Why Bitcoin Is Close to a Record-Breaking 3 Exahashes Of Processing Power
The bitcoin hash rate currently nears 3 exahashes, representing an all-time high for the processing power of the Bitcoin network. The escalating hash rate concurs with continuing social media reports that Beijing-based Bitmain Technologies Limited, a company which supplies bitcoin mining equipment, suffers consistent supply shortages due to high demand.
Also Read: Bitcoin Mining Intensifies in Q4 2016
How the Hash Rate Increases
At a time when increasing numbers of individuals and organizations are considering mining bitcoin (Berkeley’s ET research effort SETI showed interest last week for example), and the bitcoin hash rate has skyrocketed past all time highs, there could be a shortage of equipment amid increasing interest in bitcoin mining.
Consumers and mining enthusiasts have reported shortages since the fall of the Antminer R4 and S9, newer rigs which experts cite as responsible for much of the increase in the hash rate. If new generations of miners are more efficient than previous ones then the total exahash rate should increases approximately by that difference over the time it takes to replace the bitcoin mining industry’s current hardware. Any shortages would prolong the time it took to get new mining rigs ‘into the wild.’
“Global bitcoin hash rate is proportional to current bitcoin value and the efficiency of current generation hardware with a lag time”, Con Kolivas, the mining pool ‘CKPool‘ founder, tells Bitcoin.com. “Any spikes you see follow new generation hardware being released at the rate hardware is being released and the rest of the rise lags behind the changes in bitcoin value.”
The correlation between hash rate and Bitcoin value is complex. Mr. Kolivas suggests, though, there is a cause-and-effect interplay.
“Mining does not affect value,” Mr. Kolivas says. “Value affects mining hash rate. The hash rate rises follow the releases of the Antminer S7 and S9 along with the Avalon 6 and 7.” There have been no reports of shortages at Canaan, the manufacturer of Avalon bitcoin mining equipment.
Bitmain is currently in the process of building another data center in China’s North Western province of Xinjiang.
“The planned data center would be capable of consuming up to 135 megawatts of power, which will add it to the list of the highest powered data centers in the world,” the company wrote in a press release. “Wind and solar energy would be the primary source of power for the data center. It is specially designed for high-performance computing and, considering the interest of most investors in the data center, mining of cryptocurrencies such as Bitcoin will be its major application.”
Despite increasing interest in bitcoin mining, Google search queries, according to Google Trends, remain far off its all-time highs set in the winter of 2013-2014.
Increased 190% On The Year
On January 1, 2016 the hash rate per second was 707,457 TH/S. Nearly one year later, the hash rate was 2,050,572 TH/S or nearly a 190% increase on the year. For the Bitcoin hash rate, this marks the single largest gain in a one year period yet.
Starting in the second half of 2015, the Bitcoin hash rate, the overall computing power of the miners on the network, made dramatic gains – more so than in any previous year.
You can see in the chart below how, even when compared to 2013 as the Bitcoin price reached an all-time high of $1122, the contemporary hash rate is dramatically higher.
What is the Bitcoin Hash Rate?
The hash rate, a measuring unit of the processing power being used to solve intensive mathematical operations for the Bitcoin network, refers to how powerful Bitcoin miners are collectively. Blockchain.info defines hash rate as, “The estimated number of terahashes per second (trillions of hashes per second) the Bitcoin network is performing.”
The term ‘difficulty’ measures how difficult it is to crack a code to discover a hash below or above an expected value. Currently, the Bitcoin network is expected to create 12.5 bitcoins every 10 minutes, though this varies.
The hash function used in Bitcoin is the cryptographic model SHA-256. Hash functions, deterministic yet unpredictable, have led to a hardware-based arm’s race in which increasingly faster Bitcoin mining hardware is continually developed to compute the SHA-256 computational puzzles that must be cracked to mine bitcoins. Much such hardware came online at the end of 2015 and into 2016, contributing to the exploding hash rate.
What do you think about the hash rate in 2016? Let us know in the comments below.
Images via Shutterstock and Blockchain.info