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Hashrate explained: A critical aspect for Bitcoin’s security

What is hashrate and why is it important?

Hashrate — also called hashpower or computing power — is a critical aspect of decentralized networks functioning under the proof-of-work consensus.

Hashrate and crypto mining: The basics

To explain hashrate, we first need to understand how cryptocurrency mining and proof-of-work consensus algorithms work.

Cryptocurrency mining is the process through which miners dedicate computational power to provide security and ensure the correct functioning and performance of the network.

How do miners do that, exactly? To confirm transactions and add them to a block, miners have to find a solution to a cryptographic puzzle in each of those blocks. The puzzle consists in finding a hash, which is a 64-digit hexadecimal number.

“Hashing” refers to encrypting data by converting any data input to a fixed-length hexadecimal output. Bitcoin, for example, uses the SHA-256 hashing function. Block hashes are 64 digits long and contain all the transactions’ data inside that block.

Miners have no other way of finding that hash than trial and error. They have to “guess” one hash after the other until they find the correct one. The amount of guesses a miner can make per second is what we know as their “hashrate.”

That said, the network’s hashrate refers to the total amount of hashes produced by all Bitcoin miners worldwide. In other words, it’s the total computational power used by miners to secure the Bitcoin network.

Why is hashrate important?

Cryptocurrency mining is a profit-driven, competitive activity. Miners race against each other to be the first to find blocks and earn the reward.

The more hashes they can produce per second, the bigger the chances of finding the correct hash first. Although it’s technically possible that a low-hashrate miner could find a block in the first few tries, the actual chances of that happening is one in several trillion.

That said, a miner’s hashrate output impacts directly on their profitability. Miners looking to increase their profits will often scale, acquiring more and better mining hardware to raise their hashrate output. That, in turn, increases mining difficulty — another essential aspect of why hashrate matters.

Difficulty helps stabilize the network’s performance and maintain security, so it’s critical to understand how hashrate affects it.

Bitcoin’s mining difficulty adjusts every 2016 blocks in direct proportion to the total hashrate. The more hashrate working on the network, the harder it will be to find a block.

In conclusion, hashrate isn’t only important for miners in terms of profitability. It’s also a major factor in the network’s security, as the more hashrate there is, the more expensive and hard it is to attack the protocol.

Measuring hashrate

As mentioned above, miners measure their hashpower by the number of guesses of a hash they can produce per second.

Now, because we have machines that can perform trillions of calculations per second, these numbers have risen astronomically. And miners are using different hash units to better and more clearly illustrate their hashpower.

The units we use to measure Bitcoin hashrate are:

  • H/s: Hashes per second.
  • KH/s: Kilohashes per second (or 1,000 H/s).
  • MH/s: Megahashes per second (or 1,000 KH/s).
  • GH/s: Gigahashes per second (or 1,000 MH/s).
  • TH/s: Terahashes per second (or 1,000 GH/s).
  • PH/s: Petahashes per second (or 1,000 TH/s).
  • EH/s: Exahashes per second (or 1,000 PH/s).

However, given the technological advancements, the most commonly used denominations are the last three — TH, PH, and EH/s. For example, Bitmain’s S19 Pro — one of the most popular Bitcoin ASIC miners on the market — has a hashrate output of 110 TH/s. That is one hundred ten trillion hash guesses every second. That’s a lot of calculations.

Other hashing algorithms

Logically, not all proof-of-work cryptocurrencies use the SHA-256 hashing algorithm as Bitcoin does. Other blockchain networks — especially smaller ones with much less hashrate than Bitcoin — grew concerned about ASIC miners’ vast computational power.

Bitcoin has a tremendous amount of hashrate, which makes it very hard to attack it. However, a few ASICs could be enough to concentrate a large portion of the total computing power in these smaller chains, posing great risks and vulnerabilities.

That said, many blockchains developed ASIC-resistant hashing algorithms that couldn’t be cracked with Bitcoin’s specialized computers.

Equihash, a mining algorithm used by several altcoins — like ZCash or Horizen — requires extensive RAM memory to mine, which Bitcoin ASICs don’t have. Nevertheless, Equihash’s ASIC resistance didn’t last long, as specialized hardware manufacturers have already developed solutions for mining this algorithm.

Another example is Monero (XMR) which uses its exclusive algorithm, RandomX.

According to the developers, RandomX uses random code execution (hence the name) together with several memory-hard techniques to minimize the efficiency advantage of specialized hardware.

The list goes on and on. And as manufacturers keep coming up with new, more efficient hardware, we’ll probably keep seeing developers trying to fight it.

Commoditizing hashrate, Lumerin’s first goal

Hashrate is a crucial element of proof-of-work networks, both in terms of security and performance.

That said, we believe hashrate should be just like Bitcoin: decentralized and accessible for anyone, anywhere. However, that’s far from where we are today.

Currently, there are only a handful of ASIC manufacturers, with most of them located in Asia. Considering shipping costs, supply chain issues, and limited production capacity, it’s cumbersome from people in regions like Africa or South America to get their hands on an ASIC.

Lumerin is focused on changing that. Through our data stream routing protocol and our hashpower marketplace, we aim to commoditize hashrate. In other words, we want to enable everyone to buy hashrate and mine Bitcoin without having to acquire costly hardware.

This would not only allow global access to Bitcoin mining. It will also open up new possibilities for miners, enabling them to harness the full power of their hashrate.

Visit us on lumerin.io to learn more!

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