Litecoin, Dogecoin See Mining Surge After Prices Rise Post-Merge

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Min­ing activ­i­ty is surg­ing on a raft of proof-of-work blockchains still rid­ing tail­winds from Ethereum’s switch to proof-of-stake five months ago.

Those ben­e­fi­cia­ries of Ethereum’s long await­ed Merge, which acti­vat­ed last Sep­tem­ber and sent the blockchain’s min­ers out of busi­ness, include Doge­coin, Lite­coin and Syscoin. 

At the time, small­er net­works minable with high-end GPUs — a la pre-Merge Ethereum — imme­di­ate­ly saw a major hash rate uptick. Ethereum Classic’s hash rate (a mea­sure of the network’s com­put­ing pow­er) bal­looned 160% in a sin­gle day and RavenCoin’s jumped 80%.

Like Bit­coin, Doge­coin and Lite­coin can only real­ly be effi­cient­ly mined with spe­cial­ized ASIC rigs attuned to their hash­ing algo­rithm, Scrypt. Those net­works, which com­mand far less hash rate than Bit­coin, didn’t book a sud­den hash rate boost in Sep­tem­ber, unlike Ethereum Classic. 

But they’ve since set fresh record highs. Doge­coin and Lite­coin are “merge-mined,” mean­ing they can be mined simul­ta­ne­ous­ly with­out sac­ri­fic­ing per­for­mance, lead­ing their hash rates to correlate. 

Litecoin’s hash rate chart looks pret­ty much the same, hit­ting all-time high in late December

Syscoin’s hash rate is also hov­er­ing around highs set in Octo­ber, although it can’t be mined effi­cient­ly with GPUs. The net­work can, how­ev­er, be merge-mined with Bit­coin, which itself is main­tain­ing record lev­els set late last year — even as its price has plummeted. 

More hash rate typ­i­cal­ly equates to more secu­ri­ty, as bad actors require more com­put­ing pow­er to pull off effec­tive 51% attacks. But are dis­placed Ethereum min­ers respon­si­ble for Doge­coin and Litecoin’s hash rate pumps?

A spokesper­son for Litecoinpool.org, an apt­ly-named Lite­coin min­ing pool, doesn’t believe so. Com­mon Ethereum min­ing rigs, such as the RTX 3080, could con­tribute around 100 MH/s to the network’s hash rate, but less than two MH/s to Lite­coin, good for a fac­tor of about 50.

Ethereum’s hash rate was rough­ly 1,000 TH/s before the Merge. So, if all the min­ers on Ethereum were to switch to Lite­coin, per back-of-the-nap­kin math, those min­ers should expect to add about 20 TH/s to Litecoin’s hash rate.

Litecoin’s hash rate has climbed far more than 20 TH/s. It was just over 400 TH/s in Sep­tem­ber. It’s now sit­ting around 600 TH/s, a 50% jump.

“I think we can safe­ly say that this jump can­not be attrib­uted to GPUs com­ing from Ethereum min­ing, but rather to more Scrypt ASICs enter­ing the mar­ket,” the Litecoinpool.org rep said. 

They added that Litecoin’s third halv­ing is just a few months away, which means min­ers may well be look­ing to get more bang for their buck before issuances are reduced.

Litecoin and Dogecoin soar since Merge

At times, min­ing Lite­coin and Doge­coin to sell for BTC can be more prof­itable than min­ing Bit­coin direct­ly. A source famil­iar with the min­ing indus­try told Block­works that some mid-sized min­ing oper­a­tions keep Scrypt ASICs on hand for that exact purpose.

Read more: Is Bit­coin Min­ing Still Prof­itable? The Eco­nom­ics Explained

The source was grant­ed anonymi­ty because they are not autho­rized to talk to the media. 

Sarah Man­ter, direc­tor of com­mu­ni­ca­tions for min­ing plat­form PROHASHING, told Block­works that rather than direct­ing old Ethereum GPUs to Scrypt, it was more like­ly that min­ers have been buy­ing up used ASICs from those who capit­u­lat­ed when the mar­ket crashed — and point­ing them at Doge­coin and Litecoin.

Either that, or they’re sell­ing GPUs and buy­ing new ASICs to mine what’s now profitable. 

Ethereum Classic’s hash rate has retraced since its post-Merge bump

“I have no knowl­edge of GPUs being repur­posed to mine Lite­coin, because GPUs haven’t been able to prof­itably mine Litecoin/Dogecoin for quite some time,” Man­ter said. 

Added Man­ter: “I know a lot of GPU min­ers have either been get­ting out of the game alto­geth­er in favor of oth­er endeav­ors such as stak­ing, or buy­ing, trad­ing or turn­ing off their work­ers to wait it out and see what pulls ahead and becomes prof­itable again.” 

Lite­coin has increased 24% since the Merge, increas­ing the odds of prof­it­ing from min­ing the blockchain. Price, though, is just one fac­tor, along­side ener­gy and equip­ment expen­di­tures, that impact profit.

Doge­coin is up 16% over the same period.

Man­ter said that no GPU algo­rithm (and, accord­ing­ly, asso­ci­at­ed blockchains) seems to be pulling ahead of its peers in the same vein as Ethereum’s dominance. 

“That doesn’t mean one won’t even­tu­al­ly, as the mar­ket improves [and] hash rate shifts,” Man­ter said.


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