What is hashrate in the Bitcoin blockchain? How is a hash generated and what is it for?

Bitcoin hashrate
Despite the fact that the Bitcoin mining industry has existed for more than 10 years, it continues to be steadily replenished by newcomers who want to make money by mining the main cryptocurrency.

At the same time, they first need to master the basics of technology, which will allow them to select the necessary equipment and evaluate its productivity. In particular, it is worth paying attention to such a parameter as Bitcoin hashrate and its relationship with other indicators.

• What is Bitcoin hashrate
• Bitcoin hashrate chart
• Bitcoin mining difficulty. Relationship with hashrate
• Factors influencing Bitcoin hashrate
• Dynamics of changes in Bitcoin hashrate

What is a hash?

A hash is a cipher; a word, message, or data is encoded in it using letters and numbers. For this, different hashing algorithms are used. One of them is SHA256. It is used in the Bitcoin network. You can view the current Bitcoin (BTC) hashrate chart here https://www.blockchain.com/.

The hash looks like this, for example, if you encode “Mining-Cryptocurrency.ru” using SHA256, you get:

• 749f4c6b15373b35b0b70f583b9a53d9aaaaf4f511f6824597aab0ff93ff9de4

And this is what the phrase “Mining-Cryptocurrency.ru is the best news portal about cryptocurrencies” will look like:

• 5cbab2580345039a6957de0ad177219c4b18697b5464612a34b93831829f7407

If you change even one character in a message or word, the entire hash will look completely different. So, the task of the miners is to brute force, changing just one symbol, to select a hash that will be equal to or less than the numerical value of the “target hash” . Once this happens, a new block is created, and the miner who found the correct hash receives a reward.

In this service you can play with encryption using the SHA256 algorithm.

Considering that hashes are generated randomly, you have to go through more than one million options to find a cipher that satisfies the conditions. Hashrate shows how many hashes the network can generate per second. At the time of writing, the Bitcoin network hashrate is 160 exahash/sec. This means that 160 quintillion hashes are created on the network per second.

Hash Algorithms

Let's talk about some popular, growing and simply interesting hashing algorithms.

Autolykos. Newly developed algorithm. Used by the ERGO cryptocurrency. Introduced on the NiceHash power market since June 2022. Unlike the classic SHA256 used by Bitcoin, Autolykos is memory intensive. This reduces the gap between owners of specialized ASICs and video cards when mining coins.

YesPowerR16. It can be found in the mining of several cryptocurrencies, the most famous of which is Yenten. Excludes mining on ASICs and video cards - only CPU. More friendly to Intel processors than AMD.

SHA256. Developed by the US National Security Agency, SHA256 is the basis of Bitcoin and many other currencies. Open to crypto mining by any means, which is why BTC miners today are dominated by large pools that own the latest ASICs. Well proven - not a single coin based on SHA256 has been hacked to date.

Equihash. Developed in 2016, the algorithm is used by ZCash, Bitcoin Gold and smaller currencies. Requires a minimum of 2 GB of RAM on the device. Allows you to mine on a processor or powerful video cards.

What is the hashrate of a cryptocurrency (blockchain)?

Hashrate determines the computing potential of a crypto-mining device and the overall power of the distributed network. The word "hashrate" comes from two English words "hash" and "rate". The word "rate" stands for speed, and hash is a fixed-length alphanumeric code that is used to transmit encrypted data.

Converting any amount of information into a hash occurs very quickly, and the reverse process is impossible. This is very important, otherwise the operation of the entire blockchain will be ineffective. If you change only one character in the source data, the character set in the output data will also be different. This means that each data set will have its own unique hash.

The hashrate of an ASIC miner, video card or central processor is the speed of processing cryptographic data by a specific piece of computing equipment operating in a particular blockchain ecosystem.

This term also refers to the total computing power that is used to mine and process transactions on Proof-of-Work blockchains such as Bitcoin and Ethereum (prior to update 2.0).

Computing power is determined by the number of solutions sent to the server by the mining farm equipment to generate a new block of data. Each correct decision (share accepted) corresponds to the established hash code and can become a digital signature that closes the next crypto block.

