The energy used to mine Litecoin is going into dedicated computer machines, powering processors in a global competition to solve cryptographic puzzles at the cost of computing power. While costs and energy are incurred for Litecoin miners as well, they are not the result of digging into the ground in the search of precious metals. The term mining is an analogy that is borrowed from the process of extracting precious metals from the ground as they also need to be mined at the cost of labor and energy. These vital network participants are the ones doing the mining and are in return rewarded with the cryptocurrency. The receivers of the newly issued Litecoin units are the so-called miners. In place of a pre-mine, where the entire stack of Litecoin units would be created in one fell swoop before the network’s launch, Litecoin is issued and released by the protocol in a pre-programed way. The distribution of coins has therefore been designed in a decentralized manner as well. As a result, there is no central entity to distribute the cryptocurrency out into the world.
Just like Bitcoin, Litecoin is a decentralized cryptocurrency, whose digital ledger is maintained by a decentralized network of nodes instead of one single party. Since Litecoin is a Bitcoin fork with a few tweaks and changes to its source code, Litecoin mining works similar to mining Bitcoin.
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