The hashrate represents the core of the process used to validate cryptocurrency transactions. When crypto transactions are executed on a proof-of-work (PoW) blockchain, the transactions are verified by generating a hash.
A hash is a function that contains a string of characters that form the encryption basis of crypto transactions. Hashes are of a fixed length; the most popular one is the 256-bit long hash of the bitcoin blockchain.
Miners on a PoW blockchain aim to generate a hash with characters that match exactly that of the target hash of the current block, which is initially unknown.
So, what is hash rate? Hash rate is the measure of the entire computational power used in a proof-of-work network to validate transactions on a blockchain. It can also refer to the hash mining speed of a mining machine when working to generate a hash.
These mining machines make millions to trillions of guesses of the hash, and the first to get the right hash wins the right to add the block to the blockchain and receive rewards for the corresponding rewards.
Here's an in-depth look into the importance of hash rate, how it's calculated and measured, and the factors that change a hash rate.
What is the Importance of Hashrate?
Hashrate is one of the most important factors crypto miners look out for before starting to mine. First, what is hash rate in regards to their components? Hash rate is a function comprising random alphanumeric codes encrypting a piece of unique data.
The crypto mining space is highly competitive, and miners strive to stay ahead of others with the best mining equipment. Especially because the best mining equipment usually has the best hashrate mining features.
Miners with more efficient miners have higher hashrates and more chances to be the first to find a valid hash. If they use equipment with lower hash rates, it's more likely that their competitors will beat them to discover the hash.
In addition, if they mine in a network with high mining hash rate requirements, it signals they compete with many other miners. Therefore, miners have to consider the hash rate requirement versus the hash rate of their mining rig.
Hash rate is also an important measure to crypto investors as it gives an overview of the security level of the crypto network. The higher the hash rate requirement, the more difficult it is for hackers to attack the network.
How is the Hashrate of Your Cryptocurrency Calculated?
On May 13, 2022, Ethereum hit a new all-time-high hashrate of 1,126 terahashes per second; not less than 48 hours bitcoin broke its hash rate record with a new 254 million terahash per second hash rate.
Although a high hash rate increases the strength of the security of a blockchain, it simultaneously raises the standard hash rate needed by a hash miner. Your crypto mining device's hash rate or power varies depending on several variables. But, what is hash rate in mining calculated by?
Your mining hashrate is calculated based on:
- Your mining equipment
- The model of your mining device
- The mining algorithm you're exploring
- The power consumption
- Stability of your device's connection to the server
- The software settings for mining
- The crypto coin to be mined
- The number of miners in the crypto network
There are several ways to calculate your miner's hash rate, including using a hash power calculator. A hash power calculator is an online tool for determining a mining device's hash rate. These calculators evaluate various benchmarks for different mining devices. Some of the best hash power calculators include:
- Coin calculators
- Crypto coinz
- Crypto compare
An alternative to online calculators is downloading mining software and setting it up to run benchmarks for your mining rig. There are many mining software for different algorithms, so your results will be based on the algorithms you're testing.
How is Hash Rate Measured?
Miners in a mining pool are usually rewarded on the equivalent hashing power each individual contributes to the pool. You can improve the level of your mining rewards by learning how to measure your hash rate. So, what is hashing power measured in?
Hashrate meaning in terms of what it's measured in is hashes per second. Mining hashrate measures the number of hash calculations performed per second on a blockchain. These hash calculations range from thousands of hashes to millions, billions, and trillions. For example, 2 TH/s means two trillion calculations can be completed every second.
Hashrate is measured using the following notation:
- KH/s (kilohash per second): number of hashes per second in thousands
- MH/s (megahash per second): number of hashes per second in millions.
- GH/s (gigahash per second): number of hashes per second in billions
- TH/s (terahash per second): number of hashes per second in trillions
- PH/s (petahash per second): number of hashes per second in quadrillions
- EH/s (exahash per second): number of hashes per second in quintillions
What Affects the Change in Hashrate?
Many factors affect the hashrate of a crypto protocol. The hashrate of a network changes depending on the following:
- The cryptocurrency
- The number of miners in the network
- The blockchain algorithm
Mining comes with costs like hardware, cost, and time. Hence, miners are keen on generating a high-earning hash rate meaning they want to mine crypto coins with the highest potential to earn significant profits.
When a blockchain network has a high hashrate, there's more competition. High levels of competition do not mean the reward will be insignificant.
For instance, Bitcoin hit a hash rate as high as 292,000,000,000,000 MH/s meaning 292 exahash per second (1 exahash = 1 quintillion. Even when the Bitcoin hash rate rose to its all-time high, miners were still interested in participating because of the potential reward.
The current reward for mining Bitcoin is 6.5 BTC, equivalent to $151,158. The reward for mining bitcoin is significantly worth all the mining costs and efforts. However, the difficulty in mining Bitcoin varies based on the hash power. So, what is hash power relationship with mining difficulty?
Bitcoin's protocol usually adjusts the difficulty of mining Bitcoin based on the current hashrate. When the hashrate increases, the difficulty level rises; when the hashrate falls, the level of difficulty reduces.
The mining difficulty level is an automated system that tracks the number of new miners and how their contributing hash power affects the network's hashrate. Miners can use the current mining difficulty level to calculate if it's worth mining particular crypto coins.
Bitcoin hashrate is the number of hashes calculated every second. Bitcoin currently has a hashrate of 292 exahash per second. The hashrate changes depending on several variables, and the algorithm adjusts accordingly.
The current bitcoin hashrate is very high and signals the presence of more miners in the Bitcoin network. The more miners join the network, the higher the hash rate. The higher hashrate helps to add new blocks faster to the blockchain. Because mining difficulty increases or decreases with any rise or fall in hashrate, it helps to control the creation of new bitcoins.
What is a Good Hash Rate for Miners?
A good hashrate has a corresponding mining difficulty level that allows miners to find a hash within 10 minutes. Ten minutes is the standard time for block generation on bitcoin's blockchain.
If the mining difficulty is too high, miners won't be able to add a new block within 10 minutes, and if the mining difficulty is too low, miners will add new blocks in a minute or two.
To maintain the standard block generation time, the bitcoin protocol adjusts the mining difficulty accordingly. You can track the mining difficulty and how many hashes per bitcoin block on a difficulty chart.
Bitcoin's Impact on the Environment
As the hashrates of bitcoin and other PoW crypto coins increase, the environmental impact also rises. These cryptocurrencies consume significant power, leading to increasing global energy consumption.
Energy consumption levels for bitcoin are similar to those of smaller countries. Bitcoin miners can help reduce the implications of the massive energy consumption by switching to more renewable energy sources.