Guellord MbusaIt's no secret that the Bitcoin network is maintained and secured by mining. This process is carried out by users with the specific powerful machines called Asics ou graphics cards depending on the cryptocurrencies.
These validate the transactions that take place in the encrypted Bitcoin network. This system means that transactions are generally irreversible and ensures a good level of security for Bitcoin. The power of all these machines combined is called the hashrate of the bitcoin network.. Since miners are paid in bitcoin (BTC), the amount of computing power and the difficulty of mining new bitcoin (BTC) are elements that primarily influence the price of bitcoin (BTC).
But how does it work in practice?
What is the hash rate of the bitcoin network?
In simpler terms, the hashrate (hash rate) measures the mining power of a computer per second. This is the mining speed. This speed is measured in units of hashes/per second, that is, how many calculations per second can be performed by a computer.
As we already know, the IT structure Blockchain is the basis of bitcoin (BTC) and many other cryptocurrencies. The Bitcoin network is made up of blocks independent of each other which form a chain. Blocks are like files containing information about transactions carried out on the network. These blocks are added to the chain after validation of a transaction by solving a complex mathematical equation carried out by the minor.
The latter receives bitcoin (BTC) as a reward for his participation in the validation of transactions on the network.
Confirming the integrity of network transactions is known as “hash” in one block. Thus the hashrate of the bitcoin network therefore corresponds to the power of all the computers of all the mining farms combined.
Calculating the hash rate helps individual miners or those in pools predict their profitability. However, because cryptocurrencies are mined with different types of mining equipment, the hash rate of each machine differs. Since different levels of processing speed, memory, and power are required for mining, the network hash rate increases when mining equipment is upgraded or vice versa. And, because the network is designed to release a specific amount of Bitcoin at a time, a more robust network does not necessarily lead to mining BTC faster.
It should also be noted that the difficulty of bitcoin mining(BTC) increases when more miners join the network, because it takes more guesses per second to solve the complex math equation to get the reward.
As a result, the hash rate increases with network difficulty. Likewise, hash rate is a crucial indicator for cryptocurrency investors and network security against hackers. As the hash rate increases, network attacks become more costly and difficult.
How important is hashrate for the Bitcoin network?
If there's one crucial indicator of a blockchain's strength, particularly from a security perspective, it's its hash rate. The increase in hash rate is therefore a good sign for a blockchain.
Bitcoin's hashrate increases as miners multiply. This means that the total computing power of the network is high and it is difficult for malicious actors to interfere with the normal operation of the network. However, if it happened that the network was owned by a majority hash rate controller; he could cancel his payments by reorganizing the payments. It is the 51% attack that could disrupt the network. (The hacker would need to have more than 51% of the network power to do this). This action would lead to double spending issues due to a drop in the network hash rate. However, no one has an interest in this happening because it would be counterproductive for everyone.
On the other hand, a decrease in the hash rate exposes the network to cybercriminals due to the low cost of executing a 51% attack. Additionally, a lower hash rate makes the cryptocurrency less decentralized, which poses a considerable risk for crypto investors. To protect its users from losing funds, crypto platforms could stop trading or delist a currency if its hash rate suddenly drops.
⚙️ In short, for cryptos running on Proof Of Work, a larger hash rate is considered better for network security and stability. This means more energy costs, more miners, and more time is needed to support the network.
How does Bitcoin hashrate work?
The SHA-256 cryptographic hash function , which converts any input data into a string of 256 bits (hash), is one of the technologies using which Bitcoin measures its hash rate. Due to the one-way nature of this function, it is simple to determine the hash from an input, but not vice versa.
A hash rate, which can be expressed in billions, trillions, quadrillions and quintillions, is a measure of the number of calculations that can be performed each second.
For example, a hash rate of 1BH/s indicates that a billion guesses can be made every second.
How is Bitcoin hash rate measured?
Exahashes per second (EH/s) equivalent to one quintillion hashes are used to express the hash rate of BTC. By comparing the average time between mined blocks with the difficulty of the network at any given time, the overall hash rate of the network can be approximately calculated.
What is mining difficulty?
Mining difficulty refers to the difficulty for miners to generate a hash lower than the desired hash, which is accomplished by lowering the numerical value of the hashed block header. On average, a new block (Bitcoin) is found every ten minutes. However, if a BTC is discovered less frequently than the average time, the difficulty decreases or vice versa.
Additionally, it is essential to note that the Bitcoin network mining difficulty is automatically changed after 2 blocks were mined. Therefore, depending on the number of miners and their total hashing power in the mining network, the difficulty can be adjusted up or down.
What is the current hash rate of Bitcoin?
Although the precise hashing power of Bitcoin is unknown, it can be inferred from the number of blocks currently mined and the difficulty level of the blocks. So how to monitor Bitcoin hash rate? Blockhain.com offers estimates on the current hash rate of Bitcoin, which would be 249,03 million TH/s as of October 25, 2022.
How does hashrate affect the price of Bitcoin?
Currently a bitcoin mining company requires colossal investments due to the high competition in the market. Only a few years ago it was possible to mine bitcoin (BTC) alone in front of your small computer. It was the good old days when many crypto fortunes were made. Today such an activity is almost useless because it is unprofitable. Worse, it would waste money and even more so depending on the regions where electricity is expensive.
A recent study listed the countries where it would be the most profitable to mine bitcoin. In first place, we find the Kuwait andAlgeria. (See —> Kuwait Algeria 🇩🇿: The future Eldorados of bitcoin mining?)
Today's miners pile thousands of machines running at full speed into warehouses called “mining farms”. All this requires significant financial resources.
The computing power and the difficulty of mining new bitcoin (BTC) tokens are elements that influence the profitability of the mining industry. The more computing power the Bitcoin network uses, the higher its value.
Furthermore, rational miners are only willing to mine BTC if it is profitable, which implicitly means that any other cryptocurrency without demand would have zero value and miners would redirect their resources elsewhere. The price of bitcoin (BTC) is a function of all these investments.
Final Word on Bitcoin Hashrate
Changes in the price of Bitcoin are important not only for purely speculative reasons, but also for how they affect the Bitcoin network energy consumption. As implausible as it may seem, for the bitcoin (BTC) market, there are only a few mining pool operators to coordinate their operations to control the market price.
Additionally, the inelastic nature of the bitcoin (BTC) supply and intense competition in the mining industry are also factors that impact the price of the crypto asset. Although speculation has a considerable share in the variation of the price of bitcoin (BTC), it is believed that the hash rate or the total number of calculations made by Bitcoin miners and the price of BTC are linked.
Read other related articles:
- How to become a blockchain developer? Here is the guide.
- Start Here: The Beginner's Guide to Bitcoin
- Simple methods to mine bitcoin on your computer!
- Know the different players in the Bitcoin ecosystem
- Understanding the “Bitcoin Improvement Proposal (BIP)”: What is it?
—–
Our affiliate links:
Buy cryptocurrencies (the easy way):
Generate interest on your cryptocurrencies:
Secure your cryptocurrencies:
To have fun and play
- The best for Esport and bitcoin sports betting : CloudBet
- Discover the bitcoin casinos