The speed of performing cryptographic operations on special devices or PC components determines the hashrate of the mining installation of a specific owner. And the total power of miners involved in the process of mining a particular cryptocurrency is the hashrate of the blockchain network.

Before new transactions are added to the next block in the chain, miners must compete using their machines to find the hash signature. Whoever does this first is paid a block reward in the form of newly minted coins along with any commission payments for all transactions that are stored in that block.

Adding a block to the blockchain confirms all financial transactions stored in this block, as well as those performed previously. Every time a new block is added to the chain, all transactions recorded on the blockchain are confirmed over and over again, and the distributed ledger becomes more and more impossible to change. There are many different hashing algorithms that generate different types of hash codes.

Hashrate is an important criterion for assessing the reliability and security of a cryptosystem. The more honest miners are busy searching for the next block, the higher the hashrate and the more difficult it is for attackers to carry out an attack. Weak networks can be easily hacked by a 51% attack. To carry it out, a person or group of attackers buys or rents enough mining equipment to control over half of the hashrate.

Because blockchains are subject to the longest chain rule, the person or group that controls the majority of the hashrate can block or reorganize transactions and even reverse their own payments. This will create double spending issues, which in turn will completely undermine the integrity of the underlying blockchain. Thus, a drop in hashrate means a 51% reduction in the cost of executing an attack, making the network more vulnerable.

Profitability

Given the complexity of cryptocurrency mining, hashrate must be taken into account to determine potential income. Each digital currency has its own characteristics, and therefore only an approximate formula can be calculated. To do this you need to know:

• hashrate;
• amount of electricity consumed;
• its price per kilowatt/hour;
• average reward per day;
• income from each coin.

Using the information obtained, you can calculate your approximate income per hour, per day, and then per month.

Here are the most popular video cards for Ether mining that cost less than $400:

• Nvidia GTX 1660 Super – This card was released in October 2019, which means the technology is still fresh. The graphics card has 6 GB of memory and Turing architecture, which runs at higher clock speeds, consumes less power and has 20% better performance than the GTX 1660. This model is priced between $240 and $250.
• AMD Radeon RX 5700 and RX 5700 XT - In the summer of 2022, AMD introduced a new line of RX 5700 series graphics cards to the market. These cards use FinFET technology, which provides better power efficiency during mining due to the reduced size of electronic components and lower current consumption.Specifications The RX 5700 includes 8GB of GDDR6 memory and 180W power consumption. The RX 5700 XT has a power consumption of 225 W, but the base frequency is also 10% higher than the RX 5700. These cards are a little more expensive at about $430, but they can be purchased at a discount, the price will be around $400.
• Nvidia RTX 2060 Super - The RTX 2060 Super card may not be an obvious choice, since aside from 8GB of memory it is no different from the RTX 2060. But at the same time, it uses five different algorithms - GrinCuckarooD29, GrinCuckatoo31, DaggerHashimoto, X16Rv2 and BeamV2 - which makes it more stable, secure and suitable for mining. In fact, it is an intermediate option between the RTX 2060 and RTX 2070, but it can be found online for only $399, while the RTX 2070 will cost you around $530, a difference of $130 serious money in this business.
• AMD Radeon RX 580 – The AMD RX 580 was released back in 2022 and is still one of the best low-budget GPUs for mining, with prices ranging from $180 to $230. The card is used primarily for Ether mining and has 8 GB of memory, but consumes little power - only 150 W. The only potential competitor could be the RX 570, but a card with 4 GB of memory will no longer be able to mine Ether in 2022.
• Nvidia P106-100 - Nvidia has a special series of graphics cards for cryptocurrency mining - Mining edition Nvidia P106-100 is based on the Nvidia GP106 GPU (Geforce GTX 1060), which is almost the same as the regular Geforce GTX 1060, but with some small changes . The P106-100 has no video outputs or rear panel, and the card is equipped with 6 GB of memory. The Mining edition in the name does not mean that the new product is better at mining than the regular version, but rather that it is designed specifically for miners, since everything in It was considered unnecessary and was removed, allowing it to sell for about $320 - $170 cheaper than the GTX 1060.

