What Does Hashrate Mean?

“Hashrate” refers to the total combined computational power that is being used to mine and process transactions on a Proof-of-Work blockchain, such as Bitcoin and Ethereum (prior to the 2.0 upgrade).

A “hash” is a fixed-length alphanumeric code that is used to represent words, messages and data of any length. Crypto projects use a variety of different hashing algorithms to create different types of hash code – think of them like random word generators where each algorithm is a different system for generating random words. For instance, the hash for “coindesk” using the hashing algorithm that Bitcoin uses, SHA256, = f2429204b339475a3d94dd5450f5ebb3c80130a85fbb91d62768741a3b34a6b6

Before new transactional data can be added to the next block in the chain, miners must compete using their machines to solve a difficult mathematical problem. More specifically, miners are trying to produce a hash that is lower than or equal to the numeric value of the ‘target’ hash by changing a single value called a ‘nonce’. Each time the nonce is changed, an entirely new hash is created. This is effectively like a lottery ticket system, where each new hash is a unique ticket with its own set of numbers. For example, if we take “coindesk” and change the first letter to make “foindesk,” we get this hash = 5a12a9af1b5794bf6855c15944339d41ff713665e415b5434b8c9f081c61b66a Since each hash created is completely random, it can take millions of guesses – or hashes – before the target is met and a miner wins the right to fill the next block. Each time that happens, a block reward of newly minted coins is given to the successful miner along with any fee payments attached to the transactions they store in the new block. 

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