Litecoin Miners Have Their Rewards Halved but Mining Rates Remain Healthy
The Litecoin (LTC) blockchain reached the important height of 1,680,000 early this week. This landmark figure meant that rewards for Litecoin miners were immediately halved.
What does this mean for the currency from now on? There is a debate over whether it is now more or less attractive to miners and investors than before.
Image courtesy of Shutterstock
What Is the Background?
The Litecoin network is set up with a threshold that automatically sees the reward for miners cut in half every time that a fresh set of 840,000 blocks is mined. This is something that is expected to happen every 4 years or so.
Before the latest limit was reached, the rewards for each new block was set at 25 LTC. Now, it has dropped down to 12.5 LTC. Using the existing production rate, this means each 24 hour period should now see about 7,200 LTC enter the market. Of course, this is half the previous daily supply of 14.400 new coins.
It is worth bearing in mind that right now around 63 million of the total limit of 84 million LTC are in supply. So, using today’s prices there are around $2 billion of coins still there for Litecoin miners to obtain.
What Happens to Litecoin Miners Now?
Litecoin has had a strong performance in 2019 so far, racing up from a value of $30 to just under $100 at the time of writing. This means that it is currently the 4th biggest digital currency by market cap, behind only Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP).
The big question now is whether the halving of mining rewards will have an effect on the amount mined and the overall value of the coin. Some Litecoin mining pools immediately claimed that the new rewards were too low to make their activity profitable.
However, Litecoin founder Charlie Lee quickly tweeted that, “Litecoin network is healthy!” He pointed out that 12 new blocks had appeared on the blockchain in the 17 minutes after the rate was halved.
Lee said that, “Seems like miners have not shut off their hashrate at all”. He confirmed that the new mining rate after the landmark had been reached was of a block every 1.4 minutes. This compares well to the expected figure of 2.5 minutes. Indeed, it seems to suggest an increase in activity by Litecoin miners rather than a decrease.
It may take some time for the full effects of the new LTC mining rewards rate to be seen. However, for the moment it doesn’t seem to have made any sort of negative impact on the currency.