized ASIC machines. But later, processors were developed to produce Scrypt hashes more efficiently. Still, Litecoin is minable with GPU devices, though with lower potential rewards.
Litecoin mining does not work as a system with guaranteed results. Instead, miners compete to "discover" the next block in a blockchain. The miner who discovers the complex mathematical solution that is needed for every block receives a reward. The current reward for solving a block is 25 Litecoin. The reward halves every four years and will halve in about two years.
Blocks on the Litecoin blockchain are calculated every 2.5 minutes, which means a miner has a chance of discovering a block every 2.5 minutes, while competing with other miners.
Currently, more than 60% of all available Litecoin have been calculated. There are 764 days left to the next halving of the reward. The Litecoin network is scheduled to produce no more than 84 million Litecoin.
Litecoin mining is considered less profitable compared to other Scrypt-based coins. Users may try to mine Litecoin for personal or investment purposes. Mining is also an important role in a cryptocoin ecosystem, so Litecoin community enthusiasts may choose mining as a way to spread the idea. But even if current market prices make mining unprofitable, in the future, block rewards may be worth more, provided the miner waited for the right price to sell.
When all the coins have been discovered, the mining and adding of new blocks would continue. There is no maximum number of blocks.
Litecoin Mining Difficulty
Difficulty is a human-friendly term to explain the computation of new blocks in a blockchain. The difficulty describes the type of target hash that the next block must produce. The right hash begins with a certain amount of zero characters. The more zero characters, the higher the difficulty, as finding the right number is not a trivial matter.
Difficulty is a varying number that is reset with every 2016 blocks created. Difficulty may reset up or down. It is one of the factors for calculating mining profitability. When more miners join in, difficulty rises. When miners move out, difficulty adjusts downward.
The last Litecoin is expected to be mined around the year 2142, given current difficulty rates. As the number of new coins is expected to slow down, scarcity will theoretically put a brake on coin inflation.
Miners may join or leave the Litecoin Blockchain. If too many miners leave, this will decrease the overall hashing rate of the blockchain and make it less de-centralized. Still, with less miners difficulty will adjust downward and may make mining profitable again.
So the combination of rewards, difficulty and costs of mining serves as a balancing mechanism for the value and scarcity of Litecoin.
Start Litecoin Mining
To become a Litecoin miner, either purchase a Litecoin mining machine- graphic card units or a recently built Scrypt ASIC. The most powerful device currently available is the Bitmain Antminer L3+,designed to work with the Litecoin algorithm.
The first step is to make a place for storing your Litecoin rewards. This is done best by downloading the official Litecoin wallet from Litecoin.org.
Then use the public key generated from the wallet to send to mining pools or Litecoin mining software and receive payment in Litecoin. If you are setting up a wallet for the first time, it may take a while to synchronize, and display a message that you are more than 5 years behind on the network- for first-time Litecoin users. It is better to encrypt the wallet at the beginning. Encrypting a wallet at a point in time will make all backups useless.
The Litecoin community recommends that new miners do not join the largest mining pools, as this does not guarantee faster or higher rewards. This is to avoid potential 51% attacks on the blockchain, as larger pools approach the 51% hashing power of the whole network and may abduct the blockchain.
Litecoin mining also produces Dogecoin rewards in a process known as merged mining.