Charlie Lee, the creator of of the popular alternative crypto currency Litecoin, has posted on Reddit a short and interesting analysis on why a few weeks after the first block reward halving the difficulty and price of LTC has returned to the level it was prior to the event. Below you can find his post quoted: After the halving one would expect that either the price will go up or the hashrate must drop. This is because mining is designed with a Nash equilibrium of miner profit reaching 0 over time. So if miners are running at near 0 profit, and suddenly their revenue gets cut in half, miners would need to turn off their machines unless they are willing to mine at a loss. The halving happened, and the price stayed the same. The hashrate dropped a little but then climbed back up pretty quickly to the previous level. That’s really unexpected, but I think I have an explanation.

Profit per Month over 1000 Dollar. Electricity price round about: 120 dollar. So, if i buy this thing i get rich? Watch results here: 85 comments; share; save.

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I talked to some Chineses miners at Scaling Bitcoin and learned something interesting. Most miners have found electricity for free or close to 0 cost. Chinese hydro power plants are sometimes generating too much electricity. That electricity goes to waste if it’s unused. So these plants have either sold the electricity for near 0-cost or they have partnered with miners to give them free electricity for a revenue share.

So this makes total sense now. If the electricity is free or close to 0 cost, then there’s no reason for miners to shut down their machines. They make half as much, but still profitable. These miners have also been asking around at the conference to try to buy old outdated Bitcoin/Litecoin ASICs. With 0-cost electricity, they can keep those machines running and still make money. We considered the possibility that the reason behind was the introduction of newer generation of Scrypt ASIC miners from SFARDS and Innosilicon and the companies making them stacking up on hardware in their own mining data centers.

But the possibility of a lot of Asian miners with zero cost to very very very cheap electricity mining with whatever hardware they can get and still profiting also sounds like a good enough reason. If that ends up being the actual reason it presents a bit of a problem for the normal home miners and small mining operations based outside of Asia that still need to pay for electricity and thus have higher cost for mining and smaller to no profit at all. After the recent Litecoin (LTC) block reward halving we’ve seen some drop in the total network hashrate and thus difficulty as well as a direct result from the new lower rewards as a result of mining. The exchange rate of Litecoin did not change much, but with the lower difficulty things were looking like they would balance – smaller reward, but easier to mine. Interestingly enough a few days after the block reward halving the difficulty of LTC has started rising again and has already reached back the level where it was before the halving and it seems that it will continue to rise. This development rises some questions as to what is happening, so that the difficulty is rising and the exchange rate remains the same while the block reward is half of what it was previously. The only reasonable answer would be that somebody is bringing online new generation of more efficient Scrypt ASIC miners, otherwise with old generation hardware a lot of people would be mining LTC at a loss.

There are not that many options available, probably SFARDS is stacking up their new SF100 miners for own use in a data center or maybe Innosilicon is ready with their next generation of Scrypt ASIC chips and are doing the same. Lately we are seeing an interesting development in the world of BTC and LTC mining, there is a rapid increase in the difficulty and network hashrate of Litecoin even though the price is not that high.

With Bitcoin we are seeing a slight drop in the network hashrate and difficulty, and the prognosis for the next adjustment is also for a decrease in the hashrate and difficulty. While we are expecting LTC difficulty to continue to rise with more ASIC miners getting introduced on the market, we are kind of surprised to see the slight drop for BTC. The reason for that is probably the old mining hardware that is getting too expensive to run with the current low exchange rate for Bitcoin and is taken offline.

