Can anyone confirm/correct my understanding please?
I understand that the Litecoin difficulty is based on the network hash rate. So, as the rate of work increases (additional or better miners coming online) the difficulty rate increases (or decreases if the hash rate goes down). This doesn't have an intrinsic link to the Litecoin price - as in, a network difficulty increase doesn't necessarily make a change to the exchange rate for the coin and vice-versa.
So - if the difficulty rate doubled over the next 12 months (for arguments sake) and the price of Litecoin stayed the same, would I be right in saying that the profitability of mining would halve (assuming other costs remain static) ?
So just two of the risks to mining; the value of the currency could fall and the network difficulty could increase meaning that a rig would produce less coins. Either could happen, or worse case, both could happen.
On the flip side, the reward from mining increases if Litecoin rises in value faster than the network rate.
Does all that sound roughly correct, or have I got it completely wrong?
Thanks in advance
Ian
