For those just getting involved the world of cryptocurrency, there is a steep learning curve. Not only do you need to come to grips with technology like blockchain and how it works, as well as cryptocurrencies like bitcoin and how they operate, but you have a wide range of industry-specific terms to master. One of those is hash rate. What does hash rate mean and what should you know about it going into bitcoin mining?
What Is Hash Rate?
Before anything else, we need to define what hash rate is. It’s also sometimes called hash power, and is usually referenced in terms of rising or falling. Really, the hash rate is nothing more than a measure of the amount of power being consumed by a bitcoin network in the discovery of new blocks. Specifically, this means the amount of computational and electrical power required to find a block within the conventional limit of 10 minutes.
In order to understand hash rate, how it works and what it indicates, you need to have a better understanding of how the overall mining process works.
A Brief Note on Mining
Bitcoin mining requires dedicated computers, often pooled together for additional computational power and speed. The point of mining is to discover or generate new bitcoin blocks. Doing so requires solving intensive mathematical equations and moving data. In order for a miner to successfully find a block, the block’s header must be hashed so that it is less than or equal to the target, or difficulty.
The target/difficulty changes regularly, with every 2016 blocks discovered. It takes roughly 10 minutes to discover a block, so it would take roughly two weeks for 2016 blocks to be discovered.
The Block Header
A block’s header is a 256-bit alphanumeric string that includes a specific number of zeros (this changes with the difficulty). Another name for the target here is “hash”. Miners reach the target by changing small segments of the header, each of which is called a nonce. It can take many tries to vary the nonce in order to achieve the right sequence necessary to reach the target in the block’s header.
The number of times it takes to reach this target is the hash rate, and it is usually measured in seconds. This is shown in the format of h/s. However, because computers are built specifically to hash as fast as possible, the number of hashes per second is very high, so most people use larger denominations. Some of the more common hash per second denominations include the following:
- 1 kh/s – one thousand hashes per second
- 1 mh/s – one million hashes per second
- 1 gh/s – one billion hashes per second
- 1 th/s – one trillion hashes per second
- 1 ph/s – one quadrillion hashes per second
- 1 eh/s – one quintillion hashes per second
How the Hash Rate Connects with Difficulty and Rewards
You’ll find that all of the variables related to bitcoin mining are interconnected. What affects one will affect others. For instance, when the difficulty increases because the speed of discovering 2016 blocks has increased, the hash rate increases – more hash power is needed to mine blocks. As a result, the reward for miners (in pools) drops. When the speed of discovering 2016 blocks decreases once more (and miners leave), the hash rate drops, as does the difficulty.
As you can see, there is a great deal to learn about bitcoin mining before jumping in. All aspects of the process relate to all others in some manner, including the hash rate/power at a specific point in time.