Hash Rate — Definition, Importance, and Measuring

Apart from learning what a hash rate is, this guide will explain its importance for the crypto market. Furthermore, you’ll learn how the hash rate is measured and what factors influence its changes.

In addition, we’ll speak about the main advantages and disadvantages of high and low hash rates. Likewise, by the end of this guide, you’ll find out what is considered a good hash rate.

What Is Hash Rate?

What does hash rate mean? Hash rate can be described as a measure of the processing power of a PoW network. Namely, the hash rate calculates how quickly miners can solve mathematical problems associated with validating transactions and adding new blocks to the network. In simple words, the hash rate represents the speed of mining measured in seconds.

A crypto hash rate is also an indicator of the security of the PoW network. The higher the computing power, the more secure the network will be.

Why Is Hash Rate Important?

Hash rate plays an important role in the crypto market. Namely, when the hash rate goes up, it means that more miners are joining the network. This can lead to an increase in the price of cryptocurrencies, which will be very useful for crypto investors.

On the other hand, when hash rates start to decrease, it means that more and more miners are leaving the network. A smaller number of miners equals a less secure network. This also means that the network will be more exposed to hacks.

In addition to that, the hash rate will have an impact on crypto transaction fees. A network with a high hash rate will process more transactions per second, which will lead to lower transaction fees. Conversely, a drop in the hash rate will reduce profitability. Crypto exchanges may remove cryptocurrencies with low hash rates to protect their users.

How Is Hash Rate Measured?

Hash rate measurement refers to the number of calculations per second. It can be expressed in thousands, millions, billions, trillions, quadrillions, and quintillions.

• Kilohashes per second (kH/s) — one thousand hashes per second
• Megahashes per second (MH/s) — one million hashes per second
• Gigahashes per second (GH/s) — one billion hashes per second
• Terahashes per second (TH/s) — one trillion hashes per second
• Petahashes per second (PH/s) — one quadrillion hashes per second
• Exahashes per second (EH/s) — one quintillion hashes per second

The total computing power of mining machines is measured in TH/s — total hash rate per second. Larger PoW networks will have higher hash rates.

What Is Hashing Power?

So, what is hash power? This term refers to the hardware power used for mining, i.e., solving hashing algorithms. Each device will have a different hash power. For example, CPUs have hash power between 8 and 20 kH/s, GPUs between 10 and 60 MH/s, and ASICs between 90 and 100 TH/s.

You can determine the hash power of your hardware using a calculator, such as whattomine.com. Likewise, you can download hash rate mining software, like NiceHash or CGMiner. In short, stronger hardware equals higher hash power.

What Causes Hash Rate to Change?

Many factors can cause hash rates to alter, such as changes in the price of BTC, the availability of mining rigs, and crypto regulations.

For example, a drop in the price of BTC may force miners to take a break from mining, which will lead to lower hash rates. Hash rates will also change if a given PoW network becomes larger. The same applies to upgrading the mining equipment, which will increase the hash rate. 

Finally, changes in hashing rates will be affected by mining difficulties, the profitability of mining a certain digital currency, and the number of miners on a particular PoW network.

What Happens When the Hash Rate Is High?

A high hash rate means that more computing power will be needed to verify transactions in the network. This also implies higher electricity consumption and more difficulties in creating new blocks.

On the other hand, higher hash rates will boost the security of the PoW network, as it will become more resistant to 51% attacks. High hash rates can also lead to an increase in the price of BTC as it will encourage competition between miners.

What Happens When the Hash Rate Is Low?

Low hash rates will reduce electricity consumption, as less computing power will be needed to verify transactions. Likewise, a drop in hash rates will lead to an increase in block rewards since the number of competing miners will decline. Yet, a smaller number of miners will make the network more vulnerable to cyber-attacks. 

Finally, low hash rates will enable easier creation of new blocks. That said, low hash rates will also indicate higher transaction fees.

What Is a Good Hash Rate?

A good hash rate is considered to be 100 TH/s or 100 trillion hashes per second. With this hash rate, miners will be able to add a new block to the Bitcoin network within 10 minutes. Moreover, in the case of low mining difficulty, the time of adding new blocks will be reduced to one or two minutes.

BTC mining difficulty will be based on its current hash rate. The higher the hash rate, the harder it will be to mine.

Keep in mind that this is a mere generalization since each cryptocurrency will have its benchmark. Moreover, the overall hash rate will also depend on the hardware used.

For example, if you want to mine bitcoins, you’ll have to use ASICs, whose average hash rate is 100 TH/s. On the other hand, if you want to mine Ethereum, you’ll have to use CPUs. Most CPUs have a hash rate of 20 kH/s.

What Is Bitcoin Hash Rate?

Bitcoin hash rate is a measure of the amount of computing power used to mine BTC. Bitcoin miners use devices called rigs. These special machines are designed to solve complex math problems and add new blocks. Bitcoin’s hashing algorithm is called SHA-256. This algorithm generates a 256-bit hash and is also used to verify transactions.

BTC’s hash rate has experienced a significant increase since its launch. For example, in 2016 its hash rate stood at 1 EH/s, while in 2020, it grew to 100 EH/s. At the time of writing, the BTC hash rate stands at 479.39 EH/s. If we compare its hash rate with Ethereum, we’ll notice a big difference. On that note, the ETC hash rate currently stands at 151.49 TH/s.

Conclusion

The hash rate refers to the speed at which miners within the PoW network validate transactions and create new blocks. Hash rate is measured in seconds, and can be expressed in thousand, million, billion, trillion, quadrillion, and quintillion hashes per second.

A high hash rate equals a more secure network, an increase in the value of digital currencies, and a decrease in transaction fees. However, the higher the hash rates, the more difficult it will be to create new blocks.

On the other hand, lower hash rates can lead to higher rewards, higher fees, and greater network vulnerability to hacks.

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