What is the payback of video cards?

How long will it take for these budget cards to pay for themselves? For comparison, one of the most popular mining cards today, the Nvidia RTX 2080 Ti, earns about $1.66 per day when mining Ether. If you buy this video card at an average price of about $1,400, it will take about 28 months to pay for itself, excluding the cost of electricity.

So here's what the calculations say:

• An Nvidia GTX 1660 Super, which can be purchased for $240, will generate $0.65 per day and pay for itself in 12 months.
• AMD Radeon RX 5700 XT costs $400, the payback period is 8.5 months, and brings in $1.56 per day.
• The Nvidia RTX 2060 Super can be purchased for $399 and will generate $0.92 per day when mining Ether. This card will pay for itself in 14 months.
• The Radeon RX 580 is a very popular card due to its fairly low price of around $200, and this card will pay for itself in just 7 months, bringing in almost a dollar - $0.96 per day.

Designed specifically for mining, the Nvidia P106-100 will bring in $0.85 per day, and at $320, it will pay for itself in just over 12 months. We do not take into account the new RTX 3000 series cards from Nvidia and RX 6000 from AMD, since there is a strong shortage of them and it is still problematic to buy them for mining.

However, such calculations are approximate, and every miner should keep in mind that the algorithms of any cryptocurrency are constantly becoming more complex, which makes mining more difficult and increases the payback time for the equipment invested in mining. Or, if the price of a coin or the load on its network increases, the payback time, on the contrary, will decrease.

How is hashrate measured?

Hashrate is a variable value; its numerical value is expressed by the number of hashes (h) per second. To search for a hash code, thousands, millions, and billions of calculations are performed. Decoding the main indicators of device hashrate:

• Kilohesh (kH/s) – 1000 H/s;
• Megahash (MH/s) – 1000 kH/s;
• Gigahash (GH/s) – 1000 MH/s;
• Terrakhesh (TH/s) – 1000 GH/s;
• Petahesh (PH/s) – 1000 TH/s;
• Exahash (EH/s) – 1000 PH/s.

The same relationship applies to the sol unit of measurement used in cryptonetworks running on the Equihash algorithm. In the Bitcoin hashrate blockchain ecosystem, most collective mining pools are measured in petahash and exahash. In general, the hashrate of the Bitcoin network is 114.23 EH/s

Why is it important to understand current hashrate

The hashrate of the cryptocurrency network is a kind of overpass that connects the digital and analog worlds. When a user does a summation of the overall computing power of cryptographic networks, he sees an important parameter.

The real current hashrate used by participants to maintain the operation of the blockchain becomes clear. You need to have a good understanding of the features as well as the meaning of the term ethereum hashrate or network hashrate of another decentralized system.

Without this, it is impossible to understand how the blockchain works and understand its structural nuances.

What is hashrate needed for?

Hashrate allows you to assess the degree of reliability and security of the blockchain network. The more devices connected to the network, the higher its total computing power, that is, hashrate, and the more resistant it is to 51% attacks and other malicious actions.

If the hashrate grows, it means new participants are joining the network. A drop in hashrate may mean that miners are switching their power to other networks or turning off equipment. The last time a drop in the hashrate in the Bitcoin network to local minimums at the level of 131 exahash/sec was recorded on April 23, 2022, against the backdrop of a BTC correction from historical highs. The record high hashrate was recorded on May 15 at 179 exahash/sec.

Note that the Bitcoin blockchain still remains the most powerful and secure distributed network. However, more than half of the total Bitcoin hashrate is concentrated in China, which creates certain risks. However, this trend is now changing and miners are moving from China to North America and Europe.

History of Bitcoin hashrate

The history of Bitcoin hashrate is a history of exponential growth . From humble beginnings, the Bitcoin network now has a mammoth hash rate of 120 million TH/s, which is 120,000,000,000,000,000,000 calculations per second .

All of this hashing power is channeled from all over the world and has grown to over 0.21% of the entire global energy supply. This level of energy consumption continues to rise as more organizations dedicate hashing power to the network, with the Bitcoin network's energy consumption levels being higher than the total energy consumption in all of Switzerland .