Below we are going to take a look at some common hashrate amounts for both BTC and LTC and see what you can currently mine with them in the form of USD at the current level of difficulty and at the current exchange rates. Do note that the below numbers represent the estimated daily coins that you might be able to mine and there are no expenses calculated for electricity. Bitcoin: 10 GHS – 0.04339 USD/day 100 GHS – 0.4339 USD/day 1 THS – 4.339 USD/day 10 THS – 43.4 USD/day 100 THS – 433.9 USD/day 1 PHS – 4339 USD/day Litecoin: 1 MHS – 0.0676 USD/day 10 MHS – 0.676 USD/day 100 MHS – 6.76 USD/day 1 GHS – 67.6 USD/day 10 GHS – 676 USD/day 100 GHS – 6760 USD/day Here is how things look in terms of an average cost for electricity that you would have to pay for a certain hashrate for both BTC and LTC to get an idea about the costs associated with running an ASIC miner for mining Bitcoin or Litecoin. You would need to deduct these costs from the numbers above as they represent only what you will be mining if converted with the current exchange rate. Do note that the average price per KHW of power can greatly vary based on your location, so the costs can vary quite a bit, so the numbers below are just a rough estimate. We base the power usage estimate for BTC using 1000 GHS at 800W as per Bitmain AntMiner C1 specifications (0.8 Watt/GHS) and for LTC using the 100 MHS at 1100W as per Innosilicon A2 MEGA Terminator specifications (11 Watt/MHS). As an average price in USD of the energy used for the estimated numbers below we are using 13 Cents per Kilowatthour.

Electricity costs for hashrate: 1 THS Bitcoin – 2.496 USD/day 100 MHS Litecoin – 3.432 USD/day So the actual daily profit after paying for the electricity with a 1 THS Bitcoin ASIC miner at the moment will get you just about $1.843 USD per day, $55.29 USD per month if the difficulty level remains the same with a miner that can cost you something like 10 times what you can earn in a month. The actual daily profit after paying for electricity with a 100 MHS Litecoin ASIC miner at the moment will get you about $3.328 per day, $99.84 USD per month with the current conditions with a miner that can cot you about 15 times what you will earn in a month. This makes the mining model of mine now and sell the coins immediately to cover the costs not so attractive at the current exchange rates and if you don’t have more up to date hardware or free electricity there is not much point to continue mining with old hardware. At least in the winter you could take advantage of the heat generated by the miners to save on heating at home for example, or use the cold temperatures outside for better cooling and save on extra electricity costs for properly cooling miners. The idea to mine now and save the coins to sell them later when the exchange rates are more favorable seems more attractive, but it is also riskier, especially for big mining operations that do have significant operational costs. With cloud mining operations the maintenance fees that you would have to pay are even higher than what you need to pay for electricity at home and you still need to purchase the hashrate itself. So the levels of daily profit can easily get even two times lower than the ones we calculated above if you mine at home and pay for electricity that is not too expensive in your region.

Copyright ©2014-2018 - - All About BTC, LTC, ETH mining as well as other alternative crypto currencies. This is a blog for crypto currency miners and users of Bitcoin (BTC), Litecoin (LTC), Ethereum (ETH), ZCash (ZEC) and many others. If you find helpful and useful information you can support us by donating altcoins or Bitcoin (BTC) to: 1AxbMZwtcmCByrHiaWwhse5r6ea1YgBwk1 ETH: 0x8d785ff337046444d8afbac169bcb7c0adfb3266 - LTC: LPYFPK7dL1uEtwrAteLmxs7w8Je446gAAJ - ZEC: t1gg5rWxeMBMsyDRMrq5PJdFLiWQ86LGggi.

There are 180 internationally recognized currencies in circulation, ranging from the Samoan tala to the Burmese kyat. Just like with regular currency, there are multiple too. Because it was the first, gets all the publicity, but it competes against dozens of aspiring alternatives—one of which is. Measured by market capitalization (or the amount of currency on the market), litecoin is the third largest cryptocurrency after bitcoin and XRP. Litecoin, like its contemporaries, functions in one sense as an online payment system. SmartCash SMART Mining Rigs For Sale here.

