The hash power or hash rate is the combined computing power of a cryptocurrency network or the computational power of a mining rig on a crypto network that is solving cryptocurrency Proof of Work hashing algorithms.
Hash functions are a key part of, not only cryptocurrency protocols but also security systems within information technology as a whole.
The “crypto” in cryptocurrency actually comes from the cryptography used in cryptocurrencies to make them secure.
It’s how Bitcoin came about in the first place.
Cryptography has been in use for many years outside of cryptocurrencies for highly secure authentication and encryption protocols.
In crypto, SHA256 is used to generate secure hash algorithms. Secure Hash Algorithm 256 (SHA256) was developed by the US government’s National Security Agency (NSA) to convert text of any length into a fixed-size string of 256 bits or 32 bytes.
If the NSA developed and uses it, it ought to be pretty secure!
What is hash power?
Using SHA256, the sentence What is hash power? would look like:
Now imagine, your password being the above, pretty hard to crack and way harder to guess than say the name of your favourite pet, 123456 or even password.
Yes, a surprisingly large amount of people actually use 123456 or password as their password!
To crack the hash code above on the other hand would take a lot of time and computing power which brings us nicely to how crypto mining works and how hash power fits into the picture
Crypto mining and hash power
In crypto, bitcoin and other cryptocurrencies often use a process called proof of work (PoW) in order to earn crypto in exchange for solving complex computational problems.
Solving these complex computational problems uses a lot of computing power.
Miners try to solve these problems in exchange for a reward of a certain amount of coins such as bitcoin.
Each hash that is created is totally random and generally impossible to predict, it can easily take millions of guesses (hashes) before the correct hash is guessed and the lucky miner wins the right to fill the next block and add it to the blockchain.
At this point, a block reward of freshly minted coins is awarded to the successful miner as well as any corresponding fee payments attached to the transactions that are stored in that particular block.
How is the hash rate or hash power measured?
The amount of computation power used by a crypto network or a mining rig is called hash rate or hash power. The hash rate/hash power is the computational power used per second when mining.
In other words, it is the speed of mining and is measured in units of hash/second. To be precise, it’s exactly how many calculations can be performed per second.
Computers or mining rigs with a high hash rate or high hash power are highly efficient and are able to process a lot of data in a single second.
If we were to look at Bitcoin as an example, the hash rate/hash power would relate to the number of instances hash values are calculated for proof of work every second.
Hash power units are usually measured as follows:
k – kilo or 1,000 hash calculations per second
M – mega or 1 million hash calculations per second
G – giga or 1 billion hash calculations per second
T – terra or 1 trillion hash calculations per second
The hash power of an individual device is a key metric for measuring the potential profitability of a mining rig as it can help to determine the possibility of finding a good hash that is able to generate a mining reward.
More hashes successfully found equals more rewards. As mining gets ever more competitive, more powerful rigs are needed in order to win the right to the next block.
Using auto manufacturing as a way to understand hash power
An easy way to make sense of hash power or hash rate could be to use auto manufacturing as an example.
The number of cars produced by a factory per day could be like the hash calculation per second, instead, here it´s the number of finished cars per day.
A large-scale, highly automated and highly efficient car manufacturing plant could churn out a lot of cars per day, using Volkswagen as an example that would be over 26,000 cars per day.
On the contrary, a highly specialised and small car manufacturer like Morgan could maybe produce only 3 cars per day.
Using these examples Volkswagen would have a way bigger hash power than Morgan due to its investment in sophisticated robotics and efficient production lines and will produce way bigger results/output.
Not only would Volkswagen produce more output it will no doubt be way more efficient in terms of the resources required to build a single car thus being more profitable per unit.
In crypto mining, a large and highly efficient rig with a large hash power would be capable of a way larger number of hash calculations per second compared to a very small mining rig.
Hash power and security
Continuing with the auto manufacturing example, the total hash power of a cryptocurrency like Bitcoin also relates to the security of a network, the higher the hash power, the greater the difficulty for hackers to infiltrate and manipulate the system.
In much the same way, it’s way more difficult for an outsider to bring down a huge corporation like Volkswagen due to its huge resources, but much much easier to bring down a smaller player.
For an attacker to hack, say Bitcoin, let’s call it the Volkswagen of crypto, they would need to overcome the total hash power of the entire network, this is almost impossible, however, a very small network with a low hash power would potentially be more vulnerable.
In crypto as well, bigger is certainly better!
In summary, the hash power or hash rate is very important in crypto, both in terms of efficiency and potential profitability and also in terms of security for the crypto network as a whole.
As competition increases, mining rigs need to be ever more powerful in order to be able to win the hashes that will, in turn, reward them with valuable coins and the security of the entire network needs to be rock solid in order to attract more users and increase transactions.