It has been a painful last few months for the crypto markets with even Bitcoin falling more than 50% from its $14,000 peak and Litecoin down over 66% from its recent halving in August. As a result the network hashrate has seen a similar fall from a peak of over 500TH/s to now resting at 150TH/s (-77%).
According to data from BitInfoCharts, Litecoin hashrate is currently exactly where it was in December of last year at what many believe was the ultimate bottom of this market cycle. Back then the market price was half what it is now but with the mining reward having just been halved it makes perfect sense why hashrate is where it currently is. The question now is, will it make a lower low or has it formed a double bottom and due a strong rebound?
While Hashrate is not a reliable indicator of price movements as it follows rather than leads in this respect, some are speculating it is a strong indication especially considering the recent downside the market has seen.
As the hashrate and security of the network continues to drop, worry has spread that this will leave litecoin more vulnerable to a 51% attack, where a bad actor(s) controls a majority of the network and is able to force changes on the network. The likelihood of this is very unlikely however, given that Litecoin is the king of Scrypt the algorithm used for mining, as such those looking to attack it would have to pay a large cost which is not economically viable and they would be unlikely to make anything from such an attack.
Mining pools may look like a single entity, however, individuals are free to come and go from pools which act maliciously so again there is little to no incentive to attack the network even when the hashrate is this low. That is of course assuming they even could to begin with. According to current data from Nicehash the largest marketplace for renting hash power there is only ~2 – 5TH/s worth of Scrypt mining power available to rent, or about 3% of the current active network.
Litecoin Community member and moderator ‘TheHoliestRoger’ shared some of his insights via telegram:
“ I know a LOT of people who’ve stopped mining LTC as it’s no longer profitable for them. Almost all of them have simply switched their miners off, some have put them on eBay, and a very small amount have started mining shitcoins. In my opinion the switched off hashrate is well distributed and not controlled by a single entity. The thing to watch out for would be rentable scrypt hashrate from miningrigrentals or nicehash for example. Which isn’t close to 51% yet from what I can see.”