Since the Litecoin halving event this summer, miners have been rapidly ditching the fifth-highest cryptocurrency regarding market cap. According to network data, the Litecoin hashrate has dropped 37.26 percent since a high set earlier this summer.
Data provided by BTC.com shows that large numbers of Litecoin miners have stopped securing the network following the halving event that took place at the beginning of August. From a high of 472.66 TH/s in mid-July, Litecoin’s hashrate is, at the time of writing, around 296.54 TH/s
A Litecoin Reward Drop
As scheduled, the number of LTC awarded to miners for adding a block to the Litecoin blockchain dropped from 25 to 12.5 on August 6. With Litecoin prices struggling, mining operations have become unprofitable and subsequently left the network.
Using the mining profitability calculator provided by CryptoCompare and global average electricity prices from March 2019 at GlobalPetrolPrices.com, we calculated that Litecoin mining is only currently profitable using the popular 800W Antminer L3+ in Burma, Iran, Iraq, Qatar, and Egypt. At prices above 4c per KWh, so in the rest of the world, Litecoin can only be mined at a financial loss.
Data available to Weiss Crypto Ratings suggests that the drop in hashrate securing Litecoin is even worse. The analysis firm states that the network is more vulnerable to attack with such a decreased hash rate.
Popular Bitcoin on-chain metrics analyst Willy Woo has previously argued that Bitcoin price traditionally responds positively to such miner capitulation events. Eventually, only profitable operations are left, and miner selling pressure dries up. He has developed an indicator to measure mining activity. He calls it the Bitcoin Difficulty Ribbon.
Could the Litecoin Price Pump?
Woo’s miner capitulation hypothesis may appear to suggest that the Litecoin price could pump as a result of these miners leaving the network. However, any pump requires an increase in buying pressure. This is something Litecoin has been struggling with of late.
Interest around altcoins, in general, has been waning as Bitcoin dominance is rising back towards its pre-2017 bull run levels. For some analysts, the price increase in Bitcoin over the past nine months has been the result of an exodus out of altcoins, such as Litecoin, back into Bitcoin. Although this theory may explain the Bitcoin price rise, without new money coming into the market, the sustainability of any moves caused by such a departure is highly questionable.
Do you think Litecoin will drift further into obscurity now that the excitement of the halving is over? Or will buyers step up to bolster its price once again?
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