Hashrate what is it and why is it important

What Is Hashrate Or Hash Power And Why It’s Important?

Overview:

  • Hash rate Explained
  • Example Units Of Measure For Hash rate
  • Example Units Of Measure For Hash rate
  • The Effects Of Hash rate On Mining Difficulty And Profits
  • Hash rate Mining Calculators
  • Final Thoughts On Hash rate

Anyone that’s been around the crypto scene for a while and knows what hash rate means understands its importance fully and how it affects certain critical aspects of mining and other vital factors.

So if you’re new to mining cryptocurrencies and this your first time trying to understand the term hash rate, then listen carefully as this can directly impact the capacity in what your mining hardware can mine. 

What Is Hash rate?  Hash rate is a unit of measure to determine the speed in which a computer’s chipset can mine cryptocurrency. It can also represent the total amount of hash power a cryptocurrency has mining on its network.

Knowing your hash rate and how to use it can help you determine whether mining with your CPU, GPU, or even ASIC miner is worth it. 

So for this article, I wanted to dive into what it is, how to use it, and what effects it has on mining cryptocurrencies. 

Dont worry, even though this topic may sound very techy, it’s not all that hard to grasp, besides this is probably one of the most important aspects of mining to understand, so you’ll want to be sure to follow along.  

Hash rate Explained

To fully understand what hash rate means, it’s essential to understand what cryptocurrency mining is first. You see, mining is a game of luck, like playing a lottery, and computing power. Miners are playing a guessing gaming while trying to solve very complex mathematical equations to find blocks. 

The network assigns each block a unique number called a target hash or nonce(stands for number only used once), which can only get solved in a particular way. When a computer joins a mining network, it begins trying to find this unique number by using a specific algorithm. 

Much like trying to find a key that opens a locked door, miners are competing in a race to be the first to find this magic number. The algorithms used in mining get referred to as hashing algorithms. Hence, this is why you may have heard the term I’m hashing away if you’ve hung around the mining scene for awhile. 

Additionally, because mining requires miners to use these algorithms to guess this number randomly over and over continuously, it forces the mining hardware to perform many calculations per second. The amount of calculations per second gets measured like a speedometer on a car, yet instead of mph(or kph for all my overseas peeps), it gets measured in hashes per second(h/s), also known as hash rate. 

Knowing your mining hardware’s hash rate is can provide valuable insight into how many coins you can mine in a day, a week, or even months. In other words, it allows you to determine whether or not you’ll be profitable with your mining rigs efforts.    

Example Units Of Measure For Hash rate

Ok, so now we know what hash rate is on an elementary level, but we dont know exactly how it’s measured. As mentioned earlier, hash rate gets measured in hashes per second or h/s, and here are some common values used to refer it according to bitcoin wiki.

Hash rate units of measure:

  • 1 Kilo(kH/s) is 1,000 (one thousand) hashes per second;
  • 1 Mega(MH/s) is 1,000,000 (one million) hashes per second;
  • 1 Giga(GH/s) is 1,000,000,000 (one billion) hashes per second;
  • 1 Tera(TH/s) is 1,000,000,000,000 (one trillion) hashes per second;
  • 1 Peta(PH/s) is 1,000,000,000,000,000 (one quadrillion) hashes per second;
  • 1 Exa(EH/s) is 1,000,000,000,000,000,000 (one quintillion) hashes per second.

Traditional Hash rate units of measure:

  • 1 MH/s = 1,000 kH/s;
  • 1 GH/s = 1,000 MH/s = 1,000,000 kH/s;
  • 1 TH/s = 1,000 GH/s = 1,000,000 MH/s = 1,000,000,000 kH/s.

The most common units of measure used are typically Mega, Giga, and Tera, which more times than none refer to the speed of which your mining hardware is mining. Obviously, the higher the hash rate your mining hardware has, the more coins you can potentially mine. However, that’s not the only metric you should concern yourself with when it comes to finding the best mining hardware on the market. 

The larger units, Peta and Exa, get commonly used when referring to a cryptocurrency total network hash rate, which calculates the total hash rate of all the miners mining on the network. Additionally, these larger units could refer to the accumulative hashpower of a mining pool or even a cloud mining farm. 

Once again, knowing the total hashpower of a cryptocurrency or mining pool can provide insight into the decisions you’ll need to make as a miner.

The Effects Of Hash rate On Mining Difficulty And Profits

Now that we fully understand what hash rate is, its time to learn more about the direct impact it can have on mining difficulty, which ties into your mining profits as well. You see, as more miners begin mining on the same network, the more difficult it becomes to mine a particular coin. 

Let’s take Bitcoin Mining, for example. Its total network hash rate is the largest out of all the cryptocurrency’s out there. In the beginning, when Bitcoin was getting started out, there weren’t many users on the network and even fewer miners back then. This made it really easy to mine for Bitcoin as you easily accumulate 50 bitcoin a week or more just by mining on a regular at-home computer.

However, the landscape of what Bitcoin Mining is today has grown to become industrial and requires mass amounts of hashrate using ASIC miners to have a chance at making a profit. You see, as more computers mine on the Bitcoin network, the mining difficulty increases along with it. Some see this as a negative aspect of Bitcoin, but in reality, it’s necessary to ensure the network matures properly, and the currency doesn’t suffer from inflation. 

To sum this up, the more hashpower that gets added to the network, the more difficult it becomes to mine cryptocurrency. Additionally, the amount of electricity needed to mine a coin also increases. This why you need to know these sorts of things, so you dont waste your precious hashpower on the wrong network. 

Hash rate Mining Calculators

So now we know a little bit more about what hash rate is and how it affects a cryptocurrency’s mining ecosystem we can begin getting down to my favorite part which mining calculators. These allow you to project what your mining hardware profits could potentially be. 

For GPU mining, I prefer to use sites like whattomine and coinwarz as they both have a comprehensive list of different calculators. For example, whattomine allows you to select a graphics along with the quantity of GPU. Whattomine also has a database with benchmarks of each GPU, so you dont have to know the hashrate of a particular GPU. 

Thus allowing you to see not only how many coins you would generate in a day but also give you key insight as to what cryptocurrency would be the most profitable to mine with the selected GPU. Pretty sweet in my humble, honest opinion. Coinwarz doesn’t have that feature, but you can easily copy over GPU stats from whattomine to get the same insight and compare. 

When it comes to factoring ASIC miners with Bitcoin, I highly recommend cryptocompare as it seems to be the most modest and straightforward to use of them all. Please note that these calculators are mere estimates as they can’t account for your effective hash rate, which is based on a few factors such as internet connection and operating temperatures. Use them more as a guidepost, if anything. 

Final Thoughts On Hash rate

So there you have it. This is all there pretty much is to know about hash rate, although I wanted to say one last thing. Some investors claim that hash rate is directly connected to a coin’s price. Meaning that if a particular mineable coin has a high hashrate that its a sign that many support it, which signal’s that it might be a good longterm investment.

Thank you for checking out my guide. I hope you enjoyed it. Oh, and by the way, if you feel the need to drop a comment below, then by all means, please do. I love hearing from crypto enthusiasts from all around the world.   

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