Litecoin's mining power cuts down to its lowest in the year
|- Rewards for mining new blocks of data were slashed by 50% on August 5 under the network's original programming design.
- Under the Litecoin protocol, when the hash rate falls, mining new units of the crypto automatically becomes easier.
Prices for Litecoin have fallen to about $45, from a peak of around $140 in June. On August 5, rewards for mining new blocks of data were slashed by 50% under the network’s original programming design. According to f2pool, the combination of these factors has reduced profits of mining Litecoin using Innosilicon A6+ computers to $1.68 per 24 hours from $2.65 in mid-June, assuming a standard electricity cost. As per the manufacturer's website, that's a slim margin for a machine that costs $3,000.
According to f2pool's mining profitability calculator, operators that are using less-powerful Antminer L3 computers and other older models are presently making a negligible profit of about six to seven cents a day. As a result, several smaller Litecoin miners are now dropping off the network. Since July, a decline of over 70% has been witnessed in the network’s hash rate, which measures the combined computing processing power of all operators. Litecoin’s hash rate touched 149.6 terahashes per second, the lowest in a year, on November 30.
Cryptocurrency analysis firm Digital Asset Research said:
If miners are underwater, or running non-economical gear, most likely they will decommission that equipment. Hash rate follows price, not the other way around.
Steve Tsou, CEO of RRMine, a bitcoin-focused asset-management and trading platform, said that many operators on the Litecoin network have been using the L3 machines, and the recent market move has “tested the shutdown price." Under the Litecoin protocol, when the hash rate falls, mining new units of the cryptocurrency automatically becomes easier. It's a mechanism developed to lure operators back in after a price drop or a cut in the rewards.
According to Ryan Alfred, president of Digital Assets Data, despite a reduction in the size of the reward for mining a new block, it should now be easier for operators who are still in the market to mine new blocks, helping to mitigate the damage to profits.
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