About three months ago I converted my assets in Litecoin to Bitcoin.This was a hard decision to make as i was originally a pretty big supporter of litecoin.In recent weeks we’ve seen the cryptocurrency take a big dive and I’d like to explain my belief as to the cause of this, and whether it is a good time to buy into the currency as it completes a strong correction, leveling around the $5 mark.To begin, I want to acknowledge the cause of Litecoin’s devaluation, followed by major issues that still remain despite its significant rebound over the past week.Litecoin saw a lot of hype back in December from its coupled relationship with Bitcoin.There were rumors far and wide that helped fuel this speculative growth.The belief that (then) major U.S.exchanges like Mt.Gox or would jump on the Litecoin bandwagon and exchange the cryptocurrency.It was then further speculated that Litecoin would, through these exchanges, get the attention it deserved by both the media and potential adopters, bringing the currency closer to the theoretical 4-to-1 ratio of Litecoins to Bitcoins, following the growth of Bitcoin’s popularity in November 2013.

However, these anticipations have all but evaporated over the last six months.Mt.Gox is but a bitter memory for most in the cryptocurrency space and ultimately the anticipation of growth equal to Bitcoin didn’t take place.Litecoin has indeed grown, and at last Coblee’s familial relationship with BTC-China helped bring the currency to the exchange, but it did not grow as far and wide as everyone thought it would.Another difficulty for Litecoin is coming from its merger into a post-GPU environment.Over the past few months, the introduction of Scrypt ASICs has slowly, but surely driven the difficulty for Litecoin beyond what GPUs can efficiently mine.This is, like with Bitcoin, bringing Litecon’s ownership opportunity away from general PC owners and towards companies or individuals who invest into ASICs.This presents a dilemma for Litecoin, partially because so few exchanges exist in regions such as the U.S.with wide visibility and ease-of-use for people to exchange fiat currencies into Litecoin.

Adoption – from both new users and merchants – is key for Litecoin to remain a viable currency as Bitcoin accelerates forward and Scrypt currencys grow irrelevant to many.ethereum short interestThe lack of an easy route to adoption without the use of international exchanges or already owning other cryptocurrencies is what will make Litecoin’s journey into a post-GPU era more difficult than it has to be.ethereum miner power supplyAnother challenge related to Litecoin is its relationship and reliance on BTC-E, the Bulgarian exchange known primarily for its anonymity for those who exchange currency on it.bitcoin china wiredWhile currencies like Bitcoin can depend on services like Coinbase for direct, painless, and widely marketed fiat-to-BTC exchangin, Litecoin still depends too heavily on BTC-E for its U.S.ethereum decline

At first, getting into Litecoin is relatively easier than Bitcoin at first.As a younger currency it had both a lower difficulty plus an inherent easiness to start mining with the right computer hardware.litecoin or vertcoinNow that we’re entering this post-GPU era, exchanges like BTC-E are one of the limited ways to acquire Litecoin directly fiat currency.litecoin affiliateEven then, the fees, complicated deposit methods and long waiting periods are significant deterrents and create more obstacles than Litecoin needs.There are also no exchanges running out and promoting Litecoin as the flagship currency.While Coinbase isn’t saying it’s Bitcoin-exclusive, it has yet to demonstrate a plan to adopt Litecoin or what goals would be needed of the currency to consider adoption.On the bright side, there are some growing merchant solutions for accepting Litecoin, such as BitStamp, that are relatively pain-free.

Still, BTC-E is too often the face of the fiat-to-LTC world, and this needs to change.Despite there being the potential for a rebound in the coming weeks, nobody has quite yet figured out what value Litecoin will have in a market dominated by ASIC-powered coins, rather than its origins of Scrypt as a GPU-friendly alternative.The entire selling point of the altcoins  for some time was that they would remain longer in the hands of the masses by being GPU-resistant and having an extra few years without ASICs.That era has, more or less, passed.Now, Altcoins are more or less identical in usability as Bitcoins, and are sourced and used by a smaller and smaller group of people.Without any advantage, Litecoin will continue to see less interest by the exchanges it needs to remain accessible to merchants and adopters.It’s future however now depends on its ability to evolve like Coinbase to be more customer and merchant-friendly at the exchange level and grow the value as a currency.Still, Litecoin has a lot of growing to do and many more unknowns than knowns about its future on the market.

If at least a few of these concerns are addressed in the coming months though, then Liteoin could recover a fair amount of its once-speculated value as true, stable value on the market.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.Needless to say, this hasn’t happened.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): 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.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: That’s all I’ve made so far.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?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.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.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.