I would go for a change and talk about Bitcoin mining instead of alternate coins, like Litecoin. There are certainly some big hype surrounding it. Bitcoin mining is different from alternate coin mining, as there are application-specific integrated circuit (ASIC) chips designed specifically for the sole purpose of mining Bitcoin.
Mining requires a lot of processing power, and processing power requires electricity, which costs money. That is why it is not feasible to mine using GPUs anymore. With the emergence of ASICs, electricity consumption per hashrate has been reduced compared to GPUs, and there are always new, more powerful ASICs introduced for the arms race. When determining whether Bitcoin mining is profitable for you, there are several factors that you would need to consider.
Once you have decided that you would want to mine Bitcoin, there are several ways to do it. Cloud mining is an option if you do not want to invest in hardware. Cloud mining websites like Cex.io will let you start mining right away. The mining facilities are traded like commodities for a price set by the supply and demand.
If you instead chose to have your own hardware for mining, GPU mining is no longer feasible for Bitcoin mining as i have stated earlier, though high-end AMD GPUs are still profitable if you are mining alternate coins like Litecoin. The reason for this is that, when more miners join in to mine, the number of Bitcoins produced will remain the same. There are only a certain amount of Bitcoins ever produced, which is set to one block (25 BTC at the moment) for every ten minutes. So the more miners operating, the more processing power is necessary to find blocks of Bitcoin.
Application-specific integrated circuit (ASIC)
The best way to be profitable in mining Bitcoin is to invest in serious hardware, like the Bitmain Antminer S1 or the overclocked version, which are relatively low priced. The Bitmain Antminer S1 will reach 180,000MHash/sec at 360W for $1,200. Some higher priced option would be theKnCMiner Jupiter which consumes 750W to generate 560,000MHash/sec, and brings you back by $7,500. CoinTerra has also introduced their TerraMiner IV which can reach an astonishing hashing speed of 2,000,000MHash/sec with a power consumption of 1,200W.
The main risk surrounding Bitcoin mining is actually not the fluctuating price of Bitcoin. When the value of Bitcoin increased exponentially over the last year, thousands of new miners appeared and difficulty increased significantly. Cryptocurrency mining is an arms race. The hardware which seems profitable today, may be losing its effectiveness when the difficulty begin to rise. So if you have decided to invest in hardware for Bitcoin mining, only go for those hardware that is readily to be shipped.