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 computing power to solve a cryptographic puzzle. Litecoin is rewarded to the miner who generates a solution equal to or less than the network target.

Like Bitcoin, it can be mined on computers using central and graphics processing units. However, it is not as profitable or competitive as buying 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. Mining is often described as a complicated mathematical process; however, the mining software generates a hash from the information in a proposed block and adds a number to it (appends to the end) 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 incremented 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 happens 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 happen in 2142.

Litecoin price

How to mine Litecoin

To get started, you’ll need to invest in hardware and software to run the mining process yourself. 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 will likely be much smaller since 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 select a mining pool to mine with, set up the miner using the pool’s instructions—usually posted on the pool’s website—and start mining according to the instructions for your machine , software and pool.

You will also need to choose a wallet in which to store your private keys. You can use wallets like Exodus, Electrum or Mycelium.

How to choose mining hardware

There are several factors to consider when looking at mining hardware or software for Litecoin:

Your goals and expectations PriceEnergy usage and costHashrate Or to join a pool

Your goals and expectations

Most importantly, you 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 need to make sure you can get the return you want before investing in expensive hardware.

Price

Mining pools usually list current ASIC mining costs and revenues. The Antminer L7 is one of the most profitable Litecoin miners, but with a price tag of around $5,000, it may take a few years to recoup the purchase cost, depending on the pool you join and the energy used. The amount you spend will determine 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 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 on May 2, 2024 at a hash rate of 141.19 TH/s (tera-hashes per second). Even with the L7, your share of one reward may only be 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 energy consumption and how long it might take to pay off the mining rig. There are more profitable ASICs, but they are prohibitive for smaller miners.

Energy use and costs

You need to consider the amount of energy an ASIC miner uses. The Antminer L7 uses about $10 a day in energy. Your energy bill will increase by more than $3,800 per year (at $0.13 per kW/h), further reducing your annual profits.

This cost only represents the energy used to power the miner. ASICs produce a lot of heat while running – to be most profitable, they need to run 24 hours a day. An ASIC will cause your cooling bill to rise unless you can find a way to let the heat out of your home.

Litecoin hashrate distribution

Hashrate

Hashrate is another important consideration. The faster your ASIC can hash, the more competitive you will be on your own or in a pool. Many mining pools split the cryptocurrency they are rewarded, but most base individual rewards on the amount of work done per miner.

If you have a slow ASIC, your profit will likely be much less than a miner with a faster mining rig or setup.

Join a pool

Once you’ve decided what equipment you’re going to use to mine, you need to decide how to mine: solo or in a pool. Mining alone risks going long periods of time without finding a block. However, if you are lucky enough to mine a block solo, you will keep the entire 6.25 LTC plus fees.

Pool mining, in which many miners combine and split the proceeds according to the hashing power contributed, is still subject to luck: your pool might open three blocks out of 10, and then wait for 200 blocks to open another. Your earnings are almost certain to be more steady with a pool; the trade-off is that you only earn a small cut of each block that finds the pool.

The Bottom Line

Litecoin can be mined with personal computers and GPUs, but these units are much slower than ASICs. Litecoin mining is also much faster than mining Bitcoin – but even with the faster processing times, the chances of successfully mining Litecoin on your own are very low.

Rewards are also lower than other coins because LTC market value is significantly lower. You will need to figure out if mining Litecoin will be rewarding enough to justify the expense or if you might be more profitable mining another coin. Regardless, it is important to join a mining pool to increase your chances of success.

The comments, opinions and analyzes expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more information. As of the date this article was written, the author does not own cryptocurrency.