Are you interested in mining cryptocurrencies? Are you already mining but still unclear about all of the components at work? Mining is an important and integral part of any “proof-of-work” cryptocurrency. Without mining, there would be no blockchain ledger and the digital currency in question would have no value. So the mining process actually drives the entire cryptocurrency network, and can also be quite profitable as well! I personally believe that crypto mining is becoming less competitive and more of a social endeavor that will benefit everyone on the network. We will get into that more in a while but for now, I want to focus on one critical part of mining: Hash Rate.
Hash Rate, or Hash Power, is the unit that measures how much total computational power any given network is consuming in order to generate new blocks. Each coin’s individual blockchain varies on the time it takes to generate a new block of transactions. As an easy example, Bitcoin will always take roughly 10 minutes. The difficulty level self-adjusts in order to keep the time consistent at 10 minutes per block, forever. Another way to say this is: The hash rate needed to create a block decreases or increases as necessary in order to ensure a 10 minutes timeframe. So what determines the rate of adjustment?
The amount of computational power is used to find and generate the block increases as a miner either upgrades equipment or joins a “mining pool”. This increase in computational power — or hash rate – makes running mining algorithms easier and faster. In order to keep these miners from solving blocks more quickly, the hash rate required to solve a block automatically adjusts as needed to a sufficient difficulty level. At one time you could mine a significant amount of bitcoin using the CPU power of only a laptop. Before long, the amount of people mining pushed the required hash rate to solve a block up so far that it was no longer feasible to mine with such low CPU power. Eventually, people turned to PCs with powerful graphics cards. GPU mining ensured a much higher hash rate at a much lower rate of energy consumption. Next, was the introduction of Application-Specific Integrated Circuit (ASIC) units which are high GPU machines made specifically for mining. Many newer cryptocurrencies are resistant to ASIC mining in order to keep the mining process more equal to the network. Once users began mining with ASIC devices the hash rates skyrocketed, making it almost impossible to have any luck at solo-mining.
Before we get into the higher hash rates involved in mining pools, it’s important to understand the common denominations. When comparing the available hash rate of your setup to the total global hash rate of a particular pool you will most likely notice that your individual hash rate is in kH per second or MH per second while the pool is measured in PH/s or even EH/s. This is vital information when determining your share of mined coins in a mining pool and deciding which currency will be most profitable to mine, to begin with. Here are the common denominations of hash rate:
- 1 kH/s = 1,000 hashes per second
- 1 MH/s = 1,000,000 hashes per second.
- 1 GH/s = 1,000,000,000 hashes per second.
- 1 TH/s = 1,000,000,000,000 hashes per second.
- 1 PH/s = 1,000,000,000,000,000 hashes per second.
- 1 EH/s = 1,000,000,000,000,000,000 hashes per second.
As I mentioned above, knowing your hash rate is vital to calculating your profitability. Mining can be thought of as a sort of lottery where the miner with the most hash rate stands the best chance of winning. In order to have a decent chance of winning this lottery yourself, you must be contributing a significant portion of hashes per second to the network. If you are contributing enough hash power and you succeed in solving and broadcasting the new block you are rewarded in two ways. First you “unlock” a specified amount of the total amount of any given cryptocurrency and receive it as payment. The second way a miner profits is by transaction fees. Each transaction in a block contains small fees which are paid to the miner that created the block. This ensures that mining will remain profitable even after all coins have been mined.
The current global hashrate on the bitcoin network is 21.35 EH/s – or 21,350,000,000,000,000,000 hashes per second – and the average hashrate for an individual miner is only measurable in MH/s. It is clearly no longer profitable to attempt to mine on your own for the average person. This is where mining pools become an attractive option as users can combine computational power to increase the total hashrate. When the pool collectively solves a block on the blockchain profits are split between all active miners proportional to each one’s hashrate contribution. This brings me back to my point about mining becoming more social. Of course, as it is currently, each pool is technically in competition with one another as well as any large mining “farms” that are in operation. However, as mining difficulty increases, miners are forced to pool resources in order to continue mining. I visualize a time where the hashrate required to mine the last few bitcoins or any other coin for that matter, will require the combined computational power of every device on the network. Meaning that all transaction fees would be split between everyone on the network! This may be away in the future but I am very excited about the prospect.
Traditionally, to get started mining required a certain amount of technical acuity. To then route your miner to a specific pool correctly would leave even some experts scratching their heads. The first pool of my knowledge that is readily available to anyone, anywhere is MinerGate.com. They have made the entire process as easy as signing up, downloading software and clicking run. Literally. Moreover, if you are not satisfied with a hash rate of your own equipment – you can always acquire a cloud mining contract.
MinerGate offers many other pools easily mine a variety of coins with nothing more than the computer you are already using. You can run as many active miners on your account as you have access to and MinerGate even allows you to mine multiple currencies at once!! Beware that using your computer for other applications will reduce your hash rate as it is directly related to your computer’s power.
Author: Jarrett Ashley