The culture of technology in Australia.

Three Months as a Litecoin Farmer

Crunching the numbers on virtual currency mining in Australia

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On the 3rd of August, it will have been 3 months since I fired up my Litecoin farm. I dicked around for a few weeks in April with Litecoin rigs at home, but had all 14 of my rigs working simultaneously on the 3rd of May, 2013. In fact, this feature marks pretty close to three months since I started mining “full time”. So let’s take a look at the issues I’ve faced, if I’ve made any money, and the status of Litecoin in general.

I won’t explain the ins-and-outs behind the decision to mine Litecoin (aka LTC), as I’ve already attempted to justify that on my own blog, in detail, before Reckoner started. Feel free to read the four posts, if you’d like a nice background on the whole Bitcoin & Litecoin mining scene, the gear I’m using and the theories behind it all.

From the outset, my plan with Litecoin mining was to amass as much computing power and mine as many coins as I could afford. I’d hold on to those coins, then cash out in a blaze of glory when the price bubble inflated to some crazy amount, but just before the market would (probably) crash. I figured this would happen some time in June, to co-incide with the release of Litecoin trading on Mt. Gox.

Needless to say, this hasn’t happened. Mt. Gox trading LTC hasn’t yet occurred and the reality of the situation–as opposed to my plans–are quite different.

What has happened is a massive rise in difficulty, without a subsequent rise in the value of Litecoin. The chart below illustrates this (the difficulty line is messed up – the data source for LTC appears to be broken):

Litecoin value in the last 3 months

This is bad.


Difficulty up, price flat

For the same amount of effort (time & electricity), I’m mining significantly less coins, which aren’t worth more to reflect that effort. In mid-May, difficulty was around 600, which with my hashrate of 16.8Mh/sec nets about 28LTC/day. But now, with difficulty at 880, at the same hashrate, I’m only earning 19LTC/day.

Normally, that difficulty curve is not much of an issue as you’d think. As the mining difficulty increases, the price of LTC should go up proportionally to match. Here’s the problem; the price hasn’t changed much at all. When I started in mid-May, it was hovering around the $2.80-$3 mark. That’s essentially the same price it is today.

So even though the price has been relatively stable, the amount of coins I’m earning has decreased significantly.

Stated simply? Instead of making $79/day in mid-May, I’m now making only $53/day.

Despite all that, the venture is not making a loss (yet). This is the breakdown of my cashflow since May 3rd:

Expenses – $4971

  • $4800 on rent & electricity ($1600/m)
  • $171 on Internet access ($57/m)

Income – $5242.16

  • 24th June – sold 877LTC @ $2.96ea (after fees & exchange rates) – $2595.92
  • Currently holding 571LTC @ $2.96ea – $1690.16
  • Projected earning 323LTC to 3rd August (3 month anniversary) – @ $2.96 – $956.08

Profit – $271.16

That’s all I’ve made so far. $271.16.

Let’s put this number in perspective. If I put $16,000 into a savings account at 4% and added $1657/month into it over 3 months, I’d have earned $177.41 in interest. So I guess I’m ahead of that, at least. But I’d also have the full $21,148.41 in cash. So as an investment, LTC is a bit of a dud, so far.

Oh and, this doesn’t count the initial $16,056.10 I spent on setup costs. So far, I haven’t even made a dent in paying that back and it’s still sitting on my credit card and is now starting to accrue interest, which is about 17% P.A averaged out over a few cards – approximately $230 per month.


What could I have done differently? Well, I could have made more coins, but there were a few teething problems with electricity (lots of brownouts in the area) and some mining pool difficulties (there as a big DDoS attack on a series of Litecoin pools, killing earnings for everyone over a few days), but the past month or so has been very stable.

When I begun this Litecoin thing, I said I’d give it a max of 3 months and then re-assess my options. Well that 3 months is now, so what are my options?

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1) Sell up the farm and hold on to my existing LTC. Cash out when it looks good

If I was to sell my farm now, I’d expect to get $11,000 back out of the $16,000 I spent. That leaves me $5000 out of pocket. I should have ~850 LTC in my wallet, so if I can sell those LTC for $6ea in the future, I’d at least break even. If over the long term, LTC grows and the price increases, I’d miss out on all that.

