What Is Hashrate?
Hashrate is the total computational power being used by miners to process transactions in a proof-of-work (PoW) cryptocurrency network. A high hashrate is one indicator of a network’s security because it shows a large number of miners are verifying transactions.
When it comes to mining Bitcoin, Litecoin, Dogecoin, Bitcoin Cash, Zcash, or any other PoW crypto, a good hashrate is a higher hashrate. The more computing power going towards maintaining a network, the more secure it will be and the more transactions it will be able to handle. The hashrate is one of the most important concepts to understand, especially for anyone considering investing in cryptocurrency.
How Does Mining Work?
To understand what is meant by the term “hashrate” it’s important to understand the process of crypto mining.
Mining is the method by which crypto transactions are processed and consensus is achieved in a PoW system (proof-of-stake or PoS is a different type of consensus mechanism).
Miners rely on high-powered computers to run computations on complex puzzles based on crypto transaction data. These systems generate millions or trillions of guesses — or hashes — per second as to what the solutions to these puzzles could be in order to validate as many transactions as possible.
Valid hashes in proof-of-work networks have to be verified by other miners. Once the block has been validated, it’s added to the chain and the original miner receives a reward in new coins or tokens.
A group of transactions is called a block (and different blockchains have different block sizes or heights). For example, every 10 minutes or so, a new block on Bitcoin is mined, and the reward goes to the miner who can prove they did the most work toward creating the block (hence the term proof-of-work). Different blockchains have different transaction times.
Why Does Hashrate Matter?
Hashrate refers to the amount of computing power being contributed to the network at any given time. The more mining, the higher the hashrate. Bitcoin has a lot more hashing power behind it than all the other cryptocurrencies combined.
A hashing algorithm takes a unit of data and turns it into a random string of numbers and letters. This process is called encryption, and it ensures that data will be secured.
A hash is just a computer performing this action. Bitcoin’s PoW algorithm is based on an encryption algorithm called SHA-256. Ethereum has been known to use Keccak256 hashing algorithm (but has shifted to a proof-of-stake system with the Merge). The bitcoin hashrate boils down to how many times per second this algorithm is hashing calculations.
Bitcoin miners perform as much of this work as possible in an effort to obtain the next block reward of 6.25 bitcoins.
Today, however, most mining occurs in “pools,” where a group of miners pool their hashing power together and then split the block rewards amongst themselves, according to the hashrate each contributed.
Hash Rate As a Bullish Signal
For almost any cryptocurrency, a higher or increased hashrate can be a sign of demand from either miners or traders or both.
A high hashrate and network difficulty can be considered a bullish signal since it shows that miners are committed to block processing on the network, and producing a steady flow of new coins in the market.
How Hashrate Impacts Mining Difficulty
One of the ingenious aspects of the Bitcoin protocol (and some other coins as well) is something called the difficulty adjustment.
Every two weeks or so, the protocol automatically changes how difficult it will be to mine Bitcoin based on the current hashrate. When the hashrate rises, so does mining difficulty. When hashrate falls, mining difficulty also falls.
This helps to ensure that the supply of Bitcoin remains scarce while also keeping mining competitive. In 2020, the Bitcoin hashrate hit several new all-time highs, signaling confidence in the largest cryptocurrency by market cap.
What Is Hashing Power?
The hashrate can be in the billions, trillions, or more calculations per second. That’s why so much power is required when doing PoW mining. Here’s how hashrates are abbreviated:
• KH/s — kilohashes per second (thousands)
• MH/s — megahashes per second (millions)
• GH/s — gigahashes per second (billions)
• TH/s — terahashes per second (trillions)
• PH/s — petahashes per second (quadrillions)
• EH/s — exahashes per second (quintillions)
Altcoins and Hashrate
Other cryptocurrencies also need hashing power to run their networks, and the hashrate can vary considerably from crypto to crypto. But the hashrate also fluctuates for each crypto individually.
As with most PoW crypto, a higher hashrate is considered better for the network’s stability and security overall.
That said, the hashrate of a given coin doesn’t determine how quickly each block is completed. That’s a function of something called the block time, which is predicated on the mining difficulty value of the crypto network. To keep blocks being solved at a constant time frame, the mining difficulty value is calibrated up or down when the block difficulty is reset.
What Is a Good Hash Rate for Dogecoin?
As of Aug. 12, 2022, the Dogecoin hashrate was roughly 496.15 TH/s, which is significantly lower than the network’s all-time high of 1.34 PH/s on April 23, 2022.
