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Bitcoin Hash Rates Explained

Basics Mining

Hash rates are an important factor for miners to use to determine profits. Here is a primer to help understand how they work.

Hash rate basics

Hashing is a transformational process which converts strings of data into a fixed length of alpha-numeric sequences. Hash rate measures the number of times a hash function can be computed per second.

A hash function — which for bitcoin in SHA256 — takes an input of any length and produces an output with a specified length. However, with hash functions, the same input will always produce the same output, and if you want to find an input that hashes to a specific output, you need to try random inputs until you find the correct ones.

Hashes and mining

Hash rate measures how powerful a Bitcoin miner’s machine is, and therefore, the miner’s expected profit is directly proportional to the hash rate.

To mine Bitcoins, miners must use an input that includes a list of the most recent transactions that need to be verified, with a hash smaller than a specified value, which is adjusted periodically. When a miner finds the value it will then be broadcasted, a set of included transactions will be verified, and that set will become the next block in the bitcoin blockchain.

The only way for miners to find these values is by searching for them, and continually faster hardware has been developed to quickly compute the SHA256 hash function. Moreover, some machines can compute trillions of hashes every second. For example, when the network reaches a hash rate of 10 Th/s, that means 10 trillion calculations per second.

The bitcoin network must make these intensive mathematical and with cryptography-related operations for security purposes.