Profile User: redcalx Name: redcalx Page Summary · Litecoin Mining Profitability and Total Network Hash Rate Latest Month September 2019 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Search Search:

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Meanwhile the litecoin world experienced its own price hike this year. From $2 or so to $30 currently, and this has generated investment in GPUs. Now, there is some scope for litecoin specific h/w, possibly in the form of modified, customised GPUs, but the gain from that would be far less than for BTC ASICs, so there is less commercial reason to design and manufacture such h/w. This generates a background of stability from an investment point of view and this has caused a large increase in the number of GPUs coming online.



As I write the network hash rate is about 90 billion hashes per second (90 Gh/s), and this number moves up daily. Bear in mind this was less than 1 Gh/s earlier this year, and around 20 Gh/s in early November, so the market reaction to the price rise has been rapid.



The shape of the hash rate curve (versus time) should approximately be S shaped (sigmoid), that is, the rate of rise should fall as the profitability falls off. There is perhaps some oddness caused by differing mining costs depending on location, factors include electricity cost and cooling cost (less where it is winter), but overall we expect mining to asymptotically approach an equilibrium where mining cost matches mining earnings. There is no incentive to mine beyond this price as you could simply buy the LTC from the market for the same price. Basically, mining gives you the option to 'buy' LTC at a cheaper price, and if that option is no better than buying from the market then there is no point.



So what is the equilibrium hash rate?



The variables are:



C - electricty cost ($/KWh). I pay a relatively high $0.232, in the US I've heard this can be as low as $0.05, but I think 0.10 - 0.15 is typical, elsewhere it is higher, e.g in Germany due to green taxes.



F - Mining hardware efficiency (Hashes/KWh). My rig runs at 880W and 1.776 Mh/s. So in one second we do 1.776 * 10^6 hashes with 880 Joules of energy. 1KWh = 3.6 MJ. Therefore F = 7.265 GH/KWh. With tweaks it's possible to achieve 9 GH/KWh. I'll use my figure as a reasonable estimate at the average.



P - LTC price in $. Currently approximately $30.



R - Total mining rate in LTC/day. This is 28,800 LTC/day, given by 576 blocks/day (one every 2.5 mins on average), and 50 LTC/block.



To calc the equilibrium point we simply need to determine what the network hash rate would need to be to reduce earnings to mining cost. I'm using electricity cost only, I'm ignoring amortised capital investment costs - miners often like to ignore this on the basis that they hope to be able to sell the GPUs back to gamers via ebay at some small loss. And I just want a ball park estimate on where the ceiling is.





Equilibrium hash rate (Ts) is given by:



(Total network earnings/day) E = R * P (= 28800LTC * $30) (= $864,000) (Total KWh/day purchasable with E) K = E / C (= $864,000 / 0.232) (= 3.72 * 10^6 KWh) (Total hashes/day produced by K) Td = K * F (= 3.72 * 10^6 KWh * 7.265 GH/KWh) (= 2.7 * 10^16 Hashes/day) (Total hashes/second produced by K) Ts = Td / 86400 = 312.5 GH/sec Tidying up a little we get: Ts = R⋅P⋅F / (86400 x C) So now we can calc Ts assuming different LTC prices: @ $40 => 417 GH/sec @ $80 => 835 GH/sec @ $100 => 1.04 TH/sec @ $200 => 2.08 TH/sec



So we see that at the current price of $30 the network still has a big profitability gap to fill, and therefore we can expect the rate to climb rapidly for a while yet. It's going to be interesting to see the shape of the rate curve, i.e. are there going to be mining supply side problems?



The other way of looking at this is - to what price would LTC need to fall in order to reach equilibrium with today's hash rate? The answer is $8.62 Bitcoin ASIC mining hardware was up and running by the time of the first 10x rise in BTC price earlier this year. Yes ASIC availability was limited, but if GPUs were still profitable at that time it was a small time window and people new they had a very limited profitable lifetime, thus it's likely that no significant investment in GPUs (for BTC mining) was occurring as a result of the price rises.Meanwhile the litecoin world experienced its own price hike this year. From $2 or so to $30 currently, and thisgenerated investment in GPUs. Now, there is some scope for litecoin specific h/w, possibly in the form of modified, customised GPUs, but the gain from that would be far less than for BTC ASICs, so there is less commercial reason to design and manufacture such h/w. This generates a background of stability from an investment point of view and this has caused a large increase in the number of GPUs coming online.As I write the network hash rate is about 90 billion hashes per second (90 Gh/s), and this number moves up daily. Bear in mind this was less than 1 Gh/s earlier this year, and around 20 Gh/s in early November, so the market reaction to the price rise has been rapid.The shape of the hash rate curve (versus time) should approximately be S shaped (sigmoid), that is, the rate of rise should fall as the profitability falls off. There is perhaps some oddness caused by differing mining costs depending on location, factors include electricity cost and cooling cost (less where it is winter), but overall we expect mining to asymptotically approach an equilibrium where mining cost matches mining earnings. There is no incentive to mine beyond this price as you could simply buy the LTC from the market for the same price. Basically, mining gives you the option to 'buy' LTC at a cheaper price, and if that option is no better than buying from the market then there is no point.So what is the equilibrium hash rate?The variables are:- electricty cost ($/KWh). I pay a relatively high, in the US I've heard this can be as low as $0.05, but I think 0.10 - 0.15 is typical, elsewhere it is higher, e.g in Germany due to green taxes.- Mining hardware efficiency (Hashes/KWh). My rig runs at 880W and 1.776 Mh/s. So in one second we do 1.776 * 10^6 hashes with 880 Joules of energy. 1KWh = 3.6 MJ. Therefore. With tweaks it's possible to achieve 9 GH/KWh. I'll use my figure as a reasonable estimate at the average.- LTC price in $. Currently approximately $30.- Total mining rate in LTC/day. This is 28,800 LTC/day, given by 576 blocks/day (one every 2.5 mins on average), and 50 LTC/block.To calc the equilibrium point we simply need to determine what the network hash rate would need to be to reduce earnings to mining cost. I'm using electricity cost only, I'm ignoring amortised capital investment costs - miners often like to ignore this on the basis that they hope to be able to sell the GPUs back to gamers via ebay at some small loss. And I just want a ball park estimate on where the ceiling is.Equilibrium hash rate (Ts) is given by:So we see that at the current price of $30 the network still has a big profitability gap to fill, and therefore we can expect the rate to climb rapidly for a while yet. It's going to be interesting to see the shape of the rate curve, i.e. are there going to be mining supply side problems?The other way of looking at this is - to what price would LTC need to fall in order to reach equilibrium withhash rate? The answer is Tags: cryptocurrency, litecoin Speak

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