The meme coin saw lower values and a drop in dogecoin mining profitability in Q2 of 2022, which may have affected the hashrate.
What Is a Good Hash Rate for Ethereum Mining?
As of Aug. 12, 2022, the Ethereum hashrate was 942.50 TH/s, a bit lower than the network’s all-time high of about 1.32 PH/s on June 4, 2022.
The drop in July was believed to be a function of lower miner profitability — perhaps in relation to the upcoming “merge”, as Ethereum’s transition from PoW to PoS is being called.
How Does Proof-of-Stake Work?
While Bitcoin and many others use the PoW consensus algorithm, some coins use different algorithms, like proof-of-stake (PoS).
Rather than using powerful computers to contribute hashing power toward proof-of-work, proof-of-stake block rewards are distributed according to whoever has the most tokens “staked” on the network. Staking tokens involves locking them up for a period of time, sort of like a long-term savings account.
This method of consensus is less energy intensive compared with PoW, although some also argue it’s less fair and less secure.
Some cryptocurrency exchanges now allow for automatic staking of tokens that utilize PoS. Users can hold the tokens in their crypto wallet and automatically receive rewards.
There are many different ways coins secure their networks, but the important thing to know is that the total hashrate of all other coins combined pales in comparison to the Bitcoin hashrate.
How to Calculate Hashrate
For users interested in mining cryptocurrency, it could be useful to calculate the expected hashrate of a computer or mining rig. The two primary factors that determine the profitability of mining bitcoin are the hashrate and electricity costs involved.
Miners can insert the appropriate variables into a hashrate calculator and receive a result right away.
Investors considering speculating in altcoins could think about looking at the hashrates of different cryptos, as this may be one of the few fundamental factors available for analysis.
Benefits of a High Hashrate
The more computing power contributing to a network, the harder it becomes for potential bad actors to spam, hack, or commit fraud on the network, because doing so requires more power.
To take control of a network and do things like reverse or double-spend transactions, an individual needs to own 51% of the hashrate. And at this point, having enough power to control 51% of the Bitcoin hashrate seems very unlikely.
That’s the main benefit of a high hashrate — increased security. This can also lead to increased confidence in a coin, higher user volume, and potentially higher currency prices. For investors looking to build their crypto portfolio, security can be extremely important.
Bitcoin’s excellent hashrate has a lot to do with its continued success and increasing value. Many people argue that BTC is the only reliable store of value for investment purposes for this very reason.
Bitcoin Hashrate vs Price
There tends to be a correlation between the bitcoin hashrate and the bitcoin price. When a hashrate moves higher, prices tend to rise, although it’s not clear which causes which. It’s somewhat of a chicken-and-egg kind of scenario, and the topic has been much debated.
When prices go up, the hashrate is likely to follow, as mining coins becomes more profitable. A higher hashrate indicates that miners have a degree of confidence in the price, as they’re willing to make investments in computing hardware to mine more coins. When the hashrate goes up, prices could also follow, as investors see this as a signal of confidence.
When a hashrate is rising, it could be a good time to buy cryptocurrency, although the trend has not been proven.
The Takeaway
What is a crypto platform’s hashrate? Hashrate is the total computational power being used by miners to process transactions in a proof-of-work (PoW) cryptocurrency network. Ideally, a higher hashrate is preferable as it can indicate a) greater support among miners; b) greater interest among traders; and c) it’s also a signal of the network’s security.
When it comes to PoW crypto mining, a good hashrate is a higher hashrate. The more computing power going towards maintaining a network, the more secure it will be and the more transactions it will be able to handle.
FAQ
How do I find the hashing power of my computer?
Your computer or hardware uses a certain amount of power — or hashing power — to solve different algorithms. Your computer may display a higher or lower hash power, depending on each blockchain’s algorithm. You can determine the hashing power of your hardware through various means, including online services or internal commands.
What is the hashrate of Bitcoin?
As of Aug. 12, 2022, Bitcoin’s hashrate was roughly 210 EH/s (exahashes/second). That’s 196 quintillion hashes per second.
How long does it take to mine 1 Bitcoin (BTC)?
You can’t really mine a single Bitcoin, because the reward for validating one block of transactions on the Bitcoin network is 6.25 BTC, which takes about 10 minutes. In theory, then, you could mine 1 BTC in 10 minutes (as part of the 6.25 mining reward).
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