Price Plunges, Mining Profits Take Hit

Litecoin skilled its first halving at block 840,000 on August 25, 2015, which lower the block reward from 50 LTC to 25 LTC. 

Then, on August 5, 2019, the crypto underwent its second halving at block 1,680,000, additional decreasing the block reward to 12.5 LTC.

As Litecoin’s third halving occurred as anticipated on August 2, 2023, the block reward dropped from 12.5 LTC to six.25 LTC. On the identical time, the each day mining output was additionally halved, going from 7,200 LTC to three,600 LTC. Though the halving slowed down the inflow of latest LTC into the market, Litecoin’s annual inflation fee has fallen from 3.64% to 1.75%.

Sadly, the halving did not drive a worth surge. In keeping with Coingecko, the LTC worth plummeted by over 10% over the previous week. This downward development, compounded by the halved block reward, has dealt a significant blow to LTC miners. Information from OKlink means that on the worth of $82.07, LTC miners earn a mere $0.00038 per hashrate unit, the bottom in almost a month.

ViaBTC’s Mining Revenue Rankings underscore a sobering actuality: factoring out the DOGE income, not a single LTC mining machine within the current market panorama can register optimistic returns on the electrical energy worth of $0.05 per kWh. Once more, we should credit score the merged mining mechanism proposed by Litecoin founder Charlie Lee. By persistent lobbying, Lee confirmed the DOGE neighborhood the perks of merged mining with LTC and satisfied DOGE to move the proposal and undertake merged mining by way of a tough fork. In hindsight, merged mining was a smart choice, which yielded win-win outcomes. For miners, with out the DOGE income, LTC mining would generate virtually no revenue; for DOGE, the hashrate from LTC miners has been essential to its survival, because it protected the coin from varied assaults.

The present LTC worth just isn’t interesting for miners, even when the DOGE income is taken into account. Solely a handful of mainstream ASIC miners, together with ANTMINER L7, Hammer D10+, Inno A6+, and Goldshell LT5, handle to generate each day revenues of over $1, and plenty of different fashions are approaching or have already reached the shutdown worth.

The LTC mining income dived. As of August 6, the each day LTC miner income stood at $290,000, a 60.8% decline from the $740,000 recorded on August 1, the day earlier than the third halving.

Whereas halvings are usually perceived as a bullish sign, for LTC miners, the third halving was unhealthy information, because the market didn’t welcome it. The sharp decline of the LTC worth may be attributed, partially, to a collection of sell-offs by buyers and whales. In keeping with on-chain statistics, earlier than and after the halving, roughly 70,000 litecoins, with a complete value of round $5.81 million, have been bought by whales holding between 1,000 and 100,000 LTC. The huge sell-offs aggravated the market downturn, one more blow to the LTC worth.

Primarily based on the present market dynamics, LTC’s worth trajectory has did not match the rising mining prices. This predicament exposes miners to potential losses. LTC miners should make a troublesome selection in at the moment’s market: preserve mining and anticipate market revival or flip to different crypto with extra worthwhile prospects.