• Decryption's Litecoin Mining Adventure

    What the hell is that monstrosity above? It's my Litecoin mining farm. What the hell is a Litecoin mining farm? It's a bunch of computers with fast GPUs, shoved in a shed, running 24/7 to mine Litecoin. You've probably heard of Bitcoin, and Litecoin is like that theoretically, but technically different. This setup can just sit there for the next few months, pay itself off, then generate a steady flow of passive income. Yes, really. Well, that's what I hope happens... Let me explain my justifications for taking the time and effort to bother with this, instead of a real job.

    I won't explain what Bitcoin or Litecoin is here, as there's loads of info across the Internet about it. The pertinent info for this story is that you can exchange this digital currency for goods or for "fiat" (aka, US dollars or Euro or whatever) currency. My 14 computers verify a portion of the network's transactions and in return for verifying these transactions, I'm given coins. The more transactions I verify, the more coins I get and the more coins I get, the more money I make. So just how much money can be made doing this?

    Those 14 computers can process approximately 17,000 kilohashes (one hash is one transaction) per second. At that rate, I will earn approximately 1091 Litecoins in 30 days. One Litecoin currently is worth approx US$3.30. So that's $3,600/30 days, right? Well not really, as the difficulty (a variable that the system sets, so that the amount of coins given out in a certain time period is even) can rise, meaning there's less coins for the same amount of effort. Or the difficulty can lower, resulting in more coins. Generally, if it becomes more difficult to mine coins, the price of the coins goes up, to reflect that, and down if it becomes easier.

    It's also not just free money - there are costs for doing this. Electricity is the big one. Each one of those 14 computers uses approximately 550W, all day, all night. That's $46.20/24 hours (at 25c/kWh). So for 30 days, you're looking at spending around $1,386 just in electricity. Then there's the cost of the hardware itself. I've spent close to $15,000 on that setup, predominately on AMD 7950 GPUs (28 of the bastards), but also including shelving, network equipment, power accessories (3 phase installation, power distribution units) and cables.

    There's charts and calculators galore to work out historical trends in difficulty and the value of the coins, but the market is volatile, so it takes a bit of luck and faith - just like any high risk & high reward investment. My approximation is that I'd get at least 1,000 coins per month for the next few months. They're currently worth about $3.30 each.

    The value of those coins will hopefully go up too (they were $4 recently, and $5 not too long ago), as there's a few things on the horizon for Litecoin that mean it will be more attractive as a currency such as more ex-Bitcoin miners moving over, more traders accepting it and Mt. Gox coming on as an LTC exchange. I'm hoping to get in on the ground floor with Litecoin, as I missed out with Bitcoin.

    I can't predict exactly how much money there is to be made, as it depends on so many variables. There's basically the same amount of risk as going down to the TAB and chucking a few grand on some horses. Right now it's not very profitable and would take a while for me to recoup the inital investment. But if the price of Litecoin does skyrocket/bubble, I'll hopefully have a nice stockpile of LTC I can cash in at a profit and then sell off the mining farm to gamers who want those sweet GPUs. That's the plan anyways - let's see what actually happens over the next few months!
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