Users of crypto networks are aware of the existence of cryptocurrency mining. However, few people understand how it happens. Before starting ASIC, it is not unreasonable to understand what a hash in mining is and what kind of work the computing equipment does.
The concept of hash in mining in simple words
To begin with, you need to study the definitions. The list of terms:
- Hash (hash code) – an encrypted phrase.
- Hash function in blockchain – an algorithm for converting any information using cryptographic ciphers.
- Hashing – the process of converting data into a short hash code.
- Hash dig est – the variant answer that was sent to the network after solving a hash function.
- Hashrate – the speed at which hardware can send the results of a job to the blockchain.
- Block – all the information stored in the hash code and header.
Properties
A hash in mining is an encoded alphanumeric string of fixed length. The character set is unique and is never repeated. Each transaction is analyzed by several factors: size, execution conditions, time of execution, and participants. Information in its expanded form takes up a significant amount of memory, and therefore becomes more time consuming to work with. To reduce, data is encoded using ciphers.
Functions
Hash function is a way of compressing a large amount of data into a fixed size string. Open source networks use cryptographic encryption to do this. The Bitcoin blockchain is based on the SHA-256 algorithm. However, it is not the only one.
| Hashing Algorithm | Blockchain |
|---|---|
Dogecoin (DOGE)  1 5020 $ ByBit provides convenient and safe conditions for cryptocurrency trading, offers low commissions, high level of liquidity and modern tools for market analysis. It supports spot and leveraged trading, and helps beginners and professional traders with an intuitive interface and tutorials.  2 Earn a 100 $ bonus for new users! The largest crypto exchange where you can quickly and safely start your journey in the world of cryptocurrencies. The platform offers hundreds of popular assets, low commissions and advanced tools for trading and investing. Easy registration, high speed of transactions and reliable protection of funds make Binance a great choice for traders of any level! | |
Bitcoin Gold (BTG) | |
Cryptographic algorithms differ in complexity and security parameters. As well as the length of the final (target) hash – 64, 128 or 256 bits.
How a hash works
Computing equipment produces thousands of hash function solutions to create a single block. Each result (hash digest) is sent to the network for validation. Confirmation (validation) occurs after other devices arrive at the same answer. The block is then considered to be mined. The hardware then starts a new search.
The new block contains a part of the previous block in the hash. The interconnected sequence of mined cells is connected according to the principle of chain attachment. Hence the name – block + chain.
Mathematical calculations are performed by computers or mining equipment. The main work is performed by the central processing unit (CPU) or graphics card processor (GPU).
Features
Different hash functions are characterized by the difficulty of finding the right one. Difficulties may lie in the mechanics of computation, and also depend on the amount of incoming data.
The SHA-256 algorithm for mining is the most labor-intensive. It requires increased hardware performance.
Another property is the self-regulation of the algorithm. Hashing when mining a single block should take relatively the same amount of time. For bitcoin network – on average 10 minutes. The number of devices and overall performance is constantly increasing. In response, the network increases the computational complexity. If the total load drops, encryption becomes easier.
Application in mining
The mining of each block is accompanied by the generation (emission) of new crypto coins. Miners receive them as payment for the hash value found. The size of blockchain networks’ rewards is summarized below.
| Coin | Average time to create 1 block | Reward size |
|---|---|---|
The network is also designed to systematically halve the reward value (halving). This occurs when the blockchain reaches a threshold number of cells. In the bitcoin network, halving occurs every 210,000 blocks. The last halving occurred on March 11, 2020. It is estimated that the next correction will take place in April 2024.
The Litecoin network also has a halving every 840 thousand blocks. The nearest downgrade is at the end of 2023. The reward to miners will drop to 6.25 LTC.
What is hashrate
In order to mine 1 block, the device selects thousands of results that meet the conditions of the algorithm. Each one in turn is sent to the network for validation. Hashrate is the number of computed hashes that a device can execute in 1 second. The following are the accepted units of performance measurement.
| Unit | Name | Number of hashes per second |
|---|---|---|
Each mining device has a performance potential. The sum of the power of all the hardware in the network is called the total hashrate.
ASIC miners have the fastest computation speed. In the SHA-256 hashing system, the power of modern devices reaches 244 TH/s (Bitcoin Miner S19 XP Hyd). The Antminer L7 is better suited for the Scrypt algorithm with a performance of 9500 MH/s
Calculating profit by hash rate
However, to choose mining equipment, it is not enough to know the power characteristics of the device. It is also important to remember that hash functions are characterized by the complexity of calculations. For example, to mine 1 block in the Dogecoin network, you need the capacity of miners with a volume of 692.14 TH/s. While the figure for creating a cell in the Bitcoin blockchain is 243.41 EH/s. That is 351,000 times more difficult.
243.41 EH/s / 692.14 TH/s = 243.41 EH/s / 0.00069214 EH/s = 351,677.40
Obviously, bitcoin mining requires the most powerful ASIC hardware. For Dogecoin mining, less productive but more affordable models are suitable.
The easiest way to calculate the probable profit and payback period of video cards and ASIC-devices is online performance recalculation services. WhatToMine is considered to be one of the most popular. Taking into account the hashrate of the technique and blockchain algorithms, calculators for miners determine the potential of the model in each of the suitable networks.
For the NVIDIA GeForce GeForce RTX 4090 GPU with 24Gb of video memory and a clock frequency of 2230 MHz, the following indicators are calculated:
- Beam – 85 H/s.
- Ethash – 127 Mh/s.
- FiroPow – 58 Mh/s.
- KawPow – 67 Mh/s.
- Zhash – 164 H/s.
These indicators help to determine the most profitable mining algorithm for the model. In practice, the values of equipment performance often differ from the theoretical ones. This is influenced by the accurate configuration of the equipment, timely service, cooling and uniform power supply.
Frequently Asked Questions
📢 Why does a new hash contain part of the previous block?
Storing a hash is necessary for the security of the blockchain. The hash function works in such a way that changes to an already mined cell will cause the hash to be recalculated and break the chain.
🔥 What is a mining pool?
A mining pool is a server where the power of a group of devices is combined. The higher the overall capacity, the higher the chances of finding the target hash value.
📱 What is cloud mining?
It is the rental of mining equipment. You don’t need to buy your own equipment and keep an eye on the technical part of its operation.
⚡ Where do they use hash functions other than the blockchain?
Data hashing is happening all over the internet. Antivirus databases and password storage applications also use encryption algorithms.
📌 Can the hash be decrypted?
No, cryptographic hashing is a one-way irreversible process.
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Author: Saifedean Ammous, an expert in cryptocurrency economics.
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