In the early days of Bitcoin, anyone with a decent computer could mine for Bitcoins by processing transactions. The difficulty of mining increased as more and more people began mining, and today it’s become nearly impossible to mine for Bitcoin on a home computer.
This is where hashrate comes in.
Hashrate is a measure of how fast your computer is processing data from the Bitcoin network. The higher your hashrate, the more likely you are to solve a transaction block and earn Bitcoin.
However, the bitcoin mining landscape has changed drastically since 2009.
ASICs, or application-specific integrated circuits, are specialized hardware that can greatly outperform a general-purpose computer for mining Bitcoin. ASICs are so efficient that they’ve driven the once-decentralized network of Bitcoin miners centrally located around the world.
The centralization of hashrate gives those with access to cheap electricity an unfair advantage, as they can operate their ASICs at a lower cost per gigahash than everyone else. This has led to the development of large mining farms in countries with cheap electricity, such as China and Iceland.
The hashrate distribution among different countries is constantly changing, as miners move their hardware to wherever they can get the most bang for their buck. As of writing, China accounts for 65% of the total Bitcoin hashrate, while the United States only contributes 4%.
Despite the centralization of hashrate, anyone can still join the Bitcoin network and help process transactions. There are now cloud-mining services that allow you to rent hashing power from a data center, which can be much cheaper than setting up your own ASIC farm.
Hashrate is an important metric for understanding the health of the Bitcoin network. A higher hashrate means that more people are working on securing the network, which makes it more resistant to attack.
It also means that there’s more competition for rewards, which keeps miners honest and prevents any one group from getting too much control over the network.
What Does Hashrate Mean Conclusion
In short, hashrate is a measure of how fast your computer is processing data from the Bitcoin network, and is used to determine how likely you are to solve a transaction block and earn Bitcoin. Hashrate is an important metric for understanding the health of the Bitcoin network, as it shows how much competition there is for rewards and helps keep miners honest.