2) Keep doing what I’m doing

Do nothing, and keep my current farm going. It requires minimal maintenance now so it literally is just set and forget. I’ve already got a decent hashrate and there is still hope of Mt. Gox accepting LTC in the near future.

3) Get more rigs, mine more coin, hope for the best

I have about $18,000 spare on my credit card. I could go for broke, expand out to a bigger space, double my hashrate and mine even more coins. Then when the price of LTC goes up (hopefully) over time, I’d have a very nice stockpile of LTC that I can flog off, eventually repay the startup costs and be mining away, earning coins on gear I’ve already paid back.


The common sense part of me tells me to quit now and just hold on to the LTC I have. Sell it when it reaches $6-7 and be grateful all I lost was time. The lazy part of me can’t be fucked decommissioning my current farm, moving all that into a new space, buying more gear, and so on. But the nerd part of me wants even more computers and still feels there’s an opportunity with Litecoin, so why not get as much mining power as I can? Particularly since I now know the pitfalls and can scale relatively easily.

I’m still not sure what I’ll do next, but I don’t have long to decide. Either way, don’t ask me for advice. I’m not an accountant.

Besides, an accountant would probably say this is stupid.

If you found this article interesting or helpful, a little donation of some crypto-currency would be appreciated.
BTC: 19KL2gv2BY8sMXbRjHqmcnYWYuDsePbLiN
LTC: LLiagULyQbDVNT2B4trFHFBkLBZux71sDN

  • http://smithjw.me/ James Smith

    Great article as always mate.

    • decryption

      Thanks :)

  • reckonerau

    Honestly, at this point I think I would wait it out and see what happens for another two weeks. I’m sure you’re following this more closely than I am, but Mt Gox said in a statement a month ago here https://www.facebook.com/MtGox/posts/484532824964463 that:

    “As risky as it is to invoke the name of Litecoin (LTC???), we must apologize for not keeping everyone up to date. The fact is that the current situation means a continued delay, but for good reasons. We’re looking at July right now, though that depends on a few things. Mainly, we want to do things correctly from the beginning.”

    So Mt. Gox keep their word (which is not a sure thing, given their past track record) then it’s worth waiting for. After that, if nothing happens, then I’d start dismantling and selling the rigs pronto, because the resale value on those video cards will be dropping by the day.

    • decryption

      Yeah, the resale value on the cards will hold steady until AMD release a new range of cards (which is slated for sometime later this year). Then they’ll drop significantly!

  • http://codefridge.com/ Codefridge

    With that hashing power, why not mine a more profitable coin? You can either set it up on your side to change pools or you can use https://www.multipool.in/ . Or at least point a miner or two at another coin. You’ll make a bit more cash then.

    • decryption

      I’ve seen lots of people waste time coin hopping :(

      • http://codefridge.com/ Codefridge

        I’m not saying that you should coin hop. But maybe diversify your coins. Also coins like WDC are and have been profitable for over a month now (which is a lifetime in crypto coins). You said it yourself, LTC diff is ridiculous.

  • Juventus+30

    Sell your equipment ASAP, there’s no real benefit in LTC, expenses are high and profit is low when you take into account how much you have spent to get it started.

    At least it has been fun :-D

    • decryption

      Yep, it has been fun :)

      • ZenInsight

        Nope…in 6 months Litecoin has gone from 2-3 bucks to over $15. I hope you kept doing this.

  • Thisguy

    hmmm, i’d say invest in some risers and put 4 gpus on one board. You can get risers for X16 or X1 slots. If you do get risers for X1 slots, make sure they are powered or you’ll blow a hole in the mobo. That would shave down 100W per mobo eliminated. So remove 7 mobos and that would save 700W maybe.

    • decryption

      Yeah, I could increase the density and run 5x cards per mobo, but then I’d have to build some open air rig contraption to make it stable and I’d need to spend more money on heavy duty power supplies and spend more money on risers.

      • Thisguy

        or you can dual up the psus, run them side by side off of one mobo. You could build a wood frame for the open air rig, and the risers are 3 bux a piece on ebay. If you run more than 3 cards on a mobo/or use the pciex1 slots, you’ll need to buy powered ones. Then again you can also mod them yourself. Heres a guide. https://bitcointalk.org/index.php?topic=76121.0

  • H. T.

