Gareth Johnson
Gareth Johnson
Updated on October 26, 2021

Every time a Bitcoin transaction is conducted, it has to be verified, recorded, and stored on the blockchain. These transactions are transparent and public but can’t be tampered with, which makes them more secure than traditional transactions.

These transactions are verified by Bitcoin miners and kept in blockchain blocks. The process of confirming the validity of the transactions on the network is called hashing.

If you’re unfamiliar with this term and want to find out more about hashing – how it works, how long it takes, and what its purpose is, keep reading our article.

What Is a Hash Rate?

The hash rate or hash power points out the combined computational power that’s used to mine and verify transactions on a Proof-of-Work (PoW) blockchain such as Bitcoin. Ethereum’s blockchain was similar, but since its 2.0 upgrade, it has a different approach to hashing.

The “hash” is a fixed alphanumeric code that represents words, messages, and any length of data. Various crypto projects use different hashing algorithms to create different hash codes that are randomly generated and different algorithms use different methods.

Rows of GPU in mining rig

Miners using their mining rigs more often than not compete to guess a hash that is equal or lower than the numeric value of the “target” hash by changing a single number value. That number is called a nonce. Every time the nonce changes, a new hash gets created. In other words, this works much like the lottery. Every new hash is a unique ticket with its own numbers.

Each new hash created is random and virtually impossible to predict. It could take more than a million guesses and a miner could still end up with the wrong number and the target hash could be guessed by another miner that wins the competition to fill the block with transaction data.

Different Hash Rate Units

When Bitcoin was released back in 2009, the Bitcoin network hash rate could be easily measured in hashes per second as the computing power on the network was relatively low. The hashing algorithm implemented by Satoshi Nakamoto, Bitcoin’s inventor, was the SHA-256 algorithm. This algorithm gives a fixed-length output.

When discussing the hash rate of the Bitcoin network or a single mining rig, we’re discerning how many times the SHA-256 algorithm can be performed. So, today’s familiar measuring stick would be H/s (hashes per second) or—with the growth of the network—TH/s, or one trillion hashes per second.

Back when Bitcoin was not widely utilized, you could mine Bitcoin on your home PC and have a chance of receiving a block reward, which was 50 BTC. However, the days when the hashing power remained below 15 digits are long over. Nowadays, the hashing power for a single Bitcoin goes up to 2.7 quadrillion hashes per second. You’ll find a list below that explains the different hash rate denominations.

Today, the mining reward for Bitcoin is only 6.25 BTC, while the hash rate is currently measured in trillions and even goes up to quadrillions/quintillions. The hash rate is measured in:

  • KilohashKH/s which measures thousands of hashes per second.
  • MegahashMH/s which measures millions of hashes per second.
  • GigahashGH/s which measures billions of hashes per second.
  • TerahashTH/s which measures trillions of hashes per second.
  • Petahash PH/s which measures quadrillions of hashes per second.

Bitcoin Mining

Cryptocurrency mining is mostly done through GPUs (graphics processing units) or by ASIC (application-specific integrated circuits) that consume lots of power and may rack up large electricity costs due to their power consumption.

In order to mine one Bitcoin block, it is estimated that you’ll spend almost 17,722 KW/h. That’s nearly $26,000 in electricity costs only. Naturally, Bitcoin’s profitability is greater than the power costs.

Bitcoin coins hidden inside gold cave

The specialized mining machines, on the other hand, could set you back thousands of USD further. Luckily, there are options to mine in mining pools, or in other words, joining your hardware with other users in order to achieve a higher hash rate.

You could also go solo, but that depends on the power of your rig. Crypto miners with lower-end mining machines have smaller chances of filling out the next block if their computational power is low compared to other miners on the network.

Mining Difficulty

The difficulty level for Bitcoin is measured by using an internal score that starts at 1, or the easiest level, and shrinks or grows depending on how many miners are present on the network. This internal score is adjusted around every two weeks or when 2,016 blocks have been filled and added to the chain.

Miners fill out new blocks with data every 10 minutes. What this means is if the miners are creating new blocks in less than 10 minutes, the difficulty level will go up and vice versa. The higher number of miners on the network would result in a higher number of hash rate attempts, which leads to more nonce guesses. The higher the number of guesses, the higher the chances for quickly discovering the nonce number and filling the block with data.

Blockchains are designed in such a way that they only add new blocks to the chain and release new crypto coins at a steady rate. The difficulty level is programmed to automatically adjust to the network’s traffic after a number of blocks have been filled to keep the process at a constant speed. 