What does hashrate depend on?

The hashrate of a mining installation depends on the computing potential of the components. Its level is also affected by:

• Mining program settings;
• Correct assembly of the truss;
• Stable connection to the server and the power grid.

Depending on the calculation algorithm, the hashrate of a specific mining machine can differ significantly. The reason for this is the design features of devices from different manufacturers.

Statistics and equipment

When purchasing hardware for a mining farm, you first need to focus on hashrate indicators.

Specialized services such as the WhatToMine mining profitability calculator help determine the computing potential of a video card or ASIC. This site contains data on most electronic gadgets used for crypto mining.

Hashrate in the cloud

In cloud mining, things are a little different. The user pays back a certain amount of hashrate generated by the data center equipment and receives dividends in cryptocurrency. The client selects only the service he wants to work with and the desired coin.

Best Cryptocurrency Mining Pools for 2022

A cryptocurrency mining pool is a server that distributes the calculation task among all its participants. As soon as one of them hits the target, a block is formed and the participants receive their reward. A pool has a higher chance of finding a block of transactions and receiving a reward than a single miner. However, if you participate in a pool, then you will have to share the profit with all its participants.

The list of mining pools is extensive; there are already more than one and a half thousand of them in the world

An optional cryptocurrency mining option for 2022 is cloud mining. There are a large number of services that are ready to provide computing power for rent. But you should be vigilant: against the backdrop of the growing popularity of digital currency and mining, a large number of scammers have appeared, so you need to use only reliable and proven services.

Difficulty of mining and increasing hashrate

The hashrate of the BTC network directly depends on the number of miners working in it. The more devices mine the same coin, the faster the computational complexity increases.

This indicator clearly demonstrates the level of complexity of generating hash codes. The difficulty of Bitcoin, for example, is measured using an internal score that starts at 1 (the easiest level) and increases or decreases exponentially depending on how many miners compete on the network. This estimate is automatically adjusted every 2,016 blocks. The more miners there are in the network, the higher the hashrate, and, therefore, more “guesses” (share accepted) are generated, which increases the likelihood of discovering the hash signature of a block.

Since blockchains are typically designed to add blocks (and release new coins) at a steady pace, difficulty is programmed to automatically adjust after a given number of blocks to keep that rate constant. If miners solve blocks more often than 10 minutes, the difficulty increases, and if miners solve blocks less frequently, the difficulty decreases.

In the event of a drop in value and miners leaving the network, its hashrate, and accordingly the complexity of calculations, decreases, allowing preset parameters to be preserved. However, this method is effective only up to a certain point. A large hashrate loss paralyzes the mining network because miners not only generate new crypto coins, but also process transactions. The system stops functioning, and the coin gradually dies, this has happened more than once in the history of the blockchain industry.

The hashrate of mining devices is a parameter that directly affects the profitability of mining. Its level fluctuates constantly, but the average value is usually within the mining capabilities of an electronic miner. Indicators can be increased by modifying the basic input/output system (BIOS) installed on this device and increasing the clock speed and power limit parameters. Overclocking a video card is done using the MSI Afterburner . It is necessary to gradually increase the frequency of the memory and core, selecting values ​​at which the video card demonstrates maximum without loss of stability.

Owners of GPU rigs and ASICs are trying to get the most out of their equipment, increasing the speed of calculations. But it should be taken into account that the effect of overclocking can negatively affect the real hashrate. The mining farm will quickly sort through possible options for solving a cryptographic problem, but the number of confirmed shares will be slightly less than with moderate overclocking. And on top of this, the device will consume more energy and be subject to increased wear and tear.

The efficiency of mining is always determined by pool statistics and depends on the ratio of the level of network complexity and the computing power of the rig. The number of shares sent in a short period of time (for example, 1 hour) may not coincide with the speed of calculations. But the average hashrate on a pool is always more or less equal to the speed of enumeration of solutions displayed in the terminal of the mining utility. If these indicators differ by more than 10-12%, then the rig owner has problems working with this pool. And if it is impossible to solve them, it is better to look for another collective mining server.

conclusions

So we looked at the concepts of hashrate and network complexity. From everything we have studied, two points can be deduced:

• When looking for tokens with low network complexity, you need to be very careful. After all, if the exchange rate of such an asset is very low, it will not be able to recoup the costs of electricity;
• When trading, you need to constantly monitor the difficulty of mining. This task should be part of your trading strategy. Until the cryptocurrency market has acquired a set of individual factors for predicting trends (like Forex and the stock market), all available means are used.