    Hello…I have 4×7970 and it’s crazy when I decided to expand my rigs but I have not made up my mind yet. But it’d be crazier if you take an additional investment which I would say no – hold off for a while until the LTC’s price increases. Anyway, it’s your choice.

  • phillipeon

    Yo, i don’t think u should burn all $18k. really, there are people out there burning million of dollar for this thing. Its no longer about the mainstream people. Now corporation will take over.

  • phillipeon

    renting out warehouse, high electricity charges, high components wattage…seems u doing it all wrong. if i have all that shit u have there, i’ll hook up with students in university for free electricity and split the profit.

    • decryption

      oh yeah? free electricity? if you’re serious, get in touch: aagius@icloud.com and we can talk!

  • Uwonder

    All I have to say is “HA! HA!” Serves you right for being a greedy bastard and trying to screw everyone over. Let me repeat your greedy intentions for you:

    “…my plan with Litecoin mining was to amass as much computing power and mine as many coins as I could afford. I’d hold on to those coins, then cash out in a blaze of glory”

    So, you were going to hoard a boatload of coins and dump on a bunch of unsuspecting n00bs who are just learning about LTC. Your plan also totally disregards the long-term viability of Litecoin as a currency and focuses solely on your greed. So, fuck you! I’m glad that you got screwed and are losing money. You deserve it. You really, really deserve it.

    Let this guy stand as a warning to all other would-be LTC miners who are looking to get rich quick. If you plan in investing in a crypto currency, do so because you believe in the long term viability of the coin, or because you want to use it to buy goods and services. Greedy miners who are in it as a get rich quick pump and dump scheme will lose money.

    • decryption

      Cheers mate :)

    • ZenInsight

      Fail. Litecoin is over $15 now and obviously stabilizing as the “silver” to Bitcoin’s “gold”.

  • Guest

    Stay true my friend! As a farmer on a smaller scale(i bounce from 9,500 to 13000khs depending on how hot the day is), I’ve essentially traded my fiat income on lieu of Litecoins. I’ve rented a facility for my rigs and the monthly cost leaves me with about 300$ to spare which I use for food and goods.

  • Ken Sington

    The predicted decline of the Aussie dollar should help your profits and the resale value on the rigs. I’m very tempted to jump in myself, but don’t have a plan B to pay back the credit cards if it all goes pear shaped.

  • Gavin Andresen

    If you add in the value of your time, you’re even farther behind.

    Mining is a zero-sum game: you are competing against all the other miners for a fixed amount of wealth. It doesn’t really matter if you’re Bitcoin or Litecoin or ThisOneIsReallyDIfferentAndBetterIPromiseCoin, there is some unknown but growing demand for cryptocoins that fundamentally drives prices.

    I did a little Bitcoin CPU mining in 2010, but stopped when I calculated my cost of electricity. It was cheaper to just buy coins rather than mine them.

    And I prepurchased a BFL single ASIC miner (first day), but resold it (at a BTC profit) because it was going to take at least six months for me to recoup my investment and adding in the cost of my time and annoyance from the extra heat and noise made it just not worth it.

    It really only makes sense to participate in zero-sum games like mining if you have some advantage over most everybody else: maybe free hardware or free electricity or maybe early access to scrypt-mining ASICs.

    • http://www.10weekspregnantsymptoms.com/ Julie K

      There are some low risk investments like savings accounts that don’t actually tie up your initial principle, but those pay very little. Every other business or investment takes time. 6 months to break even is still relatively short. Most business sold at least go for 10 months profit. Anything less and potential buyers walk away thinking it’s too good to be true, so it’s a scam.

      Starting a mining farm and getting all the money back in 6 months, plus you keep the equipment would be like buying Google or Apple stock and expecting it to double in 6 months, so you could sell half, getting the money back you originally paid for it.

  • http://CoinCollectionWorld.com/ Ed Smith

    Thanks for the nice and informative article :)

  • Nguyen Ba Phuoc

    Thank you for the article.
    May I ask:
    What did you decide? Do you still keep the rig?

  • http://us.battle.net/wow/en/character/barthilas/Lysium/simple Lysium

    It’s at 7$ on btc-e, sell now.

