Is Litecoin Mining Profitable for an ‘Average Miner’?

litecoin mining
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Is Litecoin Mining Profitable for an ‘Average Miner’?

The discussion on Litecoin [LTC] mining power has been of paramount importance because of the reduction of rewards to the miners.

Litecoin [LTC] halving occurred on 5th August 2019. Around two weeks after the halving the mining power has reduced by about 30%, increasing the block time for Litecoin.

litecoin blocktimes
Litecoin Block-Time Chart (Source)

For a given network characteristic (‘difficulty’ which calibrates itself according to the network), the Litecoin block times vary w.r.t. to the hashing power. A lower hash power implies a longer time to create blocks.

Charlie Lee, the creator and lead developer of Litecoin [LTC] was, however, not concerned about it. He tweeted about the reducing hash rate saying,

Since Litecoin blocks are 4 times faster than Bitcoin’s, the network can handle a sudden decrease in a hash rate much better.

If 75% of hashrate disappears overnight, Litecoin just acts like Bitcoin for 2 wks (10 mins blks) and then diff retargets and everything is back to normal.

Hence, the network would eventually readjust itself. Although, the increasing average block time is a negative sign for the network as a whole.

Nevertheless, the Litecoin hash rate at the time of halving had reached an All-Time High. The speculation in price was highly favourable to the miners at the time.

litecoin mining hashrate
Litecoin Mining Hashrate (Source)

The reduction in reward and the decrease in price has adversely affected the profitability of miners. The hash rate has decreased 40% from its All-Time high above 500 Terra Hashes.

The price of Litecoin [LTC] has decreased by about 30% from the time of halving. Moreover,

ltcusd
LTC/USD 1-Day Chart on Bitstamp (TradingView)

Mining Profitability

According to a previous estimate by Charlie Lee, mining Litecoin [LTC] would have been profitable even after halving. However, according to our estimates, it seems that the decision taken by miners to leave the network is justifiable.

This is the profitability calculation from his estimates in June. At the time, Litecoin was trading at around $126, with mining rewards effectively double from now.

 

ltc halving
LTC Mining Profitability in June and future estimates by Charlie Lee

Nevertheless, the difficulty has decreased by 22% as well. Hence, the mining rewards for existing miners would increase accordingly as well.

Hence, according to the current difficulty level, the mining revenue before halving would have been $12.61. However, since the price has decreased by 43%, this corresponds to revenue of $7.11 per today’s price ($72).

Moreover, since the rewards have been halved the revenue would be $3.55. At the electricity cost of $2.65, it is reaching the break-even cost of running operations for an ‘average miner.’

Furthermore, since mining is primarily a large scale business with a probabilistic rise in the future, the tipping point for miners motivated to operate their systems would be the break-even cost.

Last but the least, the first half of the year has been highly profitable for Litecoin [LTC] miners. Moreover, the sentiments around Litecoin [LTC] are also positive with the privacy developments with the cryptocurrency.

Miners could expect a slow-down in the near future. However, price movements and network strength would continue to affect profitability.

Do you think Litecoin [LTC] mining is a sustainable long term business? Please share your views with us. 

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Is Litecoin Mining Profitable for an 'Average Miner'?
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Is Litecoin Mining Profitable for an 'Average Miner'?
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The discussion on Litecoin [LTC] mining power has been of paramount importance because of the reduction of rewards to the miners. 
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Author: Nivesh Rustgi

Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com

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Nivesh Rustgi 689 Articles

Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com

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