Litecoin halving, mining machine clean-up, the total network computing power is expected to decrease by 20%-30%

Finally, Litecoin’s annual drama is about to begin.

According to the latest data from Litecoinblockhalf (https://www.litecoinblockhalf.com/), based on the current block speed, the Litecoin halving time is around 6:21 pm on August 5, 2019.

This means that the income from Litecoin mining will be directly reduced by half, and a number of Litecoin mining machines will temporarily bid farewell to the stage, unless the price of Litecoin rises gratifyingly. As for how the price of the currency will go, it is actually very difficult to judge.

Mining machine wash is imminent, and the estimated computing power will be reduced by 20%-30%

Litecoin is derived from Bitcoin. According to the pre-set, it also has the saying that mining output is halved. Its halving cycle is 840,000 blocks. According to the mechanism of producing one block every 2.5 minutes, its halving cycle is also about 4 years.

Litecoin had its first halving in August 2015. At around 6:21 pm on August 5, 2019 (block height 244220), Litecoin will have its second halving.

After the halving, the mining output of Litecoin per block will decrease from 25 to 12.5. Its annual inflation rate will decrease from 8.7% to 4.26%. By the way, the output of Litecoin has reached 75%.

What does this mean for mining? Take a look at this picture.

▲Data from Biyin Mining Pool

It can be seen that the current daily net profit of the Innosilicon A6+ mining machine is the highest, about 33.24 yuan. The Innosilicon A4 has reached the shutdown price. The Antminer L3+ series has one foot in the gate of hell, with a daily net profit of about 5.25 yuan.

We assume that the price of Litecoin remains unchanged, and exclude factors such as mining machine optimization, difficulty adjustment after computing power reduction, and use the cost of 0.25 yuan per kilowatt-hour of electricity during the flood season to calculate what will happen after halving.

The daily net income of Innosilicon A6+ is 10.3 yuan, and that of Jinbei Miner X6 is 7.3 yuan. The daily net income of Antminer L5 is 6.8 yuan. The electricity cost of the above three mining machines accounts for less than 30%. The mining machines behind are in a worse situation. Especially these machines, the daily net income of Antminer L3++ is -0.455 yuan, and that of Antminer L3+ is -0.315 yuan. Judging from the static data, the Antminer L3 series will be completely wiped out.

Shenyu, the founder of F2Pool, introduced that the current mainstream in the market is the overclocked and underclocked version of L3+. After the halving, a lot of L3+ will be eliminated. It is estimated that the overall eliminated computing power will account for 20%-30% of the entire network.

After calculations, Jiang Zhuoer, founder of Litecoin mining pool BTC.TOP, believes that after the halving, Litecoin mining machines with electricity costs above 0.26 yuan will have to shut down. These shut-down machines will either be moved to places with lower electricity costs or sold directly.

However, once the mining machines are shut down, the computing power of the entire network will decrease. After the difficulty is adjusted, the unit income will rise again. Jiang Zhuoer said that if the income increases by 20%, the mining machines with electricity costs of 0.3 yuan can be put into operation again. Shenyu calls this competition "the game between existing mining machines."

Shenyu also believes that miners should calculate costs and pay attention to prices to cash out and preserve value. About 3 days after the output is halved, the mining difficulty adjustment will be completed, and the miners' costs and benefits will have clear results. Miners can clearly see whether L3+ can still be mined. During this period, some miners should choose to wait and see and make a decision when the results are clear.

As can be seen from the table above, new mining machines have high computing power, low electricity costs, and strong competitiveness. Of course, the price of the machine is naturally high. A replacement between old and new mining machines is taking place.

Feng Chong from the CoinIndustry Research Institute told Babbitt that many people who bought Litecoin mining machines for 200-300 yuan before the flood season (old mining machines) have recovered their costs and made good profits. "For mining, relatively advanced mining machines can allow miners to maintain cash flow during a bear market, but for investment decisions and behaviors, luck is largely the factor, because almost no one can predict the price of the currency."

Halving = To The Moon?

A few positive lines changed people's views, and "Latiao Wanba" made a splash in the cryptocurrency circle. On January 1, 2019, the price of Litecoin was $30, and then Litecoin began to rise wildly, reaching a high of $138, and then fell back along with the market, and the current price is $94. Calculated, Litecoin has risen by about 3 times this year, and it is still up 2 times. It ranks fifth in the digital currency market value ranking.

Litecoin has only experienced one block reward halving in history. Prior to this, the price of Litecoin began to rise three months before the halving, and after the block reward was halved, the price began to fall.

Will history repeat itself this time?

Previously, Babbitt wrote an article in which the following views were popular in the market.

First, the reduction in production will change the market supply of Litecoin. Assuming that the growth rate of demand remains unchanged, market speculation and FOM sentiment will increase demand. Once the growth rate of supply decreases, the price will theoretically rise. Second, the good news has been realized in advance, and the good news is bad news. Third, the cryptocurrency ushered in a bull market, and the future is promising under the halving expectation. Fourth, the future of Litecoin still depends on the "face" of Bitcoin, and the correlation of digital currencies is getting stronger and stronger.

Huang Jin, CEO of BiNiuniu, told Babbitt not to make predictions about the short-term market, as there are many factors that influence the short-term market.

How will the hash rate change after Litecoin halving? Will the price see a waterfall or a moon? These are hard to predict. The market is a process of development. Maybe you will be able to see clearly next year whether this is a repeat of history.