Like PayPal or a bank’s online network, users can use it to transfer currency to one another. Only instead of using U.S. Dollars, it conducts transactions in units of litecoin. That is where litecoin’s similarity to most traditional currency and payment systems ends. ( Related ) How Litecoin Is Made Like all cryptocurrencies, litecoin is not issued by a government, which historically has been the only entity that society trusts to issue money. Instead being regulated by a Federal Reserve and coming off a press at the Bureau of Engraving and Printing, litecoins are created by the elaborate procedure called, which consists of processing a list of litecoin transactions. Unlike traditional currencies, the supply of litecoins is fixed.

There will ultimately be only 84 million litecoins in circulation and not one more. Every 2.5 minutes (as opposed to 10 minutes for bitcoin), the litecoin network generates a what is called a —a ledger entry of recent litecoin transactions throughout the world. And here is where litecoin’s inherent value derives. The block is verified by mining software and made visible to any “miner” who wants to see it.

Once a miner verifies it, the next block enters the chain, which is a record of every litecoin transaction, ever. Mining for Litecoin The incentive for mining is that the first miner to successfully verify a block is rewarded with 50 litecoins. The number of litecoins awarded for such a task reduces with time. In October of 2015 it will be halved, and the halving will continue at regular intervals until the 84,000,000 th litecoin is mined. But could one unscrupulous miner change the block, enabling the same litecoins to be spent twice?

The scam would be detected immediately by some other miner, anonymous to the first. The only way to truly game the system would be to get a majority of miners to agree to process the false transaction, which is practically impossible. Mining cryptocurrency at a rate worthwhile to the miners requires ungodly processing power, courtesy of specialized hardware. To mine most cryptocurrencies, the central processing unit in your Dell Inspiron isn’t anywhere near fast enough to complete the task. Which brings us to another point of differentiation for litecoins; they can be mined with ordinary off-the-shelf computers more so than other cryptocurrencies can. Although the greater a machine’s capacity for mining, the better the chance it’ll earn something of value for a miner. What Is Litecoin Worth?

Any currency—even the U.S. Dollar, even gold bullion—is only as valuable as society thinks it is. Were the to start circulating too many banknotes, the value of the dollar would plummet in short order. This phenomenon transcends currency. Any good or service becomes less valuable the more readily and cheaply available it is.

The creators of litecoin understood from the start that it would be difficult for a new currency to develop a reputation in the marketplace. But by restricting the number of litecoins in circulation, the founders could at least allay people’s fears of overproduction. There are advantages inherent to litecoin over bitcoin.

Litecoin can handle more transactions, given the shorter block generation time. Litecoin also has a barely perceptible transaction fee. It costs 1/1000 of a litecoin to process a transaction, regardless of its size. Contrast that with PayPal’s 3 percent fee. If we consider the U.S. Dollar to be of constant value—of course it isn’t, but we need to have one static quantity when comparing cryptocurrencies—litecoin’s variability becomes clear. Komodo KMD Asic Miner Comparison.

Through most of 2013, litecoin’s market capitalization was similar to today’s. But during a 3-week span in November 2013, its market cap increased 20-fold.

It’s been gradually declining to its previous level ever since, even as the user base has increased. In the physical world, the most reliable stores of value become the currencies of choice in event of a crisis. In the late 1990s and early 2000s, Zimbabwe became synonymous with hyperinflation. When inflation reached 89.7 sextillion percent (give or take a few points) and rendered the Zimbabwean dollar worthless, that wiped out the fortunes of many people unfortunate enough to have held liquid assets.

People had no choice but to use something more stable—primarily the U.S. Dollar and South African rand—for daily commerce. Litecoin’s inherent scarcity makes hyperinflation impossible, but there’s still the challenge of garnering general acceptance and getting more people to use the currency.

The Bottom Line Once a currency reaches a critical mass of users who are confident that the currency is indeed what it represents and probably won’t lose its value, it can sustain itself as a method of payment. Litecoin isn’t anywhere near universally accepted, as even its own founders admit that it has fewer than 100,000 users. (Even bitcoin probably has less than half a million total users.) But as cryptocurrencies become more readily accepted and their values stabilize, one or two of them—possibly including litecoin—will emerge as the coin(s) of the digital realm.