Hash Rate
The hash rate measures how many computational attempts per second are made in a crypto network such as Bitcoin to find the next block of data. It is considered a measure of computing power and thus of network security.
With Bitcoin and similar digital currencies, computers around the world maintain a shared ledger. To prevent anyone from cheating in it, they must solve a computational task for every new entry. This task cannot be solved cleverly, only through blind trial and error with numbers. Each individual attempt is called a hash. The hash rate indicates how many such attempts occur per second. It can be given for a single computer or for the entire network combined.
What the hash rate reveals about Bitcoin’s security
Bitcoin’s ledger is not protected by a bank, but by computational effort. Anyone wanting to falsify entries after the fact would have to redo all the computational work performed since that entry. And do so faster than the rest of the world combined. The higher the network’s hash rate, the more absurdly expensive such an attack becomes.
That is why analysts read the hash rate like a health indicator. If it rises over months, many operators are apparently investing in new equipment. If it drops sharply, something concrete has often happened. In 2021, for example, China banned mining, and the global hash rate halved within weeks. It only recovered once the equipment came back online in the US and Kazakhstan.
A common misconception is that the hash rate says something about the price. That is at best only indirectly true. A high price makes mining lucrative and attracts new machines, so the hash rate tends to follow the price rather than predict it.
From hashes per second to exahash
A hash is the result of a fixed computational procedure. You feed in the block's data plus a freely chosen number and get a seemingly random string of digits. What’s being sought is a number for which the result begins with a great many zeros. Since this cannot be calculated directly, only stubborn trial and error helps. Whoever manages more attempts per second wins more often.
The numbers involved are enormous, so prefixes are used. A terahash is one trillion attempts per second, an exahash is one quintillion. The Bitcoin network has recently been in the range of several hundred exahash per second. A single specialized device, known as an ASIC, can manage perhaps 200 terahash. Purely mathematically, then, millions of such devices are needed for the entire network.
It is important to distinguish this from difficulty. The hash rate is the actual computing power present. Difficulty is a network setting that is readjusted every two weeks. If the hash rate rises, the task is made harder. This keeps it so that a block is produced roughly every ten minutes.
Where the figure appears in news and financial reports
Publicly traded mining companies like Riot or Marathon report their hash rate monthly, similar to how a car manufacturer reports production figures. For investors, this is the key metric: it shows how much of a share the company holds in the worldwide race. Whoever controls one percent of the network hash rate earns, over the long run, roughly one percent of the distributed bitcoin.
The figure also plays a role in debates about energy consumption. Hash rate and energy demand are closely linked, but not rigidly so. Newer devices deliver significantly more attempts per kilowatt-hour. Rising hash rate therefore does not automatically mean proportionally rising consumption.
The term only applies to networks using the Proof of Work method, in which computational work determines validity. Ethereum switched to a different method in 2022, one in which staked capital counts instead. There, hash rate no longer exists at all. Anyone reading this metric should therefore always be aware of which network is being discussed.