Litecoin (LTC), the fourth-largest cryptocurrency at present with regards to market capitalization, has halved its crypto reward for miners.
According to Litecoin explorer from BTC.com, the Litecoin blockchain hit the maximum block height of 1,680,000 on Monday at 10:16 UTC.
This event marks a significant threshold for Litecoin miners, as the network is programmed to reduce the mining rewards after reaching every 840,0000 blocks. Roughly, it takes four years for this threshold to be reached and the reward is reduced by half.
After this “halving,” the Litecoin mining reward against each block has been cut down to 12.5 LTC from the previous figure of 25 LTC.
As the Litecoin network requires 2.5 minutes for producing one block, it produces somewhere around 576 block every 24 hours and a 7200 LTC supply enters into the market – which is half of the previous figure of 14400 LTC every day.
As per press time, almost 63 million from a total of 84 million Litecoin issued are in circulation effectively. With that, there are around 21 m LTC block mining rewards – with estimated worth of $2 billion at current price – available and that’s what miners will be competing for moving forward.
There has been a significant increase in the price of Litecoin since the start of this year. It was around $30 during January and saw a maximum of $120 by June. Since then, however, it has decreased to somewhere near $100.
Anticipating the increase in price prior to the halving event, the hash rate computing, as well as mining difficulty on the network, have both seen a spike of 200% since December 2018.
The halving event is probably going to affect the interest of miners because various mining devices used for Litecoin mining will now find it hard to generate enough Litecoin for offsetting the electricity costs.
According to f2pool miner profit index, the top 3 most profitable Litecoin miners from InnoSilicon and FusionSilicon X6 recorded a profit margin of around 55% to 66% before August. 5.
However, other older miners like Bitmain’s AntMiner L3 already had below 50% profitability based on $0.04/kWh electricity cost and the price of LTC before this halving.
If everything else is kept constant, the reduction of mining revenue to half might result in a net loss to the miners with older models. Sixing Mao, the f2pool co-founder, said the same in his Weibo post:
“With an electricity cost of 0.26 yuan [$0.037] per kWh, miners like L3+ can pretty much just shut down tonight.”