In addition, miners receive profits in digital currencies, but they need to spend fiat. Therefore, they constantly monitor the situation on the exchanges and due to this they themselves have a great influence on the market.

Where is the best place to buy Bitcoin? TOP 5 exchanges

For a safe and convenient purchase of cryptocurrencies with a minimum commission, we have prepared a rating of the most reliable and popular cryptocurrency exchanges that support deposits and withdrawals of funds in rubles, hryvnias, dollars and euros .

The reliability of the site is primarily determined by the trading volume and the number of users. By all key metrics, the largest cryptocurrency exchange in the world is Binance. Binance is also the most popular crypto exchange in Russia and the CIS, since it has the largest cash turnover and supports transfers in rubles from Visa/MasterCard and payment systems QIWI, Advcash, Payeer .

Especially for beginners, we have prepared a detailed guide: How to buy Bitcoin on a crypto exchange for rubles?

Rating of cryptocurrency exchanges:

The criteria by which the rating is given in our rating of crypto exchanges:

• Reliability of operation
  - stable access to all functions of the platform, including uninterrupted trading, deposits and withdrawals of funds, as well as the period of operation on the market and daily trading volume.
• Commissions – the amount of commission for trading operations within the platform and withdrawal of assets.
• Additional features and services - futures, options, staking, NFT marketplace.
• Reviews and support – we analyze user reviews and the quality of technical support.
• Interface convenience – we evaluate the functionality and intuitiveness of the interface, possible errors and failures when working with the exchange.
• The final score is the average number of points for all indicators, determines the place in the ranking.

Cloud alternative

If the user does not have enough money to purchase video cards, do not despair. There is a less expensive alternative - cloud mining. Today, the cryptocurrency market has a whole host of services that provide this service. The advantages of working with such companies include:

• unlimited hashrate;
• modern equipment;

Of course, cloud mining could not avoid its disadvantages:

• income is lower than with independent mining (of course, under equal conditions);
• the user is charged for renting capacity and electricity;
• inability to pick up equipment;
• the risk of becoming a victim of scammers offering their services under the guise of real services.

Potential income can be viewed before concluding a contract. Such companies know how to achieve high efficiency, and therefore configure devices as accurately as possible. If you can’t assemble a farm from top-end video cards, you should consider cloud mining as an option.

Choosing the right device

In the majority of countries, you can only get standard equipment for mining electronic currency. Of course, first of all we are talking about video cards. For most of the first hundred coins, one farm, including several cards, will be enough. Top altcoins will require more serious investments.

The most important component of the farm is the graphics adapter. Models from AMD are considered the ideal option, although nVidia cards are also capable of delivering good hashrate. Among the video cards with excellent profitability:

• GTX 1060 from nVidia;
• RX 570 or RX 580 4 GB from AMD.

It is useless to use more powerful assemblies, since their performance-to-price ratio is significantly worse, and therefore plays virtually no role in cryptocurrency mining.

The Radeon R9 280X card enjoys special treatment among miners. It has become a real technological flagship in the mining of the ZEC coin. At a price significantly lower than its analogues, it manages to accelerate to 300 hashes. In addition, you can always reduce the Power Limit by lowering the original 200 watts to 160.

When assembling a truss, a number of points must be taken into account:

• DDR5 series cards are the best in terms of performance and power consumption;
• the more memory, the higher the power;
• There is never enough cooling - graphics adapters operate at the limit of their capabilities, heating up to maximum temperatures;
• Only devices with a bit width of 256 bits or more are suitable (however, this rule does not apply to old-style buses).

Video cards with overclocking capabilities are of considerable value, as they can deliver 20 or even 40 percent more power.