Litecoin is expected to be halved tonight, after the halving, the mining machine will become scrap iron?

"After halving, don't say that L3 turns waste iron, and the unsold L5 has to turn waste iron."

The miners seem to be reluctant to see the halving of the Litecoin (LTC).

The news that the Litecoin halved the good news has been digested for half a year, and indeed many retail investors have tasted a lot of sweetness in the secondary market. Recently, as the halving time approached, the currency price began to pull back.

According to the Global Data of Firecoin, on February 8, Litecoin was rapidly increased by nearly 23% in the position of 32 USDT, and has maintained a rising trend until June 22 hit a high of 145.8 USDT and began to fall back. On July 16, LTC fell to a low of 75 USDT in the past month. Now quoted 94.88 USDT.

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According to Blockchair data, LTC is expected to be halved from 6:00-6:30 pm Beijing time today. As of 16:00 on August 5th, LTC's current block height is 1,679,806, and the average block time is 152.92 s. LTC will halve the block height of 1,680,000, leaving approximately 2 hours and 06 minutes.

On August 1st, Litecoin founder Li Qiwei has announced on Twitter: “In 4 days, I will halve the Litecoin reward, which is the first time in 4 years. This should help prevent the possibility of cryptocurrence recession. I will halve it again in 2023."

The current Litecoin mining award is 25 LTC ($2,500), which is halved this year to 12.5 LTC ($1,200) and the annual inflation rate will be reduced from the current 8.94% to 4.26%.

But after halving tonight, the hard work of the miners seems to be coming. The founder of the F2Pool fish pond, Shenyu, said today that with the current Wright currency price, if the mining revenue is halved tonight, the Litecoin L3+ mining machine can basically declare shutdown.

Halve history

Litecoin came to the world on October 7, 2011 with the output of the founding block.

Founder Charlie Lee (Chinese name: Li Qiwei) excavated 3 blocks for testing the network. On October 13, 2011, the Litecoin was officially announced at the Bitcoin Talk.org Forum.

There is no white paper for Litecoin. For a long time, it has been called "the abacco coin of Bitcoin." The Chinese community is also used to calling LTC a "spicy bar."

Because it is the core source code for cloning Bitcoin, Litecoin is similar to Bitcoin in many respects, including the PoW consensus mechanism. The block rewards are initially 50, all of which are reduced by about half every four years. Until all the Litecoin coins are dug out.

Unlike Bitcoin, the Litecoin network is expected to produce 84 million Litecoins, four times the amount of currency issued by Bitcoin. The Litecoin network can process one block every 2.5 minutes (rather than 10 minutes), providing faster transaction confirmation. Litecoin uses the Scrypt encryption algorithm first proposed by Colin Percival in the workload proof algorithm. Compared with the SHA256 algorithm used by Bitcoin, the Scrypt algorithm requires less processing power and only needs high-speed access to memory, which is easier to use. Mining on the computer.

Historically, Bitcoin has experienced two block rewards halved. In November 2012, the Bitcoin block reward experience was halved for the first time. After one year, the bitcoin price exceeded $1,000, a record high. In July 2016, the Bitcoin block reward was halved for the second time, followed by one year. (2017) Bitcoin prices rose all the way, eventually breaking through $20,000. The next halving of Bitcoin will occur in May of next year (2020).

Litecoin has only experienced a halved block award in history, which occurred on August 26, 2015, and the block reward for Litecoin was halved from 50 to 25.

LTC price trend before and after the first production cut

Let's take a look at the market trend of the 2015 LTC halving market price.

The last half of the market was almost started on May 22, and the distance was reduced by about 96 days. Arrived at the highest point on July 10, lasting about 50 days, and halving the distance by 46 days.

From April 13 to May 21, 2015, Wright's currency price ranged from $1.35 to $1.50 and eventually broke out on May 22, 2015. In the next 48 days, LTC soared from $1.46 to US$ 8.97, an increase of 513%, reached its peak on July 9, 2015, the first half of the month before “half”.