Bitcoin’s Hash Rate and Calculation

The Bitcoin hash rate is calculated in hashes per second. The Bitcoin network is currently very large, and as a result, it can calculate hashes in quintillions every second. Just as a reference, one quintillion equals 1,000,000,000,000,000,000 hashes.

There are fluctuations in Bitcoin’s daily mining power and those can be significant. Most commonly there are 10% increases and decreases, but this doesn’t mean that large numbers of miners are leaving or joining the network every day.

World map with bitcoin icons in different places on the map on blue background

Bitcoin’s hash rate is not precisely calculated. There are so many different machines running around the globe at all times and the best way to get an estimate of the current hash rate is by viewing and comparing recent market activity. You can check the current hash rate via a live map.

Miners tend to view these hash rates estimates in order to estimate their costs and expenses for the mining endeavour. There are other reasons too, but we’ll explain further in the article.

Why Is the Hash Rate Important?

For the individual miner, calculating the hash rate can help them figure out their costs and profitability. 

There are many different kinds of mining rigs and mining machines, and new ones are constantly appearing on the hardware market. Every crypto is mined with different machines and they all have different hash rates due to the fact that crypto mining requires different levels of power, memory, and process bandwidth.

The way miners calculate their personal hash rate is by using hash calculators. The miners’ input information about their mining gear, electricity and power costs, different mining fees, and other info that is required depending on the calculator. By taking all of these items into consideration the hash calculator creates an estimate of earnings and losses. 

Mining rigs can be upgraded with newer and better hardware and because of that, the network hash rate might increase a couple of levels. But more computations and a more powerful network don’t mean that more bitcoins will be mined for a lesser amount of time. We’ve discussed this earlier, but the network is designed in a way to adapt to surges in power like these and raises the level of difficulty to ensure the 10-minute block filling time.

If the number of miners on the network increases together with the new miners who’ve started chasing the block, the mining difficulty will also rise because there will be more guesses from the miners at each second.

Electricity Prices and Waste 

If you wish to be a Bitcoin miner you must invest in a mining rig, find a place to store it, and you must feed it with electricity to keep the machine running. Big mining facilities often pay for additional temperature and humidity controls in order to keep the machines at the top of their game and to keep the parts from not heating up too much to extend their lifespan.

The electricity costs greatly affect the miner’s profits. For instance, a mining company that has invested in solar panels or small wind turbines might have extra costs at the beginning of their mining campaign but their long-term profits will be much greater than those of a miner that’s working from home and pays regular electricity bills and utilities. As the difficulty level for mining goes up, so do the electricity bills that greatly increase the costs of mining. This is a great moment to talk about the electronic waste that’s caused by cryptocurrency mining

Vector illustration of electricity company, towers, and windmills on top of bitcoin on green background

As we stated earlier mining is done through hardware components. These components have a lifespan and when they are used up, they lose their mining capabilities due to damage from constantly being used and are put under high-temperature fluctuations so they are discarded and replaced with new ones. According to an article on Digiconomist, there are 77.8 grams of electronic waste coming from every block filled out with data. We’ve included a live map of electronic waste that you can view for yourselves.

What the Hash Rate Means for Bitcoin

The good and stable Bitcoin hash rate means that miners are investing their money in brand new, top-of-the-line mining hardware which indicates that the network will remain online and there are interested parties in working on it. The Bitcoin hash rate can be considered as a health beacon for the network, the high hash rate means that there is a high-processing presence on the network. This is also good for the security of the network.

The network security of the Bitcoin blockchain depends on the group efforts of the miners that build the same chain. As they validate new blocks they get added to the blockchain and the longest chain of these transaction blocks is accepted as the valid version of the blockchain.

It’s of great importance that only one chain is present on the network, otherwise, in theory, Bitcoin could be duplicated or be subjected to double-spending. 

A Few Words Before You Go…

Bitcoin mining is a very competitive profession, one could list it as a profession. We’d like to think of it as a profession. There are great upfront costs, responsibility, and regular costs like electricity or rent for the storage of the mining rigs. A miner has to be smart and use everything to his advantage in order to cover his mining costs in order to turn a profit. 

To summarize the Bitcoin hash rate we could state it like this; The hash rate is the amount of data hashing per second that the computers on the Bitcoin network perform in order to verify the transactions and encrypt the network. The hash rate is also the standard of which the network health is determined and is calculated by the number of miners present on the network and the mining difficulty. 

This article tried to explain the meaning of the hash rate, its importance, how it affects miners, power and electricity costs, and electronic waste. The alternative way to put some bitcoins in your digital wallet besides mining would be to purchase Bitcoin from an exchange, but we’ll leave that part for another time.