Data shows that the Litecoin mining hashrate has reached a new all-time high, can this signal be positive for the price of the crypto?
Litecoin Mining Hashrate Sets New All-Time High at 683.52 TH/s
Litecoin, just like Bitcoin, is a cryptocurrency that operates on a proof-of-work (PoW)-based consensus mechanism, which means network validators called minors process network transactions. These miners must compete with each other using computing power to have a chance of hashing the next block on the blockchain.
The “mining hash rateis an indicator that measures the total amount of this computing power that miners have connected to the Litecoin network for mining purposes.
When the value of this metric increases, it means that miners are currently bringing more machines online to the network. This might suggest that miners find the blockchain attractive to mine currently.
On the other hand, a drop involves some miners disconnecting their rigs from the blockchain, possibly because they don’t find it profitable to mine crypto at the moment.
Now, here is a graph that shows the trend of Litecoin mining hashrate over the past three months:
Looks like the value of the metric has shot up in recent days | Source: CoinWarz
As shown in the chart above, the Litecoin mining hashrate recently experienced a rapid increase and hit a new all-time high. This means miners have more power connected to the grid than ever before.
More miners joining the network, or existing ones expanding their facilities, can be a long-term bullish signal for the price, as it means miners believe in the future prospects of the crypto.
However, such a surge may also simply be due to some miners migrating to LTC while prices are high, to take advantage of the higher profitability, as the asset has risen by around 27% in the past month.
In response to the latest hashrate surge, Litecoin mining difficulty also set a new all-time high, as shown in the chart below.
The value of the metric seems to have sharply risen | Source: CoinWarz
Difficulty is a characteristic of the network that controls how hard miners are currently finding hash blocks. Similar to Bitcoin, the Litecoin network wants to keep the rate at which miners hash new blocks constant. But when the hashrate increases, miners get faster with the extra computing power available and earn more rewards than expected.
The network must then counter this change by increasing the difficulty just enough so that the miners are slowed down to the standard rate. This is why the Litecoin difficulty has reached an ATH with the hashrate now.
The higher difficulty now means smaller reward shares for everyone involved. So it will be interesting to see if some miners are dropping out of the network now, or if the increase in hashrate really came from validators setting up long-term operations.
As of this writing, Litecoin is trading around $82.8, down 1% in the past week.
LTC observes decline | Source: LTCUSD on TradingView
Featured image of Kanchanara from Unsplash.com, charts from TradingView.com, CoinWarz.com