What is Bitcoin Hashrate (EH/s)? How it Works & Why it Matters

Bitcoin Hashrate is defined as the Bitcoin mining difficulty of the blockchain, i.e., it measures how difficult it is to mine a Bitcoin.

A hash, an alphanumeric code, is randomly generated by the hash function. Bitcoin mining, also known as 'hashing,' involves the process of attempting to guess this code using a computer that submits these guesses to the blockchain. 

Bitcoin hashrate is a measure of how many guesses are being submitted per second to the entire blockchain. A higher hashrate signifies a need for more computing power, increased energy costs, and longer verification and transaction addition times. This, in turn, results in slower and more expensive Bitcoin mining.

Bitcoin Hashrate is measured in billions, trillions (a thousand billion), quadrillions (10 raised to 15th power), and quintillions (10 raised to 18th power).

For example: According to Coinwarz, the current Bitcoin Hashrate as of April 26th, 2024, is 613.00 exahashes per second 3:31 PM UTC.

1 exahash is 1 quintillion (10 raised to 18th power). This means that 688 quintillion guesses are being submitted to the blockchain every second.

Now, if we looked at the Bitcoin Hashrate exactly one year ago from today on April 26th, 2023, the hashrate was 327.18 exahashes per second.

So, as you can see, it was almost 88% cheaper to mine Bitcoin just a year ago!

You can check out an interactive graph of Bitcoin hashrate in exahashes on Coinwarz here. 

Remember: that before you view the graph, 1 exahash per second = 1 quintillion hashes/guesses submitted per second) and in terahashes on Blockchain.com here. 

Remember: that 1 terahash = 1 trillion hashes/guesses submitted per second.

Hashrate is commonly defined as the speed at which a Bitcoin mining machine operates. In the context of Bitcoin, hashrate refers to the number of computations that hardware can perform per second as it works to solve the cryptographic puzzle. 

As more miners join the network, the network hashrate rises. The higher the Bitcoin hashrate, the more difficult it is to attempt to attack Bitcoin.  

The higher Bitcoin’s price goes, the more miners will want to join the network, further adding to the security and reliability. 

Bitcoin miners and hashrate are inexorably linked. Miners provide the hashrate to the network in exchange for the newly issued Bitcoin and transaction fees.

Let’s demystify how it all works, shall we?

Strap on your virtual hard hat and get ready to mine some knowledge!

1) What is Bitcoin Mining?

At its core, Bitcoin mining involves the process of adding new transactions to the blockchain and securing the network. Miners use powerful computers to solve complex mathematical puzzles and validate transactions. In return for their mining efforts, miners have the chance to earn newly minted Bitcoin as a reward.

2) SHA-256: The Power Behind the Scenes

Meet SHA-256 (Secure Hash Algorithm 256-bit). It’s like the magic spell that miners chant to find a solution to the mathematical puzzle. SHA-256 takes the transaction data (block header) and transforms it into a fixed-size hash value using proof-of-work.

3) Quest for the Nonce: Mining’s Holy Grail

Now, here comes the fun part! Miners tirelessly search for a specific value called a nonce (a number used only once). When combined with the block header data, it produces a hash value with particular characteristics. Think of it as a miner’s personal stamp of approval on the new block.

4) Cracking the Code with Trial and Error

Finding the elusive nonce is a process of trial and error. Miners continuously change the value of the nonce and run it through the SHA-256 algorithm until they stumble upon a winning combination that meets the criteria. Once a miner finds the correct nonce, they tout it to the network, claiming, "Eureka! I’ve solved the puzzle!”

5) Time is of the Essence: Block Time Matters

To keep everything running smoothly, Bitcoin’s protocol adjusts the mining difficulty every 2016 blocks (roughly every two weeks) based on how many miners contribute to the network. The aim is to maintain an average block time of about 10 minutes. This clever system helps regulate the pace of mining. It ensures that new blocks are added at a steady and reliable rate.

Miners are the computers that actually perform the computations, with hashrate as the number of computations that can be performed per second. The more miners that join the network, the higher the hashrate grows. The higher the hashrate grows, the more difficult it is for one single entity to affect the network.

Since their computations are effectively guesses, solo miners could spend years (or forever) expediting electricity without solving a block (and getting paid for their work!) To help mitigate this risk, many miners will join mining pools. 

Mining pools effectively combine computing power from a pool of miners. By pooling their hashing power, they raise the probability of solving a block among a population subset of the miners. This typically results in more frequent, albeit smaller, payouts.

It’s like playing the lottery versus buying a bond…

If the bond were to pay your interest payments in Bitcoin instead of dirty fiat. Swan’s Yan Pritzker breaks down Bitcoin mining as a lottery system in this great Twitter thread:

A high hashrate in the Bitcoin network acts as a shield against potential attacks, safeguarding the integrity of transactions and enhancing the trust and reliability of the decentralized system.

The constantly increasing hashrate of the network directly correlates with the difficulty level of mining. As more miners join the network, the difficulty of mining adjusts accordingly to maintain a consistent block time. This mechanism not only ensures the smooth operation of the network but also reinforces its security by keeping the mining process competitive and resource-intensive

Basically, a high hashrate implies a large amount of computational power dedicated to mining and processing transactions in the network. This massive computational power makes the network more robust and secure against potential threats by making it cost-prohibitive to attack. 

When observing a chart comparing Bitcoin’s price movement with its hashing power, it’s noticeable that the price fluctuates significantly while the hash rate follows a relatively steady upward trajectory.

Some would argue that hashrate leads price, or even causes price to increase. Others may say that miners are positioning themselves to make windfall profits for when the price run ups inevitably come. 

