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Great news has come to us these days from the world of Bitcoin mining: its hashrate has reached a new all-time high!

This new record was recorded precisely on October 12, 2022, when the hashrate reached the record figure of 255 exahash per second according to data from BTC.com.

This is a significant increase compared to levels at the beginning of the year, when the hashrate hovered around 190 exahash per second.

What is hashrate and why is it important

But what exactly is hashrate and why is it so relevant to Bitcoin? Let's try to understand it together.

Simply put, hashrate measures the overall computing power of the Bitcoin network. That is, how many billions of billions (or exa) of hash operations can all miners perform every second to validate transactions and generate new blocks.

The higher the hashrate, the more calculations are performed every second, and the more secure the network is from potential attacks.

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How mining works

Mining is the process by which blocks of transactions are validated and new bitcoins are generated. Let's try to understand how it works in simple words:

  • Miners around the world compete with each other to solve complex mathematical problems called “proof-of-work”.
  • Whoever manages to solve the problem first can validate and add a new block of transactions to the blockchain.
  • As a reward, he receives a certain number of bitcoins newly generated by the protocol.

Simplified explanation for beginners

Imagine the blockchain as a large digital ledger where all bitcoin transactions are recorded.

To add each page of this book (a block), miners must solve complex mathematical puzzles, using very powerful computers.

Whoever succeeds first can write the new page and receive bitcoin as a reward. In this way transactions are validated in a secure and decentralized way.

Progressive increase in difficulty

As miners and the overall computing power of the network increase, the difficulty of the mathematical problems to be solved increases accordingly.

This serves to keep the average time between blocks constant, around 10 minutes.

It is very important that the overall hashrate is high, because more computing power equals greater network security.

Hashrate as a key indicator

The hashrate is therefore a key indicator of the health and value of the Bitcoin network.

When it drops sharply, such as due to a mass shutdown of miners in a region, the price of BTC usually suffers as investors fear for the security of the network.

On the contrary, a growing hashrate like in this period could mean that more and more miners believe in the project and invest in new specialized hardware (ASIC), making the network stronger and more secure over time.

Other technical metrics to monitor

In addition to hashrate, there are other technical metrics to keep an eye on to assess the health of the Bitcoin network:

  • The number of active nodes, which indicates the level of decentralization and diffusion of the Bitcoin protocol. The more nodes there are, the more resilient and difficult the network is to attack or censor.
  • The Lightning Network payment nodes and channels, indicating the scalability and adoption of Bitcoin as a fast payment system.
  • The average transaction fees, which indicate network congestion.
  • The number of active wallets, showing real user adoption.

By monitoring these indicators we can understand the true health and prospects of Bitcoin as a digital monetary network.

High hashrate can also have negative effects

Increased mining difficulty

However, a hashrate that is too high can lead to an excessive increase in mining difficulty. This could make mining less profitable for smaller miners, heightening the risk of centralization.

Network congestion

Furthermore, if the hashrate grows too quickly, the network may not be able to adequately handle the increase in transactions that need to be validated. This would lead to network congestion with longer waiting times and higher fees for users.

High energy consumption

Finally, prohibitive hashrate levels require enormous energy expenditure to power the thousands of ASICs needed. This raises concerns of environmental sustainability and fuel efficiency.

For these reasons, hashrate growth must be monitored carefully, balancing security and decentralization of the network with other factors.

Continueremo a monitorare l’evoluzione di questa e altre metriche tecniche per valutare lo stato di salute di Bitcoin!


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