Trader’s Vocabulary: Bitcoin Hashrate

Trader’s Vocabulary: Bitcoin Hashrate

06/08/2020 by Koinal
Bitcoin uses a proof of work method for mining. The miners must compete and solve a mathematical problem. The solution requires running an algorithm to produce the correct result. This process is called hashing.

When Satoshi Nakamoto implemented his algorithm called SHA-256, the rate is the speed at which one machine and the entire network of computers can perform the SHA-256 algorithm. The symbol H/s represents hashes per second. When describing Bitcoin as a whole network, the reference is TH/s, representing one trillion hashes per second.

Global Mining Power

A Bitcoin grew from its humble beginnings, the number of miners grew. In the early stages, the mining rewards were high. The early stages of mining were feasible on a home computer, and the award was 50 BTC for each successful block. Modernly, the hash function block reward is 6.25 BTC, and the hash rate measures range from trillions to quintillions of hashes per second. 

The Bitcoin Hash System

Globally the Bitcoin hash rate produces a block about every 10 minutes. The algorithm controls the hashing problems’ difficulty to keep the rate of closing consistent; as the level of activity decreases, the level of difficulty increases.

Mining is a Game of Chance

Bitcoin mining requires high-levels of hashing power. A single machine must operate in the range of trillions of hashes per second to compete. With millions of competitors, the chances of an individual machine winning an award is extremely small. Perhaps once in a decade or more. The miner must not only solve the problem, and they must be first.

Miners increase their chances of winning by adding more TH/s incapacity. Modern machines operate in the range of 60 to 100 TH/s. The global Bitcoin Network must multiply those numbers by millions.

Pools Are Safer

Individually, a miner would have to invest in machinery and electricity for many years before producing a hash and collecting rewards. Yet, their hashing power forms part of the protective system for the Bitcoin platform. To raise income and opportunity, miners can create or join mining pools. Miners can contribute their hashing power and gain rewards by sharing the pool winnings. The pool addition took the risk out of mining. By providing hashing power to a pool, a miner has a high assurance of some compensation.

Why Is Bitcoin Hash Rate Important?

The hash function keeps the system safe, efficient, and resistant to attack. Miners must compete to earn their share of the Bitcoin reward for solving hashes and closing blocks. Because millions of mining machines are at work to solve today’s intensely tricky problems, there is little chance of a successful attack. The Bitcoin global computing power is spread out among many nations, and it involves many people. A successful attack would be challenging and nearly impossible to match. The attacker would need to control 51% of the computing power, locations, and computational activity.

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