- The total Hash Rate of Litecoin [LTC] Mining reached its’ yearly lows, despite reaching ATH in July this year (a 75% drop from its ATH).
- The profitability of LTC mining has turned negative at electricity cost above $0.075 Kwh.
Litecoin [LTC] miners seem to be getting cold feet due to falling prices as the hash rate falls below the bearish levels of 2018. However, a lot has changed with the protocol since then. The most important of them has been a reduction in the mining rewards by half.
Litecoin [LTC] has been trading around the $40 range for quite sometime now. During 2018 bears, the max. volume profile region was around $33. Hence, an overall 40% reduction in the mining rewards.
The total hash-rate has dropped about 75% from its All-Time High in July. The drop in the price from the yearly high is correlated with the hash-rate. Moreover, there is also an equivalent drop in difficulty hence the competition in the space seems to be diminishing.
LTC Mining Turning into a Loss Making Business
In an estimate of Litecoin mining profitability around the halving, creator, Charlie Lee had expressed a lot optimism around the sustainability of profits. However, the price of LTC has dipped from a high of above $140 to $40 since then.
The most popular mining hardware – the Innosilicon A6++ and Antminer L5 are currently generating a loss below electricity cost of $0.075 Kwh.
In his previous estimates Lee had accounted for an electricity cost of $0.05 Kwh. Nevertheless, according to popular data, the average cost of electricity in China and US is somewhere around $0.08-$0.12.
The hash rate has been continually dipping post halving. Charlie Lee is optimistic around the working of the network with only some temporary changes. Nevertheless, the overall decentralization in LTC gets affected as smaller miners shut-off their systems.
Moreover, even if miners are able to tap cheap sources of electricity, they are limited in number. Furthermore, there is also cost of cooling and maintenance which adds to the running cost. Hence, it looks like the weaker hands will getting completely shaken out of the ecosystem.
How do you think the network will cope if the price dips further or this is the bottom? Please share your views with us.
Disclaimer The views, opinions, positions or strategies expressed by the authors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of CoinGape. Do your market research before investing in cryptocurrencies. The author or publication does not hold any responsibility for your personal financial loss.