Every day, around 7,200 LTC tokens are mined by dedicated miners who receive a generous share for their effort. However, the reward might not be that generous soon, as LTC halving is coming, and on August 2, 2023, the reward per block will reduce to 6.25 LTC.
Yet, it’s important to note that this halving should not be viewed as a negative event. Rather, it serves as a critical component of Litecoin’s and many PoW-based cryptos’ ecosystems, ensuring the digital assets retain their scarcity and deflationary characteristics.
This blog aims to explain what halving entails, its historical context, and predictions for upcoming Litecoin halving events.
First, What Is Litecoin?
Litecoin is a cryptocurrency that emerged in 2011 from a fork in the Bitcoin blockchain. Its main goal was to address concerns about Bitcoin’s central control and to level the playing field for mining by large-scale firms. Although it did not fully succeed in preventing enterprise miners from dominating Litecoin mining, it has evolved into a minable coin and a decentralised payment system.
Initially, Litecoin aimed to deter enterprise-sized miners using a unique encryption method. However, these miners quickly adapted their specialised Litecoin mining calculator and expanded their capabilities.
Litecoin, similar to Bitcoin mining, can be mined using ASIC miners. Each block in the blockchain contains transaction information and is validated by mining software. This verified block is then accessible to any system participant called a miner. Once a miner verifies the block, the subsequent block in the chain is generated, and the miner is rewarded with Litecoin.
Definition Of Halving
Halving in the crypto world refers to when the block reward for miners is cut in half. Miners receive 50% fewer coins for each block they mine. This is done to control inflation and create scarcity, which can increase the crypto asset’s value. As the block reward decreases, mining new coins becomes harder and more expensive, reducing market supply. Halving is vital in cryptocurrencies like Bitcoin, Litecoin, Bitcoin Cash, and Bitcoin SV.
Halving is monitored closely by participants in the crypto market because it can significantly impact the price and market cap of the crypto asset over time.
Importance of Halving
The Litecoin halving plays a crucial role in determining the price and market capitalisation of Litecoin. It aims to manage inflation and promote scarcity of the token supply, ultimately increasing its value over time.
During the halving event, miners will receive only 6.25 LTC instead of 12.5 LTC for their efforts. This reduction in the supply rate creates scarcity, leading to heightened investor demand and a subsequent increase in the price of the cryptocurrency.
Overview Of Litecoin Halving
The halving event in Litecoin occurs approximately every four years, or more precisely, every 840,000 blocks. During each halving event, the block reward given to miners is reduced by half. This process is programmed into the Litecoin protocol and is intended to control the inflation rate of the cryptocurrency and maintain its scarcity over time, similar to Bitcoin.
Let’s take a look at the history of Litecoin halving events:
First Halving – August 25, 2015:
Block Reward before: 50 LTC
Block Reward after: 25 LTC
The inaugural halving event cut the block reward from 50 LTC to 25 LTC. This resulted in a significant reduction in the rate of new Litecoin issuance, increasing scarcity and potentially impacting the price.
Second Halving – August 5, 2019:
Block Reward before: 25 LTC
Block Reward after: 12.5 LTC
The second halving further reduced the block reward to 12.5 LTC. By this time, Litecoin had gained more recognition and was well-established in the crypto community. Investors and miners closely monitored the event’s potential impact on price and network stability.
Litecoin has a fascinating history marked by two halving events. Looking ahead, the next halving event in Litecoin is expected to occur around August 2, 2023, at a block height of 2,520,000, resulting in a reward of 6.25 LTC.
How is Litecoin Halving Going to Affect its Price?
In the past two weeks, the value of LTC against the USD has dropped by 17%. However, it has made an impressive gain of around 18% over the past month. Excitingly, the Litecoin halving date is close.
Currently, the global hashrate of the Litecoin network is at 807.00 TH/s, with a mining difficulty of 27.54 M at block height 2,511,130. The recent upward trend in LTC price has generated significant interest and attracted a substantial amount of Scrypt hashrate to the network over the past 30 days.
On July 4, 2023, Litecoin reached an all-time high hashrate of 1.03 PH/s at block height 2,503,485, showcasing unprecedented network activity. Litecoin’s total hashrate is steady at 804 terahash per second.
Litecoin’s ASIC mining devices have emerged as some of the most profitable machinery in the mining industry. For example, a mining rig operating at 8.8 Gigahash per second can generate an estimated daily profit of $7.83, while a machine running at 9.5 GH/s could earn a slightly higher daily profit of $9.24.
The impact of the Litecoin halving event on its price is uncertain. However, gaining insight by examining how prices reacted during the previous two halving events might be the solution. This analysis provides a general understanding of what could happen this time. Historical data shows that prices are typically unaffected by the event, particularly during the first occurrence.
In the second instance, prices experienced a significant decline both before and after the halving event. Consequently, it is challenging to predict future outcomes with certainty.
In conclusion, the halving event of Litecoin is worth paying attention to for investors. While it won’t have the same impact on the market as Bitcoin’s upcoming halving, its role is still significant. Nonetheless, this event is effective for those holding Litecoin and should be closely monitored.