Litecoin's halving event, which took place on August 5th, 2023, is poised to stand out as a monumental milestone in the realm of cryptocurrency this year. Historically, halving events have coincided with positive price movements, and some pundits are predicting that Litecoin’s halving could trigger a similar effect.
Litecoin is the first major proof-of-work cryptocurrency to have a halving event this year. The implications are informative, partially because it may shed light on what to expect when Bitcoin has its own halving event next year.
This halving event has had a significant impact on Litecoin miners, reducing the rewards they generate when they produce new blocks by half. Let’s take a look at Litecoin’s halving, what it’ll mean for those in the landscape, and what the implications could be for miners and investors going forward.
What exactly is a halving event?
Whenever a Litecoin block is produced, miners are rewarded with a pre-determined amount of Litecoin as a reward. A new Litecoin block is mined every two and a half minutes.
Around every four years (once 840 000 blocks are mined) the per-block reward amount drops in half. Litecoin has been around since 2011, and its first halving event happened four years later, in 2015. A second Litecoin halving occurred in 2019, and the third will take place this year.
When exactly did Litecoin's halving occur?
Litecoin’s halving event happened on August 5, 2023.
Prior to the first ever Litecoin halving, 50 Litecoins were given to miners per block mined. That amount has halved twice, leaving the current block reward at 12.5 Litecoins. That amount dropped to 6.25 LTCs per block after the halving.
The reward will keep seeing these 50% reductions every four years until eventually it drops to 0 around the year 2142, at which point the amount of Litecoin in circulation will remain fixed.
What’s the purpose of halving?
An integral part of Litecoin’s status as a deflationary cryptocurrency is that, as time goes on, fewer and fewer Litecoins are issued, and this causes Litecoins to become more scarce. Basic principles of economics state that as Litecoins become more scarce, demand should increase and drive up its price.
While fiat currencies inflate over time as their issuances increase, deflationary cryptocurrencies like Litecoin slow their own production, allowing them to serve as hedges against inflation.
Litecoin’s halvings are predictable, unlike changes in the issuance of fiat currencies. Anyone can easily check in to see how many Litecoins are in circulation, how many are left to be mined, and when future halving events will occur.
What are the main implications of a halving?
It’s common for price movements to be linked to halving events, as investors try to anticipate how a reduction in the supply of a cryptocurrency’s issuance will affect the demand for the cryptocurrency in the future.
As we move towards increasing scarcity of Litecoin, some experts predict upward price movement. After all, Bitcoin has historically rallied to significant levels in the months that have followed its previous halvings.
How will Litecoin’s value change in response to the halving?
The impact of Litecoin’s previous halvings on its price are harder to track than Bitcoin’s. This may be attributable to Bitcoin’s dominance over the crypto landscape as a whole, which can overshadow other developments.
Historically, developments directly attributable to Bitcoin’s own price movements have had more of an impact on Litecoin’s price than developments to the Litecoin network itself.
One of the reasons why Litecoin’s halving stands to be one of the most significant developments in the crypto landscape this year is because it will give us a better idea of what to expect from Bitcoin in the future.
How does halving affect Litecoin miners?
The effect of a halving on miners is more concrete and direct than it is on others involved in the crypto landscape. After a halving, miners receive half the rewards per block mined.
While this sounds negative, it’s an integral part of how Litecoin works—Litecoin miners are aware of planned halvings ahead of time, and they understand that halvings are intrinsic to the nature of the cryptocurrency.
Though miners will earn fewer Litecoin for their efforts after each halving, the value of the Litecoin they do earn may stand poised to increase due to a reduction in apply capacity.
Halving events can have a negative impact on miner’s business models, which only heightens the importance of access to affordable energy sources and obtaining the most productive mining rigs at the best possible prices.
Litecoin + DOGE merge mining
Though Bitcoin and Litecoin share many similarities, Bitcoin ASICs can’t be used as Litecoin mining rigs because the two cryptocurrencies use different hashing algorithms.
Dogecoin is a forked descendent of Litecoin and uses the same hashing algorithm, and for this reason many miners make use of merged mining to simultaneously mine Litecoin and Dogecoin.
The impact of Litecoin’s halving will be felt less strongly by miners who mine Dogecoin, because Dogecoin doesn’t have scheduled rewards halving like Litecoin does. In this way, mining two cryptocurrencies in a merge mining pair serves as a hedge against reward reductions.
Will 2023 be Litecoin’s year?
Bitcoin’s halving in May of 2020 was followed by an incredible price rally from under $10 000 USD to nearly $70 000. For this and other reasons, experts assign plenty of significance to halving events, and may feel a sense of optimism for Litecoin’s future in 2023.
Litecoin is one of the most well-established altcoins; its increasing scarcity could have a big impact on both its ecosystem and price as it inches closer to its maximum supply. Other halving events on the horizon include Bitcoin Cash in April 2024, and BitcoinSV in May 2024.
Though halving events and broader developments have an impact on Litecoin miners, one constant is the need for reliable access to the latest ASIC rigs at the best possible prices. Asic Jungle is a leader in the mining hardware procurement space, and can help you access the best value when buying or selling your ASICs.