Hash Rates Are the Number of Guesses Per Second Competing to Add a Block to the Timechain
Article by Frank America | Edited by Trewkat and Hiro Kennelly | Cover Art by Chameleon
As of today, July 17, 2023, Bitcoin’s hash rate is 367.06 EH/s or 361,920,000 TH/s. The highest the Bitcoin hash rate has ever reached is 538.05 EH/s, or 538,050,000 TH/s. But what does that even mean and why does it matter? Before we break down these cryptic numbers, let’s discuss the basics.
The Basics of Hashing
The Bitcoin blockchain uses proof-of-work (PoW) to achieve consensus. What this means is that computing power is expended in order to be first to successfully guess the answer to a complex math problem called a hash function, the purpose of which is to cryptographically link blocks together. The people applying their computing power to try to solve this math problem first and therefore earn bitcoin for securing the network are known as ‘miners’, and that’s where we get the terms, bitcoin miners and bitcoin mining.
A simple way to think of hash rates is that more people mining bitcoin increases the hash rate. More guesses: hash goes up; fewer guesses: hash goes down. Also, the Bitcoin protocol adjusts the hash difficulty according to this variation in demand, which will be covered a little further down.
First, let’s take an easy real-world example, when China banned bitcoin mining back in May of 2021. This resulted in a lot of miners going offline, closing up shop to head for friendlier jurisdictions. The drop in miners immediately lowered the number of guesses per second occurring (hash rate) by more than 50%, which after the difficulty adjustment that followed, made solving the hash much easier for a smaller pool of bitcoin miners.
The Ten-Minute Median
When the complexity of the hash is too hard it takes bitcoin miners more than ten minutes to solve it. When the complexity of the hash is too easy it takes bitcoin miners less than ten minutes to solve it. Why ten minutes? The protocol was designed to self-correct its complexity to try and target one hash being solved approximately every ten minutes. This is a mathematical adjustment to preserve a continuous block time. If it’s at the protocol level, it’s in the code, so how does that code execute itself?
The Bitcoin Timechain
Every 2,016 blocks, or approximately every two weeks, the Bitcoin blockchain adjusts the difficulty of its hash to try and hit that optimal block time. When the complexity of the hash is just right, the Bitcoin blockchain produces a new block every ten minutes. In this article by Marty Bent, published in 2019, he found original notation written by Satoshi Nakamoto, actually referring to the Bitcoin blockchain as a “timechain