After months of surging and excellent performance in expectation of its mining rewards halving, Litecoin (LTC) went through the event recently and is now it’s experiencing the consequences.
The halvening happened about three weeks ago, and it saw LTC mining rewards drop from 25 LTC per block to 12.5 LTC per block. Before the halvening, there were quite a few expectations and speculations about how the coin, the community, and the crypto space itself might handle the event. Some speculated that Litecoin (LTC) would rally to $1,000, while others believe that its entire network has no inherent value and that the coin will start sinking.
— CryptoCurrency.News (@CryptoCurrNews) August 27, 2019
Unfortunately, LTC price did sink a bit, dropping from just below $100 to $73, where it sits at the time of writing. However, LTC mining rewards and price are not the only things that had dropped quite significantly. Litecoin’s hash rate also went down by as much as 40%, according to recent statistics.
The crypto community has been discussing the new development all over the internet. On Reddit, Twitter, and forums, people have been noting that this is what happens when the mining rewards get cut in half but are not followed by any price rise. In fact, LTC has not seen a rally of its own in a long time, and only positive performance that it did see came from following Bitcoin’s lead.
For some reason, the market simply did not react to the halvening, at least not in a positive way. This came as a surprise to many, as it is the first halvening between four of them experienced by Bitcoin and Litecoin that did not see the coin’s price rally and double in size as a result.
In other words, mining rewards got cut in half, but the coin’s value did not grow to compensate the miners with the coins of higher value. Mining LTC suddenly became very unprofitable, and the only thing that remained for the miners to do is to leave.
Lesser rewards and no price spike spells lousy news for LTC
This is hardly the first time that this has happened, and the most significant other instance that many have likely already remembered was during the bearish market of 2018 when mining coins became so unprofitable that miners started leaving the sector. After all, crypto mining is complicated and expensive. It requires a lot of expensive gear, as well as resources like electricity, which can quickly build up a massive bill.
If they cannot cover the cost of mining, much less make an actual profit — leaving is the only thing they are left with. And so, in Litecoin’s case, it appears that around 40% of its miners ended up doing so.
But, why didn’t Litecoin’s price rise? There are a few theories about this as well. Many have pointed out that LTC developers, and even the coin’s creator — Charlie Lee — simply sold their stock and left the coin. LTC did not see any real development in the last two years, and the only reasons why it ranks high on the list of largest cryptos might be its age, connection to BTC, and good reputation from before.
Miscommunication in the Litecoin community, and even between the developers and the foundation seems to be running so deep that the Foundation was not aware that there was no development of the coin. They only realized this after Charlie Lee leaked a Telegram chat, and confirmed that it is real.
The aftermath, however, is quite evident to everyone — LTC price is in the downfall. Also, its miners are leaving, and the hash rate already went down by 40%. While the crypto space is well known for its anything-can-happen philosophy, the current situation does not look great for Litecoin.
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