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Bitcoin (BTC) surpassed another milestone on Thursday, August 8, as the world’s leading cryptocurrency’s hash rate hit 80 quintillion for the first time. This news comes during a good week for BTC, which saw the coin’s value top $12,000 USD twice in three days amid fears that a global recession is on the horizon.
What is Hash Rate?
In its simplest terms, hash rate is a measure of the processing power of the Bitcoin network. When Bitcoins are mined, a difficult mathematical puzzle must be solved before mined coins can be added to the blockchain. The hash rate is a measure of how many times the network can attempt to complete this puzzle every second. The higher the hash rate of the network, the greater the number of miners would be needed to commit an attack on the network. Essentially, hash rate is a measure of Bitcoin network security.
However, just because the Bitcoin network is growing in computing power, does not mean that the coin can be mined any faster. Bitcoin’s network is programmed to mine a block about every 10 minutes, and this rate is maintained by adjusting the mining difficulty (how hard it is to solve the mathematical puzzles) in line with the overall hash rate of the network.
Over Bitcoin’s 10-year lifespan, the network has grown so powerful that it can compute quintillions of hashes every second. For simplicity, 80 quintillion hashes per second is written as 80 EH/s.
Cause for Concern?
While this may sound like more good news for BTC, there may be a slight cause for concern when it comes to ownership of hash power. Research by academics from Princeton and Florida International Universities from October 2018 shows that 74% of BTC’s hash power is controlled by mining pools that are operated by companies or individuals in China. Theoretically, this gives China significant power over the Bitcoin network. This high level of centralized network power in China exposes BTC to rampant censorship and other potentially damaging attacks.
What Does This Mean for Investors?
Naturally, investors will have more confidence in a network that is more secure, and so today’s news will contribute to the overall bullish attitude investors have towards BTC at the minute. It’s notable that during BTC’s all-time price peak in December 2017, its hash rate was around 10 EH/s. This spiked to around 55 EH/s in October 2018 before falling sharply to around 35 EH/s by the end of the year. BTC’s hash rate has enjoyed a resurgence in 2019, as seen by today’s news, to coincide with its recent resurgence in value.