Cryptocurrency mining hash rate: What you need to know

Hashrate is a popular term for anyone who is mining a cryptocurrency that uses proof of work algorithm. The term is used to mean the measuring unit that measures how much of power a network is consuming in order to be functional or the power it is consuming in order to generate blocks at the normal mean time of finding them (for instance 10 minutes in Bitcoin). It is the speed at which a compute will complete an operation. The reward includes the amount set as reward per block plus the transaction fees.

Ideally, when mining cryptocurrency, a higher hash rate will increase your chances of successfully finding the next block and hence receiving the reward therein. Hashing is the taking of transactions as an input into an hashing algorithm (for instance SHA-256 in Bitcoin) in order to give an output of a fixed length. To find a block and earn reward for it, the output SHA-256 hash of a block's header must be less than or equal to the target.

A hash algorithm is also known as a hashing function and is also applicable in other cases, for instance in the storing of a password. For instance, when you create a password, the raw information (string) is run through a hash function as an input to produce a sequence of letters of a fixed length called a digest. The digest is always of the same length regardless of the number of letters in the input word. The digest is what the server is supposed to store and whenever you go login, the server will check the entered information and runs it through the same hash function to checks whether the results will match with what is stored.

The target is a 256-bit alphanumeric string that changes with the mining difficulty after a given number of blocks. Each hash will give an output of a random number between 0 and the maximum value of a 256-bit number and the many attempts (hashing process) involve changing the hash and trying again by running the algorithm.

The Bitcoin network will produce one block every 10 minutes and therefore it is understandable the amount of competition in hashing and the need to have a higher hashing rate and powerful miner in order to win a block. The average Ethereum block time or time between blocks is about 14.3s and reward per is about $1,428 USD.

The number of attempts or guessing attempts made per second is what is referred as the hash rate or hash power of the miner. The power is therefore measured in hashes per second or [h/s], with 1 kH/s denoting 1,000 hashes per second, 1 MH/s denoting one million hashes per second, 1TH/s denoting one trillion hashes per second, 1 PH/s one quadrillion hashes per second and 1 EH/s one quintillion hashes per second.

For every cryptocurrency network, the hash rate increases with increasing mining difficulty, which goes up as more people join the network. That means more computations need to be made in order to find a block and complete a transaction verification.

Another way to view hash rate when mining cryptocurrencies is as the computing power contributed by various/many miners to the network in order to maintain a network of users, support /network functions and keep the network more secure and decentralized.

Hash rate and miner costs

Mining Bitcoins or POW cryptocurrencies is energy intensive and costly to manage a higher hash rate for profitability. Different miners come with different hash rates and those with a higher hash rates are obviously more expensive. For this reason, you might want to compare the different miners and their costs.

For instance, a AMD Radeon R9 295X2 is the most powerful Ethereum mining GPU and manages a hash rate of around 46 Mh/s and a pre-owned one costs around $1500 or below depending on condition. AMD is also introducing HIS Radeon™ R9 380X and HIS Radeon™ R9 390 graphic cards. Antminer S9 costs around $3,000 and can give you a hash rate of around 14.0 TH/s, the Antminer S7 costs around $489.99 and manages around 4.73 TH/s, Dragonmint 16T costs $2,729 and has a hash rate of 16.0 TH/s and Antminer R4 with a hash rate of 8.6 TH/s costs $1,000.

For Ethereum, other alternatives include the RX 570 and RX 580 with a hash rate of between 20-30 Mh/s, Radeon RX Vega at 30-45 Mh/s, GTX 1060 from NVIDIA 18-25 Mh/s, Other options include Radeon Rx580 8Gb with a hash rate of 29Mh/s, Radeon Rx 480 with 25Mh/s, GTX 1070 with 25-32 Mh/s, GTX 1080ti with 35-40 Mh/s. Sapphire R9 290X has 30Mh/s and Radeon R9 HD 7990 36Mh/s.

Again, most people mining crypto do not run a single miner because the profit can be negligible. Hence a higher combined hash rate is more appropriate and this is possible in crypto mining rigs, which basically are many individual miners assembled together for purposes of mining cryptocurrencies. The cost also depends on the hash rate and other factors such as power consumption etc. Basically, those with higher hash rates cost more.

Also, as previously discussed, cloud mining is a good option if you do not want all the hassles of owning and managing a mining rig.

Hash rate and mining profitability

The hash rate, profits and difficulty of mining all relate to each other but also, a miner will calculate the profits in considering the power consumption. The power consumption is determined by the efficiency of the miner and the power consumption increases as difficulty goes up.

Electricity cost is a major determinant of profitability because, for instance, if a mining machine has a 10 percent higher hash rate than another, but has 50 percent higher electricity costs, it is less profitable than the first machine.

Without going into much detail, it is possible to easily calculate your profits using online profitability calculators for miners. this is done by simply entering the various variables: your hash rate, power costs, etc. So once you target to buy a given miner or rig hardware and then check your power bills, block reward, and the difficulty of mining the cryptocurrency targeted, you can go ahead and calculate profitability. Some allow you to consider other factors such as the hardware costs, pool fees and the conversion rates for the cryptocurrency (e.g. in USD).

Examples of online mining calculators include the CryptoCompare mining calculator that allows you to calculate profits for any cryptocurrency mineable. You input the hashing power in H/s, MH/s, GH/s or tH/s; power consumption of the miner or rig, cost of electricity per KWh ($) and the pool fees.

For instance, measurements from pcper.com show that RX 580 manages over 200 watts, the RX 480 uses 175 watts, and the GTX 1060 6GB uses 125 watts. Using RX 580 (hashing rate of 30 mH/S) as an example to calculate the profitability when mining Ethereum through the Etheremine Mining Pool, we have;

- Power consumption: 200 watts (most devices have power consumption rating in Wattage as a label on the device although this is the maximum wattage and is usually lesser than actual average wattage). You can use middle of the range if range is shown.
- Hashing rate -- 30 mH/S
- Cost per kilowatt (which depends on your location) - $0.12
- Pool fees = 0 percent without a pool

You get $0.2246 per day and $81.99 per year by using inputting these values on CryptoCompare mining calculator. Using Etheremine mining pool or a rig would definitely produce generate a higher profit.