cryptocoingossip

You probably heard about Hashrate many times, especially in Bitcoin mining.

Because Hashrate is an important aspect for Bitcoin miners and considered as the parameter to define the winning probability of a block.

Hashrate is the important aspect to know if you’re deciding to mine Bitcoin or any other coin that runs on Proof-Of-Work(POW) algorithm.

Ok, before jumping to Hashrate you must know about Hash for getting a better understanding of the concept.

What Is Hash?.

Hash is a cryptographic function that can be used to map data of arbitrary size to fixed-size values.

Simply put, the hash function turns any string, text, file into a fixed length code.

For example I can hash ccoingossip using SHA256 algorithm (type of hashing algorithm used in Bitcoin) the result is a long string: “41B3CCDC5196E6098338825EE847FA05A5FE23FCE053E3AAF5A728156D75610C” also I can hash my name Karthik the result is: “49245BFDF1DCEB82A2F72ACC60E6409CE3CF732476897E406DD9232EB04D8FC1”.

Have you noticed? Each time I put a different value, I get different hashes but in the same length.

Plus, hashes are nearly impossible to reverse, meaning it is hard to get the original result from a hash; this is the only reason hash is the backbone of digital currencies.

Now you have understood what is Hash; it’s time to move into knowing Hashrate.

What Is Hashrate?

The Bitcoin blockchain is nothing but the blocks having the transaction data linking with each other.

Here linking means a hash of a previous block in a new block including a bunch of other data like timestamp, transaction data, also a nonce to validate the block for hashing it to pass on to the next block to continue the chain.

Confusing right..?

Don’t worry, I’ll explain in layman terms.

Firstly know this, every block has to be hashed, which means all the data in the block has to be hashed.

Then that hash is put into a newly created block header and generates a new hash for the brand new block (block header also includes a bunch of other information such as block version, the time when the miner tries to mine the block).

But that brand new block is not added immediately to the chain because the new block could be malicious, having false or double spend the transactions.

So to maintain the secure network, the Bitcoin POW algorithm uses a nonce value that has to be included in the new block to generate the hash value set by the algorithm (in Bitcoin the hash value has to be started with a maximum of 19 zeros).

You already know how hash changes if small changes are made in data.

Now it is the miner’s responsibility to produce the correct nonce that produces the correct hash for the new block, so the block is added to the network.

For producing the new nonce value, the miner uses hardware components that brute force values produce new hashes.

The capacity of hardware to create new hashes is measured by how many hashes that hardware is capable of producing in a second, that is simply called a Hashrate.

Units of Hashrate.

In Bitcoin mining, Hashrate is represented in hashes per second or H/s.

Here is the chart that shows units of hash and values, hashes per second.

Even though these large numbers represent Hashrate, the modern ASIC mining hardware is capable of achieving 110 tera hashes per second (TH/S), which equates to 110 trillion attempts at solving the hashing problem per second.

An individual miner can easily measure hash rates of hardware by looking at the mining software but measuring the entire network Hashrate includes many parameters.

Measurement of Bitcoin Hashrate.

Measuring the Bitcoin network Hashrate is important because it is a good indicator of the entire network’s health.

By looking at the Hashrate data, we can know miners’ activity to keep the network decentralized and active.

But unfortunately, there are no accurate parameters to calculate the entire network hash.

Even though there are no exact parameters, the most widely used way to estimate network Hashrate include public data about the underlying cryptocurrency, such as the expected rate of finding a block, the actual rate of finding a block and the current difficulty.

In this formula network difficulty plays a key role because it is the parameter that defines the actual rate of finding new blocks.

The Bitcoin POW algorithm automatically adjusts the difficulty rate at every 2,016 blocks. Blocks are targeted to be found by miners every 10 minutes. So if miners are finding bitcoins more often than every 10 minutes on average, the difficulty moves upward. If miners are finding bitcoins less often than every 10 minutes on average, the difficulty moves down.

As I stated, this methodology has long been criticized as not precisely accurate.

New methodologies are emerging now to accurately measure network Hashrate.

In those emerging ways, my eyes caught 2 ways that are worth mentioning in this post.

The first one is from the Blockchain data firm Coin Metrics that takes block times over a 48-hour window and multiplies this by the time it took to find the most recent block for calculating network hash.

And the second one is from the Kraken crypto exchange that uses statistics to show with 95% confidence that the Hashrate lies in some range.

Conclusion.

Now you know what is a Hashrate in Bitcoin mining and units to define Hashrate.

This information will help you, especially in Bitcoin mining, so if you’re the one looking to mine Bitcoin or any other POW coins then, you’ll get most from the post.

Anyway, if you got any useful insight from the post, don’t forget to share it with your family and friends.