If you’ve been a part of the complex and thrilling space of cryptocurrency for quite some time now, you might have heard of the term “hash rate.” In the context of crypto assets, the hash rate is present in the process of acquiring bitcoin and other virtual coins, which is called cryptocurrency mining.
Mining is the process of acquiring a cryptocurrency through the use of powerful computers and specially designed software. Cryptocurrency miners perform the procedure through highly potent equipment by having them solve extremely complex mathematical problems—intensely complicated ones that cannot be solved by hand.
After successfully solving complex math problems, the miners then generate new bitcoin and also make the entire Bitcoin network secure and reliable through having the transaction information verified. This might sound easy and straightforward, but in reality, there is a lot of technical work going on before a bitcoin is generated—this is where the hash rate comes in.
Defining hash rate and how it works
When mining, the power of the high-performing computers that are used to obtain bitcoin and other digital currencies is measured through a hash rate. This hash rate, or hash power, is defined as the speed or the total processing power of the Bitcoin network. It is deemed an essential part of the system, as it gauges and also represents the productivity and efficiency of the mining machine used.
This mining hardware executes the computation to arrive in a valid block hash, defined as the reference or identification number of a block—the record of all the computer files, information, and necessary data—in the blockchain.
A hash includes a block header at the top of a transaction’s block. It has 64 characters composed of numbers and letters, and provides the summary of the entire block, which includes details like the block’s version, the previous block hash, the Merkle root or the block transactions hashed together, and the time when the miner tries to mine the block.
It also has the bits or the shortened version of the target hash—defined as “the number that a hashed block header must be less than or equal to for a new block to be awarded.” It also includes the nonce, dubbed as the “mining field” that the miners change to arrive at the hash of the block header, which is below the target. A nonce is an arbitrary number that can only be used once. It also works like a lucky number, so read ahead to know why.
To come up with a valid block hash, which starts with zeros, a miner must hash the block’s header and get a hash that is below the target. This will allow them to create a unique identifier for each block. It is important to note that the target changes along with the level of difficulty, so the miners alter the nonce until they hit a hash of their block headers.
If a miner arrives at the hash below the target and sends it to the network, everyone in the system will include it to their blockchains. This will then generate a reward for the miner who found suitable nonce.
Hash rate measurement and units
To compute a hash rate, the unit hashes per second (h/s) is used. This is used to gauge the speed of the machine used for bitcoin mining. It is counted using terms like Kilo, Mega, Giga, Tera, Peta, and Exa.
- 1 kilo hash per second (1 Kh/s) = one thousand hashes per second (1,000 h/s)
- 1 mega hash per second (1 Mh/s) = one million hashes per second (1,000,000 h/s)
- 1 giga hash per second (1 Gh/s) = one billion hashes per second (1,000,000,000 h/s)
- 1 tera hash per second (1 Th/s) = one trillion hashes per second (1,000,000,000,000 h/s)
- 1 peta hash per second (1 Ph/s) = one quadrillion hashes per second (1,000,000,000,000,000 h/s)
- 1 exa hash per second (1 Eh/s) = one quintillion hashes per second (1,000,000,000,000,000,000 h/s)
Another notable fact is that hash rates vary depending on the cryptocurrency and what machine or equipment was used to mine it. Different cryptocurrencies don’t have the same amount of hash power.
Impacts of hash rate and its difficulty to miners
Hash rates directly affect cryptocurrency miners, whether they are mining on their own or via mining pools. But what is a good hash rate for miners? A higher hash rate translates to higher chances of mining a block. So when the rate is at the peak, miners have more chances of receiving block rewards from successfully mined blocks.
Effects on energy consumption and profitability
Since the hash power also relies on the performance of the computers used in mining, a lot of miners are investing in powerful equipment to have more chances of having higher hash rates. These computers are expensive and also consume high levels of electricity to run its operations.
Before, miners can acquire cryptocurrencies using ordinary computers and graphic cards. However, with the rising popularity of bitcoin and other digital currencies, a lot of miners have joined the competition with new and more powerful mining hardware like the application-specific integrated circuit (ASIC) miners.
These factors caused the bitcoin hash rate to immediately increase and eventually paved the way for the difficulty level of mining to also rise. This, in turn, enables miners to generate more income. However, as the mining difficulty increases, more energy is consumed by computers. Thus, the percentage of electricity consumption also increases.
Hash rate is prevalent in the crypto mining industry. If you are planning to enter the cryptocurrency space and are eyeing to try your hand at bitcoin or crypto mining at some point, check out the links below to learn more about other related mining and bitcoin topics:
- Is Mining Bitcoin Still Profitable in 2020?
- What Happens When All the Bitcoin in the World Has Been Mined?
- Everything You Need to Know About the Next Bitcoin Halving