Regarding Bitcoin’s hashrate, it’s essential to be aware of potential risks that may threaten the network’s stability and security. Here’s a breakdown of some key risks to keep in mind:

1) 51% Attacks: Quelling the Majority Menace

Risk: A 51% attack occurs when an individual or group controls more than half of the network’s hashrate, granting them significant power to manipulate transactions or double-spend coins.

Such attacks can undermine the trust and integrity of the Bitcoin network, potentially leading to financial losses and a loss of confidence in the cryptocurrency.

Mitigation: 51% attacks are only possible if one entity (probably a mining pool) controls over half of the hashrate. The pool operators, however, would need malicious intent, which would likely destroy all the value they had created (incentives for the win). 

Changing mining pools is also incredibly easy, so the odds are that a large portion of the hashrate in a pool would voluntarily leave if that pool ever even came close to 51% of the network power. 

2) Contentious Hard Forks: Splitting the Blockchain

Risk: A hard fork happens when a protocol upgrade creates rules incompatible with the existing blockchain. Contentious hard forks occur when there is a disagreement among the community about the proposed changes, leading to a split in the blockchain and the creation of a new cryptocurrency. These forks can cause confusion, disrupt transactions, and potentially impact the security and stability of the network. 

The blocksize war, primarily involving Bitcoin and Bitcoin Cash, revolves around the debate regarding the optimal block size limit for processing transactions. 

Bitcoin Cash, an altcoin that split from Bitcoin in 2017, increased the block size limit to accommodate more transactions, aiming to improve scalability. It has since faded into near irrelevance as it continues its inevitable march toward zero when priced against Bitcoin. 

Mitigation: Bitcoin’s strength lies in its decentralized nature and the consensus mechanism governing protocol changes. 

While the big blockers had support from powerful entities like Coinbase and a large portion of the hashrate at the time, they were ultimately unsuccessful in the attempted coup because of the node runners and network users who refused to capitulate. 

You see, hasharate does not necessarily grant you the right or power to control the network. Users who run nodes that maintain Bitcoin’s rule set still have power in the face of mob rule.

How Bitcoin Hashrate is Measured

The BTC hashrate is typically calculated as hashes per second (h/s). The hash unit can be expressed by size:

By analyzing the time it takes to mine a block and the difficulty level of the network, one can estimate the total hashrate of the Bitcoin network. 

Here are a few tools you can use to keep an eye on or analyze hashrate: 

• If you really want to dig in deep, Luxor’s Hashrate Index is probably your best bet. 

• At a glance, tools like TimechainStats can’t be beat, but with a good amount of functionality for those who want a little more. 

• For those who love summary visualizations, Time Chain Calendar is a good option for quick hashrate updates.

Jesse_hodl is joined Kristian Csepcsar, the Chief of Propaganda at Braiins to discuss the current state of the Bitcoin mining industry with hashrate exploding, the intricacies of mining machine firmware and the future of mining pools.

HashrateUp is a podcast that delves into Bitcoin mining and exciting projects, utilizing hashrate production to unlock new potentials in the broader energy industry.

What factors can affect Bitcoin’s hashrate?

• Factors affecting hashrate and mining profitability include Bitcoin price, block reward, difficulty, the cost of power, and geopolitical conditions. For example, after the halving, the block reward is cut in half, so many older miners may fall out of profitability and shut off, decreasing the hashrate. However, if Bitcoin’s price increases fast enough, those old machines may be profitable to turn back on, resulting in a subsequent increase in the hash rate. 

What happens if Bitcoin’s hash rate decreases significantly? 

• If Bitcoin’s hash rate decreases significantly, it may take longer for blocks to come in than the 10-minute targeted average. Eventually, the network would reach the 2016 block limit and adjust the difficulty level accordingly. Depending on the degree of hash rate loss, this may have to happen several times to reach the 10-minute target — though slow block times would likely increase the demand for block space, resulting in higher fees and incentivizing more miners to join the network. The network is a self-licking ice cream cone of incentives that keeps things moving. 

Can Bitcoin’s hashrate ever reach zero? 

• A zero hashrate would imply the world has ended. In this case, your diversification into guns, ammunition, and general doomsday prepper goods and services may eventually be helpful. In all seriousness, the answer to this question is probably not. Similar to questions about "what if the internet doesn’t work.” Well, then basically nothing else does either, so good luck accessing your bank account. 

What if mining is banned in my country? 

• China banned Bitcoin mining in 2021, which is widely believed to have chopped the head off the 2020 bull run, so to speak. Since then, hashrate has nearly tripled, with foreign countries like Ethiopia experiencing the benefits rather than China. You can’t ban Bitcoin; you can only ban your country from benefiting. 

Isn’t Bitcoin mining bad for the environment? 

• Bitcoin mining does not waste energy; rather, it puts economic value on wasted energy. Though hotly debated, those in the know understand that Bitcoin and Bitcoin mining have the potential to radically transform the world’s energy infrastructure into a cleaner, more reliable, and abundant energy system for everybody.

Simply put, Bitcoin’s hash rate is a representation of the network’s power and security. 

Hashrate represents the backbone of Bitcoin — it powers the network and allows transactions to be securely processed, validated and added to the blockchain. 

While the concept is technical, it provides valuable insight into the health and growth of Bitcoin. Monitoring hashrate provides critical data that analysts can use to assess the overall security and state of the Bitcoin ecosystem.

As Bitcoin continues to develop, its ever-growing hashrate is cementing its position as the most powerful and secure computational network in the history of the world. 

On January 25th, Swan announced Swan Mining, a division of Swan Institutional.

Swan is currently mining over 7 EH/s. Equal to about 1% of the entire Bitcoin network. Whether you’re new to Bitcoin or a seasoned enthusiast looking to expand your portfolio with a Bitcoin IRA.

Start your Bitcoin journey with us and join Swan today.