Litecoin is an alternative to Bitcoin (BTC) that is designed to reduce the comparative advantage of using custom ASICs (or GPUs) for mining it relative to using a conventional CPU. Its future is even less certain that BTC, of course, as a later comer, but the technically interesting bits lie in its proof-of-work hash function: Scrypt. Scrypt is designed to be “memory-hard” in addition to being computationally hard.
Just before a spike in litecoin prices, a developer a week and a half writing a better scrypt miner for NVidia-based cards using the Kepler architecture. Which meant that, as of this writing, his code was about 30% or 40% faster than any of the public code for scrypt hashing on Nvidia cards. The core improvements: It went from about 150 kh/sec to about 220 kh/s, and its CPU use dropped from 30% to 0.1%.
With the GPU hitting 215-220 kh/s and the CPU at 35 kh/s (remember, it was idle), he figured that he could conservatively get 230 kh/s. Assuming a 10% overhead in shifting the money back from LTC -> USD, and taking a conservative view of the likely sale price (there’s a lag between mining them and selling them), then mining on Amazon would produce about $50-$75/month/instance.
What people are doing with Cloud services and Litecoin mining
* Some people are mining using EC2 credits they purchased at a discount. Amazon gives away $100 AWS EC2 credits to get people hooked. It seems likely that some people are trying to exploit this.
* Some people are mining using their employer’s amazon bills. (!)
* Some people are being silly and losing money, hoping that the coins will rise.
* Legitimate spot market users who’re trying to get work done despite all of this alt-coin mining.
The mining processing pipeline looked like:
1. Mine coins on Amazon through a mining pool
2. Mining pool auto-deposit (Worldcoin/Litecoin) to the Vircurex exchange
3. Convert WDC to BTC at Vircurex
4. Transfer BTC to Coinbase (US-based Bitcoin startup)
5. Transfer USD to bank
6. Pay Amazon bill in USD. Wince.
He experimented with services like Multipool and Hashcows that try to automatically switch to the most profitable coin, but found them dissatisfactory. Multipool leaves you with a lot of little puddles of silly alt-currencies to exchange. Hashcows hasn’t quite had the uptime he want. Mining worldcoin was a nice compromise – it stayed more profitable than Litecoin for most of his experiment.