What is the bitcoin hashrate?

Hashrate refers to the computing power required to extract new units of cryptocurrencies. This is a commonly used term that helps to better understand the problems that blockchains face.

Participation test, recording, stablecoin, mining, halving … To understand the world of cryptocurrencies, you need to be prepared to deal with a large number of English terms, with convoluted names that can be intimidating. Most of these words point to especially crucial steps for cryptography, and it takes some time to read before you can figure out exactly what is going on.

Among all these seemingly obscure terms, Numerama now attacks hashrate, or hash rate in good French. A word that does not designate an operation in itself, but which, nevertheless, is essential to know in order to understand all the challenges of the mining of bitcoins and other cryptocurrencies.

Hashrate is an important indicator for cryptocurrencies. // Source: Canva

What is the hashrate of cryptocurrency?

In a very simplistic way, the hashrate designates the total computing power of a network used to validate the new blocks of a string, at a time T. Here, the networks in question are those of blockchains, for example, that of bitcoin. Therefore, the hashrate of the bitcoin network corresponds to the power of all the computers of all the combined mining farms.

The hashrate is a value expressed in hashes per second, hence its name, a hash that represents a calculation performed. At the time of writing this article, May 20, 2022 at around 11 am, the Blockchain site estimates it at 187,974 EH / s (exahash / second). That represents a lot calculations per second: one exahash corresponds to one quintile of calculations per second. What is a quintillion? According to Wikipedia, this is a billion trillion, or more simply, 1,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000 .. Therefore, they are extremely complex calculations.

In comparison, Ethereum hashrate is much lower. According to Etherscan, it averaged 1,126,674.2703 GH / s (gigahash / second) on Friday, May 13, 2022. One giga hash represents “only” one billion hash per second, or a power of calculation requested much lower than this. of bitcoin.

The hashrate of bitcoin and ethereum has not always been so high. In the early days of the crypts, before they gained popularity, their hashrates were much lower, all things considered. Shortly after its inception, the bitcoin hashrate was “only” 948 KH / s according to Coinwarz, and the lowest recorded etherum hashrate was 11.5297 GH / s, according to Etherscan.

The Bitcoin hashrate has grown significantly over time, except in the summer of 2021, when mining was banned in China. // Source: Blockchain
Ethereum hashrate is constantly increasing. // Source: Etherscan

What is the purpose of the hashrate?

But what good is a web site if it simply “blends in” with everything else out there? First, it is important to specify that hashrate only exists in blockchains that work with a working test protocol.

Blockchains are, in a nutshell, a kind of great account book that works in a decentralized way, that is, there is not just one person who can write in it, or who has authority. But how do you ensure the integrity of this great book and make sure that a hacker does not record a fake amount of money on his own, for example? To avoid this scenario, verification mechanisms have been implemented. These mechanisms are called protocols.

How to preserve the blockchain? With special mechanisms, called protocols. // Source: Canva

There are several types of protocols, which Numerama details in another article, but there are usually two main systems: the participation test, or participation test (used by Cardano or Solana), and the work test, which is used by bitcoin and Ethereum. (for now).

In a participation proofing system, validators (people whose function, as their name implies, validate transactions and make sure there is no misinformation) compete to validate the new blocks by betting part of their possession in cryptocurrencies.

In a working test system, it is up to the miners to validate the blocks by responding to extremely complex equations, so complex that they will require a high hashrate for them to be solved. To this must be added one of the peculiarities of bitcoin: a new block always takes 10 minutes to be mined. The difficulty of the calculations, therefore, is adapted to the number of miners in the network, so that this time is respected.

During the early years of bitcoin’s existence, there were few active miners in the blockchain: so the competition was not very strong and the hashrate was quite low. But with the growing popularity of bitcoins, more and more miners have been added to the blockchain, increasing the computing power available and therefore the difficulty of the calculations.

But the opposite is also possible: in June 2021, when mining was banned in China, we saw an impressive drop in available computing power, as the country accounted for almost half of the world’s hashrate. For a while, it was (a little) easier to extract bitcoin, before the difficulty adjusted. Since then, the hashrate has returned to its pre-ban level, and has even surpassed it. Chinese miners have settled in part in neighboring Kazakhstan or set up clandestine mining networks.

China’s mining ban has had impressive effects on the global hashrate. // Source: Blockchain

The hashrate is, after all, an indicator of the health of a blockchain: a large number of miners in a network indicate that many people trust the project. Above all, the more difficult the calculations, the more secure the information. I like he noticed Cryptocurrency expert Jameson Lopp in early 2022, for a hacker to attack and manipulate the bitcoin blockchain today, even with access to the entire global hashrate, would take more than 2 years of calculations to be able to rewrite. the chain.

However, the hashrate is still an indicator to be taken in retrospect: therefore, it is not representative of the price of cryptocurrencies. For example, the value of bitcoin has been falling sharply for months, which is not reflected in the hashrate. Global computing power is also sensitive to factors outside of bitcoin, be it political decisions (such as that of China), but also the price of electricity. If the latter increases to the point that it is no longer profitable for miners to continue their activity, the hashrate will go down. This is what happened in November 2020 in the Sichuan region of China, when the end of the rainy season marked the end of cheap electricity for mining farms in the region, which therefore , had preferred to cease their activity.

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