LTC had a typical five-day climax before reaching its peak, and the five rising climaxes were counted from the media Atlas Diary:

Image from "Atlas Diary"

From 17:00 on May 21 to 17:00 on May 23: $1.46 to $1.88, an increase of 29%;

From 17:00 on June 15 to 17:00 on June 17th: from $2.01 to $2.98, an increase of 48%;

June 14th, 14:00 to June 30th, 14: US$3.05 to US$4.26, up 40%;

5 pm on July 5 to 5 pm on July 07: $4.09 to $5.66, an increase of 38%;

From 8:00 on July 8 to 13:00 on July 10: $5.17 rose to $8.56, an increase of 65%.

Since then LTC has fallen back to 76.24%, halved to 3.02% on the day, and in the next few months, between $2.87 and $3.24.

The halving of production will theoretically lead to an imbalance between supply and demand, and the price will rise. However, the actual situation has many influencing factors. In 2015, the halving of the Litecoin can be seen from the price performance. After the halving, there is no price increase. Some declines.

OKEx Research has interpreted the three reasons for this reaction in the market:

1. Prior to this, LTC had already made a full rise. On July 10, it reached the highest point of 8.767 US dollars at that time. The market expectation has been fully reflected.

Second, the volume of the entire digital currency was still very small, and the application scenario was very limited. Excessive speculation caused its price to deviate too much from the value, and the actual demand ratio was small, with half of the impact.

Third, when the price did not rise, the halving caused the miners to cut by half. The high-cost miners would not be able to make ends meet and had to choose to shut down. In fact, LTC's computing power has a certain degree of decline after halving, and the price is affected by this, but continues to fall. Therefore, on August 27th, Litecoin has ushered in the first difficulty adjustment after halving, down 7.61%.

What will happen to LTC after this production cut?

Let's take a look at this trend of halving the market. The halving of the market started on February 7 this year, and the distance was reduced by about 6 months.

At the beginning of the year, the Odaily Planet Daily reported on the rising trend of LTC. At that time, the coin-printed pool first pulled up a Litecoin speculative coin group. The group name is "Lite currency halved preheating group", the administrator brushed the screen slogan: Spicy bar (referring to LTC Lite coin) 18,000, issued together this year. The coin printing pool is dug, and the income is top. Half a year of spicy strips, until August 8 (Wright currency is expected to cut production time).

The highest point so far is $140 on June 22, and the distance is halved by 44 days. We can see that there have been four climaxes in the price of the currency so far, and the interval between each time is longer than the last time. Because we had the last experience, this halving expectation was actually started early. The last time was 3 months earlier. This time it was 6 months earlier and the time was doubled.

Image from "Atlas Diary"

February 7 to February 11: US$33 to US$46.8, an increase of 42%;

April 2nd to April 4th: $65 to $94.3, a 45% increase;

May 23 to May 26: $86 to $116, an increase of 35%;

June 7 to June 12: $103 to $140, a 36% increase.

For the market trend after the LTC halved, the Odaily Planet Daily collected several analysts' opinions. Most analysts believe that the halving of the market is almost the same, and there should be some correction after landing, but analyst Chen Zheng believes this. The LTC trend after halving is more optimistic than the currency price trend after halving in 2015.

“In 2015, I rushed to the top in early July and then fell sharply. Then I oscillated sideways for more than a year. This time, the LTC halved peaked on June 22, and the trend before the top has been slow. The market should be worried about the trend behind 2015, so this round of adjustment is relatively large." Analyst Chen Zheng said.

Coindesk analyst Omkar Godbole analyzed, “The LTC price is still in the narrow range of $2.5 to $5.5 after the (last) halving, until strong buying in April 2017. If history As a reference, LTC may have a sideways trend after halving next week, unless BTC moves to a new high of $20,000."

Image courtesy of Chen Zheng

However, Chen Zheng also analyzed: "Comparing these two trends, this time LTC's trend is relatively stronger, has surpassed the 0.618 times rebound of the digital golden section ratio, so I think the market outlook for this production cut is better than 2015. The currency price trend after the production cut should be optimistic. The last time LTC will start again in early April 2017 and rise to the 2015 rebound high, this time it will not be used. It is estimated that it will be a few months."

