Hashrate on the Litecoin network has dropped nearly 70% from around 523 TH/S to 159 TH/s since the halving event, which cut its block rewards in half.
As CryptoGlobe reported, Litecoin’s halvening saw block rewards drop from 25 LTC to 12.5 LTC per block. Halvings are planned events, which on the Litecoin network occur every 840,000 blocks mined. The reduced LTC payout per block seemingly saw miners stop focusing on Litecoin, and turn to potentially more profitable cryptocurrencies compatible with the ASIC mining machines used on the LTC network.
Halving events occur as some cryptocurrencies – like Bitcoin and Litecoin – are programmed to slowly reduce the amount of coins entering the market. These halvings ensure scarcity, as both LTC and BTC have a maximum supply of mineable coins. Some analysts believe the price of cryptocurrencies rises after a halving event as investors are reminded of their scarcity and demand goes up, while supply halves.
Bitcoin, which is set to undergo its halving event next year, notably saw its price surge in its previous halvings, which occurred in 2012 and 2016, dropping block rewards to 25 BTC per block and 12.5 BTC per block respectively.
In Litecoin’s case, the recent halving didn’t help its price. CryptoCompare data shows the cryptocurrency is trading at $46.18, after dropping from a $146 high in June of this year. The high came as LTC outperformed the market ahead of the halving.
The price drop combined with the hashrate drop has seen some analysts argue LTC entered a mining death spiral, with most cryptocurrency miners not being able to profitably mine it. In July, Litecoin creator Charlie Lee predicted the correction, noting block could slow down for “some time” if a large percentage of the miners shut off their machines.
The price and hashrate drop also led to security concerns. ASIC owners likely pointed their machines at other blockchains and could eventually be used to attack LTC.
While 51% attacks are nothing new to the cryptocurrency space, they usually target smaller cryptocurrencies with smaller hashrates and communities. Litecoin is among the top cryptocurrencies and even though its hashrate is down by 70% since the halving, it’s still at its December 2019 levels, when LTC was trading at nearly $400.
Featured image via Pixabay.
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