Litecoin creator Charlie Lee believes that the upcoming halving of Litecoin mining rewards will be a “shock to the system” that may force some miners to shut their machines.
On August 5, the reward for discovering a block on the Litecoin network will be reduced to 12.5 LTC, from 25 currently. The highly-anticipate event has been a major influence on the Litecoin price over the past few months.
“The halvening is always kind of a shock to the system,” Lee said in a recent interview with Australian publication Micky.
“When the mining rewards get cut in half, some miners will not be profitable and they will shut off their machine. If a big percentage does that, then blocks will slow down for some time. For Litecoin it’s three and a half days before the next change, so possibly like seven days of slower blocks, and then after that, the difficulty will readjust and everything will be fine,” Lee added.
The digital coin has seen big gains over the past few months and the upcoming halvening, which would reduce the supply of LTC tokens, have been a major catalyst for the coin’s rally. Since the start of the year, Litecoin has nearly quadrupled its value. According to Lee, the rally that typically precedes a halvening is “kind of a self-fulfilling prophecy”.
“In terms of the price, the halvening should be priced in because everyone knows about it since the beginning. But the thing is people kind of expect the price to go up… So a lot of people are buying in because they expect the price to go up,” which in turn lifts the prices even further.
In today’s trading, the Litecoin price stood at $117.33, as of 15:11 BST. The digital coin has lost 2.4% of its value in the past 24 hours, according to data from digital currency tracker Coinmarketcap. The coin’s total market capitalisation currently stands at $7.3 billion.
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