Although the price may not rise after halving, analysts believe that the "bottom average price" may be reshaped.

According to OKEx Research's analysis, from the data of the price analysis chart at the bottom of the Litecoin history, the recent bottom price range is 23.15-41.81 US dollars, and the bottom price is around 32.49 US dollars. This price is only 5.14 US dollars from the shutdown price of US$37.63, which we calculated above as “the bottom of the mining cost”. Looking at the changes in the bottom price before and after the production cut four years ago. Before the production cut, the bottom price was around $1.80. After the halving of the reward, the bottom price has risen, around $3.88, which is 2.15 times the average price before the production cut.

According to the changing rules of historical data, OKEx Research predicts a new round of Litecoin production cuts, and a high probability will re-construct a new “mining cost bottom”.

Commodity prices are influenced by the relationship between supply and demand, and fluctuate around the value, which is the expression of the law of value. The rise in mining costs will cause LTC to fluctuate around higher value lines.

Will the miners still insist on mining?

A halving of the mining reward will reduce the inflation rate of Litecoin. According to Coindesk, the current inflation rate of Litecoin is about 8.94%. After the mining incentives are halved in August, the inflation rate will drop to about 4.26%.

“After halving, the supply of new coins will be halved, and the demand will not change, the price will inevitably double. The price will double to attract more people to invest and speculate, so the price is not simply doubled after halving , is a long-term positive effect," said analyst Wu Yang. The block reward is halved, and the biggest impact is the miners.

A halving will cause a change in the supply and demand relationship. The halving of the Litecoin mining award will also affect the supply and demand relationship in the market. In economics, it is generally believed that prices are determined by supply and demand. If demand is constant, supply will decrease and prices will rise. According to this, many investors have come to the conclusion that the price will rise after the Mitte coin mining reward is halved. However, this rule is not so "immediately" when encrypting money.

The block reward is halved, and the biggest impact is the miners.

"I will starve to death after halving. I will be naked according to the miners after halving." Miner Lee Hung-fei said to the Odaily Planet Daily that Li Hongfei took the LTC in his hand when the LTC market was good in June this year. In part, in order to prevent the halving of the day, the LTC price fell sharply. He also told us that the current price of the Litecoin miner has dropped to 350 yuan.

"I personally believe that at the current price, production cuts will definitely cause many miners to leave the market. The current fastest mining machine ant L5 (not out of the market), a daily income of 0.05 LTC of about 30 yuan, halved the old machine L3 + A4 Wait, only 5 yuan a day, the mine has no reason to waste power to do no profit." A former miner who digs LTC Wang Cheng told the Odaily Planet Daily.

"After halving, don't say that L3 (the current mainstream mining machine of Litecoin) has become scrap iron, and the unsold L5 (the fifth-generation new mining machine that will be launched by Litecoin) has to become scrap iron." Some miners shouted at Wright's official WeChat community.

F2Pool co-founder Shenyu said on Weibo that with the current Wright currency price, if the mining revenue is halved tonight, the Litecoin L3+ mining machine can basically declare shutdown.

After the 5% reduction in the Litecoin block award, if the calculation and mining difficulty remain the same, the cost of mining will double for the miners.

Although the price is not entirely determined by the cost of mining, the price of mining has a considerable impact, because the miners’ willingness to sell the new currency at the original price is reduced.

Before the application scenario became mainstream, mining must be one of the few “fundamentals” of cryptocurrency. They built the so-called price hard bottom and evolved or withdrew as the market shuffled.

Note: In the text, Chen Zheng, Wang Cheng and Wu Yang are all pseudonyms.

Reference article:

Is it worth looking forward to the halving of the Litecoin in August? One article says throughlite

When does the LTC halving market end? When can we clear the position in advance? 》

OK Research: Research on the Status of Litecoin (LTC)

Text | Wang Ye

Produced | Odaily Planet Daily (ID: o-daily)

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