**What is Hashrate in Crypto Mining?**
If you are familiar with the world of cryptocurrency, you would’ve certainly heard many times that a cryptocurrency's hashrate or hash power has increased or decreased. Have you ever wondered: what is hashrate and what it means?
Whether crypto mining is your business or a hobby, it is important to understand what hashrate is and its significance. Knowledge about hashrate can help you make the right decisions and boost your chances of success as a miner.
In this article, we will discuss what hashrate is and what the impact of hashrate on profitability is.
Hashrate is the number of calculations that the mining hardware like GPU performs every second. It is the primary tool to measure the performance of a miner.
Crypto mining is the process of finding blocks by solving complex math problems. The miners must solve these problems in a particular sequence to seal off the blocks.
The mining machine needs to be fast and efficient enough to make millions of guesses every second to solve a problem.
In mining terms, the miner needs to be below or equal to “target” when hashing the block’s header to mine a block successfully. A target is a 256-bit number that changes every time a change occurs in difficulty.
The miners try different nonces (the variable parts of the math problems) to find a hash below the target.
A nonce is a 32-bit arbitrary random number that is typically used only once. It starts from ‘0’ and is increased every time until one that results in a hash under the target is found.
_**So how do you measure hashrate? Hash per second or h/s. In simple words, if you have a mining rig with a hash rate of 60 h/s, this means your machine can make 60 guesses a second. The higher the hash rate it offers, the more powerful your mining rig is.**_
In addition, the hash rate of the same machine may also vary based on the cryptocurrency you are mining.
There is a strong relationship between the hashrate, miner’s profits, and difficulty, and each is dependent on others in many ways.
For instance, we take the example of bitcoin. Whenever the difficulty of the Bitcoin network increases, the miners need more hashrate to find the blocks. In return, they receive the reward of 12.5 bitcoins plus the transaction fees of the last ten minutes.
The difficulty goes up with an increase in the number of miners on the Bitcoin network. The higher the difficulty, the more the hash power the mining machine would need to compute more guesses per second to solve the problem.
The profitability is calculated while considering the electricity costs linked with the mining equipment. It is known as the efficiency of the miner.
The electricity cost increases every time the difficulty increases. So, the more electricity you will burn, the more you have a chance to add blocks for rewards. Therefore, when buying GPUs or other mining hardware, you must investigate the hashrate/power consumption ratio to calculate profitability.
_Therefore, the hashrate is a critical factor to consider when mining. However, your success as a miner is more dependent on your efficiency._
**News as Miners Leave Bitcoin in Droves, Space Allocation Dedicated to Filecoin and Chia Surges**
While a large quantity of hashrate has stopped dedicating resources to the Bitcoin network, many alternative mining ecosystems are swelling with new participants. China’s ASIC exodus has ignited a significant increase in demand for accessing storage power on Filecoin and Chia’s proof-of-storage networks. Both networks have seen space allocation spike significantly since the bitcoin mining crackdown in China.
A lot has been happening in the cryptocurrency mining space recently, as the industry is seeing a massive shift since the bitcoin mining crackdown in various Chinese provinces. SHA256 hashrate dedicated to the Bitcoin (BTC) network has plummeted over the last few weeks, and the hashrate drop caused the network’s mining difficulty to dip close to 28% this past weekend. Interestingly, this was the largest epoch mining difficulty drop BTC has ever experienced, and in two weeks, it may be even larger.
At press time, according to coinwarz’s hashrate chart set for a one-month interval, BTC’s hashrate is 87,660,572,446,369,430,000 hashes per second or 87 EH/s. The mining difficulty drop made it easier and more profitable to mine BTC, but alternative crypto assets that leverage different consensus algorithms have been far more profitable. Today’s most profitable consensus algorithm is Blake256R14 which can mine the crypto asset decred (DCR).
A machine that boasts more than 52 terahash per second (TH/s) — and pulls 2,200 watts off the wall with an electricity consumption rate of $0.12 per kilowatt-hour (kWh) — can see profits of up to $116 per day using DCR exchange rates on July 5. A machine that can mine the Ethash algorithm and coins like ETH, ETC, CLO, PIRL, and UBQ can get roughly $42 per day using today’s crypto exchange rates, the same electrical consumption with 750 mega hash per second (MH/s), and 1,350 watts of power.
These specific consensus algorithms have seen an increase since the SHA256 exodus. Still, in comparison to times before China’s crackdown, these networks also lost a considerable amount of hash during the shift as well. However, two notable crypto networks saw the opposite effect as space allocations dedicated to the Chia network and Filecoin network have grown exponentially. In mid-October, Bitcoin.com News reported on Filecoin’s miner strike, which saw a standoff between members of the Filecoin mining community.
At that time, Filecoin’s “Network Storage Power” according to filfox.info was 600 pebibyte (PiB) of effective storage. When the first warnings of a miner crackdown in China came out of Inner Mongolia back in March and went viral, Filecoin’s effective storage rate skyrocketed. The effective storage rate climbed higher and higher as each week passed, as today’s rate is 7.087 exbibyte (EiB). He networks crossed a milestone of 1 EiB on November 24, 2020. The network crossed a milestone of 1 EiB on November 24, 2020, then a great majority of the effective storage increase stemmed from Q2 2021.
The crypto asset network Chia has also seen the space allocated to the Chia network grow exponentially and after the Sichuan crackdown, it spiked considerably higher than usual. Chia network statistics show 30,505 PiB of allocated storage dedicated to the chain on July 5. It was only 26,718 PiB on June 22, which shows it has increased 14.17% since the start of the Sichuan mining crackdown that week. The Chinese journalist Colin ‘Wu’ Blockchain tweeted about the demand that Chia and Filecoin mining was seen on June 20 and since then space allocated to both networks has increased a great deal.
“The computing power of Chia and Filecoin in China has not been affected,” the regional reporter noted that day. “\[The\] Chinese government mainly controls the power sector to crack down bitcoin mining, but they consume less electricity. Their computing power is continuing to rise, and some bitcoin miners may switch to them,” he added.
What do you think about the other consensus algorithms besides Bitcoin’s SHA256 seeing more demand these days? What do you think about the exponential increase in space allocated to Chia and Filecoin’s networks? Follow our official social media and let us know what you think.