Manchester, UK-based Alpha Technology has announced it will start developing the first purpose-built ASIC mining hardware for litecoin, signing a partnership deal with Indian designer and manufacturer Dexcel Designs.
The company announced it would begin taking pre-orders for affordable and efficient litecoin ASICs in December, for shipping in early/mid 2014.
It would represent a significant increase in computing power backing the litecoin network. At present, most mining of the world’s second most popular cryptocurrency still takes place on regular graphics cards/GPUs (as did bitcoin previously).
Alpha Technology has been working with Bangalore-based Dexcel Designs for about six months, beginning with a FPGA (field-programmable gate array) conceptualization of litecoin’s primary scrypt hashing algorithm before designing dedicated ASIC hardware.
Mohammed Akram, CEO of Alpha Technology, spoke about the development process and why his company has decided to throw its weight behind litecoin.
“We decided to go down the litecoin/scrypt path for a few reasons. One is that we believe bitcoin has enough ASIC manufacturers, to us it's all about innovation and the next step," he said.
“Bitcoin has enough ASIC manufacturers to secure the network for the years ahead, someone needs to replace GPUs with purpose-built hardware for the much weaker litecoin hashrate. Decentralization is key to these cryptocurrencies, that's why it would be beneficial to litecoin to have more ASIC manufacturers down the line.”
Akram is devoted to the concept of cryptocurrencies in general and, like others, compares their current state of development and application to the early internet.
But “you can’t put all your eggs in one basket,” he claimed, predicting litecoin would grow in acceptance as more services were created around it, and its own network became more secure.
He is also a former miner himself, and noticed litecoin was a few points more profitable than bitcoin using the older GPUs.
“What most miners care about is ROI and profit. Since we expect to be the earliest to market and distribute, miners will probably feel more confident purchasing our miner simply because their isn't a huge arms race yet in litecoin ASIC, so they can be confident that until their miners arrive their won't be a influx of hash rate from specialized hardware, so ROI is more easily predictable.”
Akram believes litecoin will become a more popular alternative to bitcoin as bitcoin becomes more valuable, referring to the (controversial) view that litecoin can be the silver to bitcoin’s gold.
To make its big mainstream break, he said, litecoin first needed a secure and effective payment processor like BitPay. Alpha Technology itself accepts payment via PayPal, bank transfer or bitcoin.
“We want to accept litecoin, but due to the high amount of sales we expect, we cannot risk the fluctutations in litecoin. Until a payment processor like BitPay is built for litecoin. I’m not talking about a general payment processor, I’m talking where we can get an equal value of fiat sent to our bank the following day. There needs to be some sort of connection or deal with a large exchange to accomplish this.”
Alpha Technology is a “family-involved business” including accountants and software experts as well as Akram, an electronic engineer.
While it is initially dedicated to ASIC-based cryptocurrency mining, its longer-term vision would see it merge with the family’s accounting firm, M. Akram & Co., to hopefully become “the main UK specialist in cryptocurrency tax and accounting services.”
Alpha Technology originally wanted its finished product to be an FPGA and developed an in-depth implementation of the scrypt algorithm, but found the cost of manufacturing would be too high. Even with FPGAs’ efficiency benefits, lower-priced GPUs would still be more profitable.
It was previously thought ASIC hardware wouldn’t offer any benefit to litecoin mining, with scrypt’s need for fast access to large amounts of memory with each hash attempt (though litecoin was also originally meant to be GPU-resistant as well).
Alpha Technology conducted analysis into each aspect of the scrypt algorithm and, using FPGAs instead as a prototyping tool, now says it is targeting around 500 kilohashes per ASIC chip (each device will have several chips). The company will release more detailed final figures “in a few weeks”.
If that sounds low to all the bitcoin miners out there, it’s because litecoin (for now) requires far less hash rates to produce a return on investment.
Bringing ASIC mining hardware onto the litecoin scene offers a big advantage over GPU miners, as they did for bitcoin miners comparatively recently.
India’s Dexcel Designs
Dexcel Designs’ CEO Amit Sinha is a fan of cryptocurrencies and believes India can seize the opportunity to develop as a ‘potential hotspot’, as he said in a column for The Hindu just before the partnership was announced.
Lack of government intervention in India so far “has given an opportunity for the cryptocurrency community in India to expand, develop cryptocurrency-related businesses in the space, and educate people on the opportunities for economic growth associated with cryptocurrencies,” he wrote.
Dexcel Designs itself is a high-end embedded product engineering company with fabless OEM/ODM Box build capability.
In its 13-year history it has worked on several state of the art designs in software and systems architecture including ASICs, FPGAs , and DSPs both in India and through other partnerships internationally.
Although litecoin’s value against bitcoin has dropped by over 50% in the past few months, its value and market cap in fiat currencies has risen.
One litecoin is (at the time of writing) worth $8.65, with a total market cap of $200,791,400 (according to coinmarketcap.com). There are currently over 23 million litecoins in existence, compared to bitcoin’s 12+ million.
Litecoin will be limited eventually to 84 million coins (compared to bitcoin’s 21 million total). It is available as a trading option on some major exchanges such as BTC-e, but is not as widely accepted by merchants yet.