Like Bitcoin, Litecoin goes through what is known as a “halvening”. The first halvening for Litecoin occurred in 2015, and it will half approximately every four years. Of course, for those who are just getting started with Litecoin and other cryptocurrencies, it can sometimes be difficult to understand what all of the jargon means and how it could affect them.
How Does It Work?
Simply put, the halvening means that the mining award is cut in half. When Litecoin was first created, when a block was solved, it would mean that the miners are rewarded with 50 coins. When half of all of the available coins are in existence, the coin undergoes the halvening, meaning that the miners will then only be rewarded with half of the coins they were previously awarded with after solving a block. After the 2018 halvening with Litecoin, the 50 was cut in half to 25. At the next halvening, the number of coins awarded to the miners is going to drop to 12.5 and so on.
The number is going to continue to drop by half every four years. In this respect, you will find that Litecoin and Bitcoin operate very similarly. They are going to keep dropping or halving every four years for the foreseeable future. There is not certain date determined when all of the coins will be mined, but there are estimates. Most feel that based on the current status, Litecoin will have all of its coins mined by 2142, while Bitcoin will have its coins mined by 2140. That’s still quite a long way off, of course.
What Does the Halvening Mean for You?
As a miner of Litecoin, or someone who wants to get into mining this digital currency, you may be wondering just what it is going to mean for you after each halvening. First, it means that each year, there will be fewer of the Litecoins entering the market. This can help to slow inflation on these coins, and the value of the coins that are currently on the market is typically going to rise. This means good news for those who have these coins.
In fact, there is often a rush to buy before a halvening, which can cause the price of the coins to rise even further. While this sounds good – and it can be – you also need to think about what it means to your mining operation. When the Litecoin – or any cryptocurrency – undergoes a halvening, it means that it becomes more difficult to mine the coin.
Essentially, it means that the profit you have been making from the Litecoin mining that you have been doing is cut in half. This is because the equipment that you are using, which is still mining at the current rate, is only providing you with half of what it would normally provide. It’s just that this is no longer profitable because of the halvening, which means you need to reconsider just how you are going to be mining in the future. Typically, this means investing in new and better mining hardware.
There are, of course, variables that can affect your profit. In some cases, the value of the coins can go up enough that even mining the same amount as before could keep your profit close to the same as what it was before.
While there is no reason to get out of Litecoin mining colocation when a halvening is approaching, you will want to think about your strategy and make sure that you are still capable of making a profit.