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.
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.
“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, impacting 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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Source: https://blockworks.co/news/litecoin-dogecoin-see-mining-surge