Litecoin Mining Profitability Hits Record Lows Amid Price Fluctuations
Autor: Mining Provider Editorial Staff
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Kategorie: News
Zusammenfassung: Litecoin's mining profitability has hit an all-time low due to a significant drop in hash rate post-halving, despite the price surging nearly 550% earlier this year. Concerns about its future are heightened by declining developer activity and market indicators suggesting bearish trends.
Litecoin Price Analysis – Mining Profitability Near All-Time Lows
The recent analysis from Brave New Coin highlights that Litecoin's on-chain activity has remained stable over the past few months, while the hash rate has significantly decreased by more than 50% following the halving event. This decline has resulted in mining profitability reaching an all-time low, raising concerns among miners and investors alike.
As of now, the spot price of Litecoin (LTC) has experienced a dramatic rise of nearly 550% from December to June, but it has since fallen by 55% from its June peak, currently sitting 83% below its all-time high from December 2017. The market capitalization of Litecoin stands at approximately $4.08 billion, with a trading volume of $1.25 million in the last 24 hours.
"The Litecoin Foundation was established in 2017. Development began even before the foundation was created, and it will continue even if the foundation runs out of money. After all, it is a decentralized cryptocurrency." - Charlie Lee
Litecoin, a fork of Bitcoin created by Charlie Lee in 2011, has a target block time of 2.5 minutes compared to Bitcoin's 10 minutes. The total supply of LTC is four times larger than that of Bitcoin, and it employs a different proof-of-work consensus algorithm known as Scrypt. Despite Lee selling all his personal LTC holdings in December 2017, he remains actively involved in the project's development through the Litecoin Foundation, which aims to increase adoption.
In recent developments, the Litecoin Foundation has formed partnerships with various organizations, including Glory Kickboxing and the Miami Dolphins football team. Additionally, LTC has been integrated as a payment method by Flexa, which connects it to over 39,000 merchants. The foundation's financial report from mid-October revealed a net worth of $570,000, addressing concerns about its financial stability.
On the development front, Litecoin has 37 repositories on GitHub, but the activity has been notably low, with only 17 commits in the past year and none in the last 90 days. This decline in developer activity raises questions about the project's future, although recent releases of Litecoin Improvement Protocols (LIP) 2 and 3 aim to introduce new features such as Extension Blocks and MimbleWimble.
Extension Blocks allow for protocol variables that differ from the main chain, potentially enhancing programmability and privacy without requiring a hard fork. However, they also come with criticisms regarding reduced backward compatibility and security. MimbleWimble, on the other hand, utilizes zero-knowledge proofs to obscure transaction details while allowing for verification, which could enhance the fungibility of LTC coins.
Currently, the network utilizes SegWit-enabled addresses, which have increased to over 70%, facilitating transactions in the Lightning Network (LN). The LTC LN currently has 816 channels and a network capacity of over 188 LTC, equivalent to approximately $12,000. Daily LTC transactions have fluctuated between 20,000 and 40,000 since March 2018, with a significant spike in late 2017 and early 2018 due to high transaction costs in the Bitcoin network.
The average transaction value in the LTC network has recently risen above $6,500, following the price surge from December to June. However, it remains significantly lower than the peak of around $30,000 in November 2017. The average transaction fee currently stands at $0.028, which is only 2.5% of the current Bitcoin transaction fee.
In terms of network health, the NVT ratio, which compares network value to daily on-chain transactions, is currently at 98, indicating a potential overvaluation of Litecoin based on its economic activity. The number of monthly active addresses has decreased since January 2018 but remains above historical levels, although LTC has significantly fewer active addresses compared to Bitcoin and Ethereum.
As for the mining landscape, the profitability of LTC mining is at a historic low, influenced by factors such as price, block times, difficulty, block rewards, and transaction fees. The annual inflation rate is currently at 4.21% and is expected to drop to 1.80% after the next halving in August 2023. The network has 203 active public nodes, primarily located in the USA and Germany, with only 26% running the latest version of Litecoin Core.
In conclusion, while Litecoin has made strides in partnerships and technological advancements, the current state of mining profitability and developer activity raises concerns about its future trajectory. The market indicators suggest a bearish to neutral outlook, with potential resistance around $80 and support between $50 and $62 based on historical volume profiles.
Source: Brave New Coin
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