Data shows Litecoin mining hashrate has reached an all-time high, could this be a positive signal for crypto prices?
Litecoin Mining Hashrate Set New All-Time High at 683.52 TH/s
Litecoin, like Bitcoin, is a cryptocurrency that works on a consensus mechanism based on Proof-of-Work (PoW), meaning that network validators called miners handle transactions on the network. These miners have to compete with each other using computing power to get a chance to hash the next block in the blockchain.
“Mining hashrate” is an indicator that measures the total amount of this computing power that miners connect to the Litecoin network for mining purposes.
As the value of this metric increases, it means that miners are bringing more machines online in the current network. This could indicate that miners are finding the blockchain interesting to mine today.
On the other hand, the decline shows that some miners are disconnecting their rigs from the blockchain, probably because it is not profitable to mine crypto at the moment.
In the Litecoin to Litecoin exchange rate history chart, you can see the history of changes in the value of the currency.
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 has increased rapidly and has set a new high. This means that miners have more power connected to the network than ever before.
More miners joining the network, or existing ones expanding their facilities, could be a long-term bullish signal for the price, as it means miners believe in the future prospects of the crypto.
Although, this kind of increase is probably only due to some miners migrating to LTC when the price is high, to take advantage of the higher profitability, as the asset is up around 27% in the last month.
In response to the latest increase in hashrate, Litecoin mining difficulty also set a new all-time high, as the chart below shows.
The value of the metric seems to have sharply risen | Source: CoinWarz
The difficulty is a feature of the network that controls how hard it is for miners to find the current block. As with Bitcoin, the Litecoin network wants to maintain a constant rate of miners continuously. But when the hashrate increases, miners become faster thanks to the extra computing power available and get more rewards than intended.
The network then has to counter this change by raising the difficulty enough to make the miners drop back down to the default level. This is why the difficulty of Litecoin has reached ATH along with the current hashrate.
The higher difficulty now means a smaller reward stake for everyone involved. So it will be interesting to see if some miners ditch the network now, or if the increase in hashrate has really come from validators setting up long-term operations.
District LTC price
At the time of writing, Litecoin is trading around $82.8, down 1% over the past week.
LTC observes decline | Source: LTCUSD on TradingView
Featured images from Kanchanara on Unsplash.com, charts from TradingView.com, CoinWarz.com