Sustainability Disclosure - LTC

Quantitative information

S.1 Name
Digital Currency Services B.V.

S.2 Relevant legal entity identifier
724500QZRWKCU8D2L569

S.3 Name of the crypto-asset
Litecoin [LTC]

S.6 Beginning of the period to which the disclosure relates
2024-06-14

S.7 End of the period to which the disclosure relates
2025-06-14

S.8 Energy consumption
1056243 MWh/a

S.10 Renewable energy consumption
15.11 %

S.11 Energy intensity
0.03866 kWh

S.12 Scope 1 DLT GHG emission - Controlled
0.00000 tCO2e

S.13 Scope 2 DLT GHG emission - Purchased
435168.18404 tCO2e

S.14 GHG intensity
0.01593 kgCO2e

Qualitative information

S.4 Consensus Mechanism

Litecoin utilizes a Proof-of-Work (PoW) consensus mechanism based on the Scrypt hashing algorithm to secure its network and validate transactions. Unlike Bitcoin’s SHA-256, Scrypt is memory-intensive, designed to be more accessible to consumer-grade hardware. It features a 2.5-minute block time and a 84 million LTC supply cap.

S.5 Incentive Mechanisms and Applicable Fees

I) Incentive mechanism

Litecoin's security and distribution rely on miners who compete to validate transactions and add new blocks, earning incentives in two forms:

  • Block Rewards (Inflationary): Miners are awarded a specific amount of newly minted LTC for every block they successfully mine (approximately every 2.5 minutes).
  • Transaction Fees: Miners collect fees paid by users to have their transactions included in the block.

Key Aspects of the Incentive Structure:

  • Scrypt Algorithm: Unlike Bitcoin's SHA-256, Litecoin uses the Scrypt algorithm. This is memory-intensive, initially intended to allow consumer hardware (CPUs/GPUs) participation, though Scrypt-ASICs now dominate.
  • Halving (Scarcity Mechanism): To manage inflation, the block reward halves approximately every four years (or every 840,000 blocks).
  • Initial Reward: 50 LTC.
  • Current Reward (as of August 2023): 6.25 LTC.
  • Next Halving: Projected for July 2027, reducing the reward to 3.125 LTC.
  • Difficulty Adjustment: To ensure a consistent 2.5-minute block time, the network adjusts mining difficulty every 2,016 blocks (approx. 3.5 days).

II) Applicable Fees

Litecoin is designed to have significantly lower transaction fees than Bitcoin, often costing just a few cents.

  • Average Transaction Fees: Typically range from $0.01 to $0.04 for regular transactions.
  • Fee Purpose: These fees serve as an incentive for miners to process transactions, particularly during periods of high demand.
  • Fast Confirmation Fees: Users can choose to pay a slightly higher fee to ensure faster inclusion in a block, though fees generally remain low even during high network traffic.
  • MWEB Fees: The MimbleWimble Extension Block (MWEB) upgrade allows for optional, confidential transactions, which may have different fee structures.

S.9 Energy consumption sources and methodologies

For the calculation of energy consumptions, the so called "top-down" approach is being used, within which an economic calculation of the miners is assumed. Miners are persons or devices that actively participate in the proof-of-work consensus mechanism. The miners are considered to be the central factor for the energy consumption of the network. Hardware is pre-selected based on the consensus mechanism's hash algorithm: Scrypt. A current profitability threshold is determined on the basis of the revenue and cost structure for mining operations. Only Hardware above the profitability threshold is considered for the network. The energy consumption of the network can be determined by taking into account the distribution for the hardware, the efficiency levels for operating the hardware and on-chain information regarding the miners' revenue opportunities. If significant use of merge mining is known, this is taken into account. When calculating the energy consumption, we used - if available - the Functionally Fungible Group Digital Token Identifier (FFG DTI) to determine all implementations of the asset of question in scope and we update the mappings regularly, based on data of the Digital Token Identifier Foundation.

S.15 Key energy sources and methodologies

To determine the proportion of renewable energy usage, the locations of the nodes are to be determined using public information sites, open-source crawlers and crawlers developed in-house. If no information is available on the geographic distribution of the nodes, reference networks are used which are comparable in terms of their incentivization structure and consensus mechanism. This geo-information is merged with public information from the European Environment Agency (EEA) and thus determined. The intensity is calculated as the marginal energy cost wrt. one more transaction.

S.16 Key GHG sources and methodologies

To determine the GHG Emissions, the locations of the nodes are to be determined using public information sites, open-source crawlers and crawlers developed in-house. If no information is available on the geographic distribution of the nodes, reference networks are used which are comparable in terms of their incentivization structure and consensus mechanism. This geo-information is merged with public information from Our World in Data, see citation. The intensity is calculated as the marginal emission wrt. one more transaction.