We have already explained that the hash rate means the calculation power and the processing speed required for mining, but what is the reason why this hash rate fluctuates?
If many people participate in mining and many calculations are performed, the amount of calculations per hour will also increase, so the hash rate will increase. Conversely, if the number of people participating is small, the amount of calculation will decrease, and the hash rate will decrease.
Thus, depending on whether or not many people want to mine the virtual currency, that is, the degree of popularity, the hash rate will go up or down. From this, it is said that the high hash rate indicates the reliability of the currency.
The fact that many people participate in mining means that the transaction information is recorded by so many people, which increases the credibility of the currency. However, higher hash rates are not always better.
Hash rates represent high popularity, but high popularity means more rivals for participants. In the case of Bitcoin, only the first person to generate by mining will be paid, so it will be more advantageous for large participants who have high performance machines.
As a result, it can lead to a centralized situation where only those strong participants mining.
What is Difficulty?
The term related to hash rate is “mining difficulty (difficulty)”.
Mining difficulty is a term that literally indicates the difficulty level when a block of virtual currency is generated by mining. A block is a collection of virtual currency transactions and is also called a mining unit.
For example, Bitcoin is said to generate one block in about 10 minutes, but the more difficult the calculation method, the more difficult and time-consuming it is to generate a block. However, as more people participate in mining and the processing power of the computer increases, the time it takes for blocks to be generated can decrease.
If the generation time is shortened, there is a risk that the original rule that one block will be generated in about 10 minutes will be exhausted and the mining resources will be exhausted. To avoid these risks, Bitcoin’s program is designed to automatically adjust mining difficulty.
The program keeps producing one block for about 10 minutes in any situation.
Relationship between hash rate and price
It is a hash rate that represents the reliability of a currency, but it is sometimes said that it is linked to the price of a virtual currency. Do crypto trading through cryptocurrency wallets
In fact, taking Bitcoin as an example, there was certainly a time when hash rates and prices were linked in the past. The higher the mining reward, the more people will try to reach the first place, which may affect the processing speed.
However, there is no longer necessarily a correlation between bitcoin prices and hash rates. One of the reasons for this is the selling pressure by mining participants.
As mining difficulty increases, so does the need for better machines, and mining participants will have to cash bitcoins. As a result, it is possible that as the hash rate rises, the mining participant’s bitcoin selling pressure becomes more pronounced, which may be a weighting factor for the price increase.
Bitcoin (BTC) hash rate mining reward trends
One of the key parameters is to know history so far in order to understand the hash rate. By knowing the past, there may be situations where you can utilize it for future transactions.
From here, let’s look at the changes in bitcoin hash rates and mining rewards.
Transition of hash rate in Bitcoin (BTC)
Bitcoin hash rates have been rising over the long term.
Although it temporarily dropped from November to early December 2018, it has been rising again since mid-December 2018. It has continued to rise steadily since entering 2019, setting a new record high recorded in November 2018.
There are many important factors that may assist in this long-term upward trend in hash rates.
Bitcoin price increase
One is the increase in incentives due to the rising price of Bitcoin.
It is possible that more people are trying to calculate faster in response to the increased value of mining rewards.