What is hashing power?
The bitcoin hashrate has been showing a downward trend recently. We'll explain why this is the case below. First, you need to understand what hashrate, hash power and natural periods of growth and decline are for bitcoinhashrate - the first digital cryptocurrency, which is a model example for other virtual currencies.
What is hashing power?
In order not to go into too technical details, we will figuratively say that hashrate is like arranging a puzzle: the higher the computing power of excavators, the whole network, both individual machines and collective "pools", can solve more puzzles in a given period of time. In other words, the hashing value corresponds to the degree of security of the entire network as well as its effectiveness.
This is the amount of all the computing power of, for example, bitcoin, and the unit of measure for it. The higher the BTC hashrate level, the greater the chance of finding a specific mining block and getting a reward for energy input to the network. To get good performance and be secure, the bitcoin network has to do a lot of actions and complex calculations. For example, a hashrate of 10 Th / s means 10 trillion calculations per second, which is a very good result. The most important factor in computing power is the digital currency mines, collecting the calculations of individual miners and "pools" in order to receive a reward - profit - for discovering the next block. Hashing depends directly on the equipment used for mining and mining, and the profit depends on what it extracts on its machine. Hashrate is important both in trading and in the valuation of cryptocurrencies, also during increases in exchange rates.
Ultimately, what profit we get depends on the power of hashing - hashing - brought into the network. Individual mining players compete with each other to win the mining rights for transaction blocks and thus receive a reward in the form of newly produced coins as well as fees for each transaction concluded within the block. The miners in this contest perform fairly simple calculations using a hash algorithm: a single hash is generated during the calculation and the output data is matched with the target value determined on the network - if the output value is higher than the target value, they must still participate in the calculation of further hashes and not they still have copying rights for the block, the average size of which is constantly corrected by the network.
Hash speed is also important - it is a direct parameter of extractor's power. A higher hash speed is needed when copying as it increases the chances of finding the next block. The biggest challenge recently has been related to the laws limiting electricity consumption, thanks to which the entire cryptocurrency game is possible. It is the miner who determines the amount of hashrate, and it ultimately determines how much cryptocurrency will be mined in a given period of time. In conclusion, hashrate shows how much computing power is used by users on the web around the world. Bitcoin is a decentralized cryptocurrency because there is no single central supercomputer that controls 100% of the hashrate - as new users arrive, it is distributed in proportion to the power invested in the network.
Bitcoin's hashrate hit its lowest level in 13 months
Cryptocurrencies as an alternative to analog currencies issued by central banks of individual countries are a relatively young investment proposition. The entire cryptocurrency game is in its infancy and experimental phases. No wonder hashratebtc is prone to natural fluctuations and even significant drops. In economics, not only hard macroeconomic data counts, but also the moods of players (as on the stock market), oscillations between a bullish and bearish market, which is related to the degree of faith in the future possible profit and the rate of return on the work put into mining. However, digital currencies are not entirely free from political and social turmoil and even government regulations. The lowest hashratebtc since 2020 is a consequence of significant drops in bitcoin mining in China, where the government has banned mining of this cryptocurrency, which even led to some panic in the digital market. China, in addition to banning mining, also banned financial institutions from using cryptography. Companies close mines and relocate from China's mining capital, Sichuan, to various other locations (for example, some companies target Kazakhstan). The Chinese government has actually destroyed the promising young digital market, which was generating $ 10 billion a year and growing at a rate of about 100% a year; Before these regulations, which are disastrous for players, the share of Chinese miners in the bitcoin market was as high as 50%. However, the beacon of the tunnel may be the fact that in parallel with the decrease in hashing power, the total pool of new users is increasing, which causes the ongoing accumulation and increase in bitcoin purchases, and this may even mean a radical reversal of the current downward trend in the near future.
Near and distant future of bitcoin and other cryptocurrencies possible
The virtual currency market does not function in a vacuum. When it was built over 10 years ago, the first miners made a lot of money. So there have been accusations that this is another financial pyramid, that soon the entire market will overheat and players not only will not earn, but will not even get a return on their investment in hashing power. It did not happen, the market continues to operate, although there are almost no profits as spectacular as then. Analysts say the "big bang" of hopes for a good trend was followed by natural fluctuations in hashrate and that bitcoin is beginning to stabilize, becoming a mature cryptocurrency. Just like exchanging analog currencies, those who invest knowledge, energy and time earn more, which means that others cannot count on high rewards from blocks. In other words, it's still a zero-sum game where someone else has to lose in order to get rich. So far, no better alternative has been invented for declining analog currencies.
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