    • Claus van dijk

      35! man

  • phil

    If you still have the rig, my company supplies my house and free electricity.plus where I live its against the lease to turn off the air con ever !due to humidity. I’m an ex. network technician turned miner ( real not crypto lol), I can run it for you split the coins ??? run it 24 /7

    • Rob Bradshaw

      But if your using 10,000+ watt and racking up $1000’s in power bills surely they’ll notice?? Otherwise great deal, I pay 0.24AUD in power, get out there and buy your own altcoin mining rig(s). You’ll be mining virtually and literally, ha :P

      • phil

        We don’t have power meters! The 4000 strong town exists to service the mine and refinery! The company has its own heavy fuel power station. No bills, in fact its a breach of our lease lol to turn our air con off !! Unlimited free power , well at least till august ! When they shut the mine down…which is a bit unfortunate ( we found out this week,
        1150 jobs to go)

  • Rob Bradshaw

    So what happened with your LTC and the rigs? now that its at $20 each … ;)

    • Ben

      Use btc-e to transfer LTC->BTC and cash them out at coinjar.io it has been the easiest way for me.

      Also, they are up to $35, wow hope he held them!

      • Rob Bradshaw

        Thanks ben yep I’m a little more knowledgeable on the whole thing now. I will probably sign up with coinjar to support the aussie startup. My work mate uses them. My last BTC sale was via bitstamp then used their international transfer which was $15US not too bad. Yep I’ll use btc-e to convert LTC to BTC, Cheers

  • John Smith

    the beautiful part is now that the litecoin is over 30 usd per share. those coins just became valuable.

  • Mark Whittington

    hi, i’m a total noob to this. give us a reassessment since the recent pop? how might that be changing your outlook? accountants are anal, anyway…

  • Aitor

    Hi bro, nice doc about this. I’ve some questions. Can u tell me how many Watts are u spending in total with all that rigs connected? :)

    • decryption

      All 14 rigs used about 7.5-8kw

  • blargblarg

    So what happened with your stockpile? Did you sell out early, take advantage of the $30-40 price, or are you still holding? I remember reading this article early on when I started mining. I’ve done some mediocre “day trading” which to me is definitely not worth it. Still mining and have just recently added a couple more mining rigs. (Wish I would have done that 6 months ago!)

    • James Bobo

      i wish i would have started 6 months ago too! litecoins are hot right now, but that makes me think it will go down soon. what could be the next coin? ftc?

  • Cannonphoder

    First, Thanks for sharing so much with us mate. You’ve answered so many of our questions, and been good natured about it. We really do appreciate it. I do have a question, if you don’t mind. I’m new to crypto-currencies, but a veteran to computers. Given what you’ve seen happen over the last two months, do you think you’ll keep your farm going?

    • decryption

      I actually stopped mining back in August. I regret not continuing through the rough patch to the “golden time” that’s going on currently.

      • Cannonphoder

        Did you keep your wallet – hopefully? did you sell you farm and such? I’m curious what pool you used and would you recommend them? I’ve got a couple of gaming PC’s for me and the kids, and I’m thinking of mining with them at night (so they pay for themselves. Any thoughts?

  • jesta

    Live the article. Hope you kept going dude. See the price now :)

  • TomasP

    great , can you tel my which server have dif. 600 ,because here is 3300 , thx great job

    • Igor Vigilyk

      this diff.+/-3300 is for ALL LTC network xD this was ” In mid-May, difficulty was around 600, which with my hashrate of 16.8Mh/sec nets about 28LTC/day”, now 16.6Mh/s = 5.99LTC/day

  • Josh Rozich

    bet you are kicking your self in the ass for selling it all then

  • argentinian ltc miner :D

    i hope you hold those coins and didnt sell when reached 6 U$D…

  • Melvyn Tan

    There is no predictability to the success of any venture. Litecoin was about $6-7 wayback in May 2013 and today, it’s hovering around $21.00. Just look at the price of Bitcoin in May 2013 and what it is today at $800.00. No pain No gain!

  • Vale Ntin

    u spent allot of money on psu and motherboard running only 2 GPU…..
    ur configuration is really bad

  • ZenInsight

    Litecoin now worth over $15. If you didn’t stop, you win!

  • Capcom

    Switch to X11 and keep going. Or you could move them all to XMR (Monero) and keep going. Pretty sure you will improve your payout with the same investment of hardware.