The after-effects of the latest block halving on the Litecoin network are in full swing with its hashrate falling by more than 60% since peaking in July.

Litecoin’s second halving took place on Aug 5, when the mining reward per block dropped from 25 LTC to 12.5 LTC. As a result mining profitability has reduced significantly, leading miners to turn off their mining equipment or switch to other networks. Litecoin’s hash rate experienced a massive drop from 523 T/H to 181 T/H in just three months.

Litecoin Hits a Wall

The abrupt hash rate decline has also been exacerbated by the price decline since the halving. The price of LTC has been down-trending since the middle of the summer, currently trading at around $59, down from its 2019 high of $145.

The downward trend of mining interest is anything other than a positive sign for the Litecoin network. A loss of hash rate means participation is lower, which in turn reduces the security of a Proof-of-Work (PoW) network such as Litecoin’s.

The wider consensus is that a halving event is a positive long-term effect for a network and the price of its coin since it decreases its inflation. In the short term, however, miners need to cover their operating costs, which leads to the downfall of the hashrate and price as mining profitability plummets.

Difficulty Adjustment Brings Back Profitability

The beauty of proof-of-work blockchains is that with a falling hashrate, the network’s difficulty for hashing blocks is also decreasing. As such, Litecoin’s difficulty has also fallen by 60%.

The difficulty adjustment process is a mechanism that balances mining profitability and can have a positive effect when hashrate falls dramatically. Over the past week, data from BitInfoCharts is showing a slow and steady increase for Litecoin mining profitability.

Should miner interest pick up, Litecoin might slowly start recovering in both network mining statistics as well as price.

Since Bitcoin and Litecoin have many similarities, it will be interesting to observe whether and how Litecoin recovers post-halving and whether Bitcoin will follow a similar path, albeit at a different price level with its own upcoming halving in 2020.

Litecoin has had its share of criticism, however. BeInCrypto has recently reported on issues related to the lack of funds for the Litecoin Foundation, and its founder Charlie Lee revealing plans to implement the privacy-centered MimbleWimble protocol.

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