If you’re looking for the short answer, Scrypt is a mining algorithm used by many popular cryptocurrencies. If you’re looking for a longer, more in-depth response, keep reading.
So, what is a mining algorithm?
Well, Bitcoin Stack Exchange has a pretty good definition.
The Mining Algorithm is as follows:
Step 0 - Retrieve the hash of the previous block from the network.
Step 1 - Gather a list of potential transactions known as a “block”. This list of transactions comes from the peer-to-peer bitcoin network.
Step 2 - Calculate a hash for a block of potential transactions along with a random number.
Step 3 - If the hash is more than the currently set difficulty level, then you have mined that block. If not, start over from Step 1. Any additions to the list of transactions from step 1 along with change in the random number from Step 2 mean that there’s a chance that the criterion will be met in the next go around.
In more basic terms, your mining hardware is solving a mathematical equation, verifying transactions on the database, or blockchain. When you successfully solve the algorithm, you’re rewarded with cryptocurrency.
Best Scrypt ASIC Mining Hardware
If you want to maximize your Scrypt mining profits, then the Antminer L3+ is the ASIC for you. With a daily return of 682%, you’ll see profits of over $5,000 annually per card if you’re mining Litecoin. However, this ASIC can mine ALL cryptocurrencies that use the Scrypt algorithm! We were going to make a Scrypt mining hardware comparison, but this is the best Scrypt mining hardware you can buy.
Take a look at your projected earnings with this ASIC miner:
As you can see, the profit margin with the Antminer L3+ are pretty high.
|PIC||GPU||Hash Rate||Price||Daily Return||Buy|
|Antminer L3+||504 MH/s||$6,000||682%||Shop Now|
Powering the Antminer L3+
It is important to buy the right power supply for this miner, as it does not ship with a power supply included.
The Antminer APW5 power supply is recommended. You can find it on eBay
The APW5 power supply can provide up to 1300 W / 110 V or 2600 W over 205 V+.
Just make sure the PSU that you choose can provide at least 850 W with 9 6-pin PCI-E connectors, uses a single 12 V rail, and has a gold or platinum efficiency rating.
NOTE: It would take over 500 top tier graphics cards to equal the hashing power of one Antminer L3+!
The Memory Hard Problem
Hashing power isn’t the only thing to consider with Scrypt mining. Memory is also an important factor to consider. This is why Scrypt is often referred to as ‘the memory hard problem’.
Coindesk wrote a great piece on the matter, citing a quote from Mike Kular, the co-founder of Crypto Industries.
“‘The memory bandwidth is a function of how many input/output (IO) pins exist on the chips’, says Kular. In FGPAs, as in ASICs, the process node (the size of the transistors, which governs how many logic gates will fit on a piece of silicon) are still, important, but they aren’t as important as with bitcoin. ‘The gates aren’t the commanding factor. It’s about the I/O pins’ said Kular, adding that the FGPA boards will have a memory bandwidth of 24.8GB/sec per board”. This quote was pulled from CoinDesk’s article on the subject.
Which Coins use Scrypt?
There are many different cryptocurrencies that use the Scrypt algorithm, but the most popular currency is probably Litecoin.
Other currencies such as Novacoin, FeatherCoin, GoldCoin, and Tagcoin use Scrypt. There are many, many more currencies than those listed on this page. You can find a complete list of currencies that use the Scrypt algorithm here.
A Quick Overview of Hashing Algorithms
What Makes a Profitable Cryptocurrency?
Cryptocurrencies such as Ethereum and Litecoin are profitable cryptocurrencies, due to their value and block difficulty. If a cryptocurrency is too difficult to mine, such as Bitcoin, you’ll waste too much money on electricity to turn a profit.
However, if the cryptocurrency is easier to mine and/or more valuable, it’s probably worth it.
You can use this mining profitability calculator to view your projected mining profitability with the cards below. You’ll be able to see your projected earnings with each card. NOTE: ZenCash is extremely profitable to mine!
Generating Passive Income with Mining
Before we talk about setting up up passive income with mining, we must first understand what passive income is.
So, what is it?
Here’s an analogy I like to use:
With a regular job, you head to work just like you head to the gym. You get there, clock in, and start working. It’s just like hopping on the treadmill. When you’re finished with your shift, you clock out and go home just like you’d step off the treadmill when you’re finished with your workout.
However, a passive income is almost as if the treadmill is still running even when you’re finished. Even though you’re not working, your ASIC is still mining, generating income when you’re out doing other things. This is passive income.
If you invest in one or more mining ASIC, you have the potential to start generating passive income. The more you have to invest in mining hardware, the more money you’ll make.