Litecoin [LTC] and other leading cryptocurrencies have been overshadowed by Ethereum [ETH] Merger for the last few weeks. Interestingly, LTC may have benefited from the merger in terms of hashrate.
An inspection of the Litecoin hash rate reveals a sharp rise in the first 10 days of September. Its hash rate increased from 390.93 TH/S on August 31st and peaked at 527 TH/S on September 9th.
The timing of Litecoin’s hash rate increase aligns with the miners exiting Ethereum. Some of the miners may flow into LTC mining pools during this time, hence the sudden boost in hash rate.
Miner Profitability vs. Price Action
Although the increase in hashrate represented an influx of miners, it was not linked to the merger. However, the hashrate may have been affected by the price action of LTC. Looking at Litecoin’s hashrate especially over the past six months, it can be seen that its fluctuations have been in tandem with LTC’s price action.
The LTC hashrate fell sharply in June from a 2022 high of over 512 TH/S to as low as 353.75 TH/S by July 1st. This was around the same time that the crypto market experienced a crash. Falling miners’ profitability may have been the driving force behind the crash.
The April-June market crash may also have pushed prices so low that many miners did not make a profit. Thus, it made sense for miners to cease operations if their costs exceeded mining revenue.
Additionally, Litecoin’s hashrate has gradually recovered over the past three months as cryptocurrency prices have also seen some recovery.
Litecoin’s hashrate has also seen a sharp decline over the past five days. This has been in line with the drop in LTC price since this period, but a 10% drop is not enough to justify a significant change in hashrate. The only way such a result makes sense is if an increased number of miners resulted in greater sensitivity to price changes. Shrinking transaction volume would also result in lower profitability for miners.
Apart from the figures mentioned above, the trading volume of LTC has decreased ominously in the last five days. At the same time that the price recorded a retreat.
An opposite result where transaction volume was high would support higher miner profitability even with a slight increase in the number of miners. Higher LTC prices would thus boost miners’ profitability.