What Is The Hash Rate?
Photo via Drone Trotter
Bitcoin’s hash rate hit an all-time high on January 3 during its birthday week. 🥳
Today, we define what the hash rate is and why it matters.
What Is The Hash Rate?
The hash rate refers to the computing power required to process blockchain transactions.
More specifically, hash rate measures mathematical calculations per second and reflects the health of a blockchain network.
Mining
Bitcoin is a proof-of-work network where miners compete to solve mathematical equations in order to validate transactions on the blockchain.
A higher hash rate indicates more miners are competing to solve the equations needed to complete the next block.
The cost of mining has a positive correlation with the hash rate as more energy is required.
Security
The hash rate also reflects the strength and security of the network.
As more miners compete to validate transactions, the network as a whole becomes more decentralized.
A more decentralized network is less susceptible to attacks from a centralized party trying to control the network.
Measuring Hash Rates
As of today, hash rates are measured by how many trillion transactions per second are being processed. This is called terahash per second and the notation is TH/s.
As of January 4, 2022, Bitcoin’s hash rate is 180M TH/s meaning 1.8 x 1020 computations are being processed per second.
Bitcoin’s hash rate has ballooned 12.5x since January 2018. This large increase suggests that the stability and security of the Bitcoin network has improved dramatically.
Here’s a chart via Blockchain.com:
Bitcoin Mining Around The World
Here’s a graphic of Bitcoin miners around the world as of August 2021.
In 2021, China banned all crypto-activities causing Chinese miners to shut down. This spurred an increase in mining in Kazakhstan and the United States.
However, Kazakhstan is experiencing internet blackouts, amid recent protests, putting its miners off-line. This may affect the hash rate and is a developing story. We’ll provide an update in Saturday’s Weekend Recap (1/8/2022).
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This is the sixth installment in The Osprey Crypto Made Simple Series where we describe a concept clearly and concisely. If there’s something you would like us to define, please reply to this Newsletter email or, if you are reading this on the web, hit us directly at riley@ospreyfunds.io.