9.18 Gridseed - should you mine bitcoin or litecoin?

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0. Introduction
It has been a while since I last mined, and when I heard that Gridseed ASICs could mine both bitcoin and litecoin, I decided to throw caution to the wind, ignore the fact that I may never get a return on my investment, and purchase a batch of ten through seeds over at bitcointalk.org (in case you're in the market for a Gridseed miner, I can recommend seeds: he delivered within ten days, and when I had problems setting the miners up he had an engineer help me out remotely).

These ASICs can mine either bitcoin or litecoin or both simultaneously, although the point of simultaneous ltc and btc mining eludes me - surely one would simply mine whichever coin was most profitable at the time?  (Edit: from some posts I've recently read on bitcointalk.org it's possible to overclock the gridseed, which might mean dual mining could actually increase overall earnings - more on that another time). When mining bitcoin (SHA256 mode) one device can produce 8 Ghps at 53W; mining litecoin (scrypt mode) one device can produce 300 Khps at 7W.

So, which is more profitable to mine with a Gridseed miner - bitcoin or litecoin? For the quick post that follows I'm not going to discuss income amplification from multicoin pools, but pools such as scryptguild.com or clevermining.com can make a significant difference to your income if you're happy to be paid in bitcoin. Since these types of pools often relate income to litecoin mining income, this post can still be used as a guide even when multipool mining.

1. Expected income per hash

For both bitcoin and litecoin, the expected income per hash is calculated the same way:

Income per hash = block reward / mining difficulty

Litecoin mining income can be converted to bitcoins using the LTC BTC exchange rate:

BTC income per LTC hash = (LTC block reward / LTC mining difficulty) * LTCBTC exchange rate

Bitcoin income per litecoin hash divided by bitcoin income per bitcoin hash results in a ratio that indicates how many more hashes are required to earn the same bitcoin amount using bitcoin hashes as opposed to litecoin hashes. In the chart below you can see this value varying from about 10000 to about 60000 over the last six months or so.

2. Expected Gridseed income
The charts above are a hash to hash comparison. However, the Gridseed miner has different hashrates and different power consumption for litecoin and bitcoin mining.  I've estimated total power costs for ten miners, controller, PSUs etc as 110W scrypt mining and 550W for bitcoin mining.

The data from section 1  can be multiplied by the hashrate and number of seconds in a day and power consumption subtracted from the total:

Net income per day = income per hash * hashrate * 86400 - cost per kWh * 24 * BTCUSD exchange rate

(Note: Bitstamp exchange rate has been used here)

3. Summary
The last couple of charts above make it clear that for the Gridseed ASIC, litecoin mining became slightly more profitable at about the time the devices were released. This may have been by design or just a happy coincidence for Gridseed, but it means that these devices are only being used for mining litecoin-like cryptocurrencies.

However, it is only recently that litecoin mining became more profitable than bitcoin mining for the Gridseeds, and (especially if you have low electricity costs) bitcoin mining could become more profitable than litecoin mining again.

If Gridseed style ASICs become more popular, then I can see the current scrypt coin arbitrage mining broadening to SHA256 coins. If this happens, then network hashrates and exchange rates  - for all currencies - will be greatly affected by the scrypt / SHA256 ability of the devices that will become available. I would certainly not buy a scrypt-only ASIC at this point unless it was sufficiently cheap and efficient  to guarantee a quick ROI.





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