Introduction to Scrypt Mining

If you are reading this article probably you are interested in mining and are seeking a better understanding on how it works and how you can invest in it.

The difference between bitcoins and other pieces of colored paper called currencies is that bitcoins are a digital mean to exchange value between individuals. Bitcoins are not issued by a central bank but are released gradually in the system in a controlled manner. This mechanism involves the resolution of mathematical problems, thus it requires a lot of processing power. This burden is shared in a network of computers (or miners) that in exchange for the work done is being compensated with the bitcoins generated in the process. Therefore, miners are the backbone of this system since they allow generation of bitcoins, they process all the transactions that occur in the bitcoin network and also they are ones to circulate them. However, being a controlled system, the amount of bitcoins that can be generated in a limited amount of time is limited and it does not vary with the amount of miners around. This means that the more miners are around the more difficult is to generate bitcoins. In the beginning, when not many miners were around, a normal GPU could do the job and mine a decent amount of bitcoins. But hold on, I said GPU and not CPU..why? Well, a CPU can do many things and is designed to perform different types of processes. GPU on the other hand is more limited, but by having more cores can do the same thing over and over in a much faster way compared to a CPU. But even GPUs are not very efficient because they are power-hungry and moreover need a lot of energy to generate what today is only a modest amount of bitcoins. This issue was solved by developing hardware called ASIC. These chips are designed exclusively to mine bitcoins, so they can do only this but they are extremely efficient in this. This innovation in the mining field lead to a race to buy ASIC hardware to obtain higher processing power to an extent that today using GPUs to mine bitcoins is counter-productive. Moreover, the investment needed to have a decent ROI (return of investment) is considerably high, leaving the normal user out of the competition.

Keeping this in mind Charles Lee created an alternative to bitcoin called Litecoin. His main aim was to avoid the design of hardware able to mine litecoins at high speed, therefore giving a normal user a chance to mine litecoins by using their GPUs. Both bitcoins and litecoins are very similar, however the main difference is in the algorithm used to create them. While bitcoins use an algorithm called SHA-256, litecoins use one called “Scrypt”. Scrypt simply uses more memory to process litecoins which is ok for GPUs but ASICs cannot be adapted to generate litecoins. This means that developing big mining facilities for litecoins is much harder. So if you want to transform your PC into a litecoin miner what should you do?First of all you need to check which GPU you have and use a mining software tailored to it. The main ones are GUIminer-scrypt for AMD videocards and Cudaminer for NVIDIA ones. I tested both myself and having a NVIDIA GPU (I know it’s not the best) I found that cudaminer could allow me to get 3 times more Kh/s than GUIminer-scrypt. Let’s see how to install them:

 GUIMiner-Scrypt:

If you have an AMD videocard you should install GUIminer-scrypt (GUIminer only is for bitcoins!!), you can download the software from this website:

http://guiminer.org/guiminer-scrypt.html

after downloading the zip file click on the guiminer.exe file and you should see a window similar to this:

 GUIminer

on the website https://ghash.io/ you can find all the info about the servers addresses and how to to set them, and all the other fields in the guiminer software have the auto-suggestion so the setup it’s quite easy, moreover they also have pre-sets for AMD videocards. If you don’t have an account on https://ghash.io/  yet you can register one on https://cex.io/r/1/lucas84/0/.

ghash

Cudaminer

If you have an NVIDIA videocard you should use cudaminer. You can download it from this website:

https://bitcointalk.org/index.php?topic=167229.0

this software it’s a bit less user friendly but it is not too painful to install. In this video I show you how to install it:

Basically you have to unzip the file and copy paste all the files in the same folder. After this, you will need to create a text file that you will use as a template to create a “proxy.bat” and a “cuda.bat” file

In the proxy.bat file you need to write:

mining_proxy.exe -o stratum+tcp://ltc.ghash.io:3333

and in the cuda.bat file you need to write:

cudaminer.exe -o stratum+tcp://ltc.ghash.io:3333 -O YOURUSERNAME.worker1:x

After this all you have to do is to click on proxy.bat first and a console window will appear for few seconds and after that click on cudaminer.bat and the mining should start.

There are a couple of things you need to check to make sure all will run smoothly, first of all you need to make sure that the file cudaminer.exe is in the same folder as the bat files and last thing you may see an error appearing after you launch the miner. More likely that is an issue with the server and not with your miner, therefore leave the miner to try a few times before get alarmed, if after 5 minutes your miner is still unable to connect to the server then you can say “Huston we have a problem”.

The scrypt protocol can be applied not only to mine litecoins but a number of other alternative coins. To do so you should use a different server address and use different pools, the advantage of being a member of the https://ghash.io/ pool is that they allow you do mine also other altcoins such as Dogecoin (DOG) Feathercoin (FTC) and Auroracoin (AUR) and all you have to do is to change the server you are using in your mining software. If you have any questions you can ask in their forum, and somebody will be able to help you in a very short period of time.

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