Mining and Hash RateH/s
Mining is how proof-of-work blockchains add new blocks: computers compete to solve a puzzle and earn a reward. Hash rate measures the total computing power doing this.
Mining is how proof-of-work blockchains add new blocks: machines race to solve a puzzle, and the winner earns a reward. Hash rate is the total guessing power pointed at that puzzle. Traders watch both because they shape network security and the selling pressure from miners.
- Category
- Cryptocurrency and Blockchain
- Reading time
- 4 min
- Also called
- Crypto mining, Hashrate, Network hash rate
- Updated
Mining and hash rate in plain words
Miners protect the chain by solving hard computing puzzles to create new blocks.1
Hash rate measures the network's computing power — how many guesses at the puzzle are made each second.2
This is not cheap: miners need dedicated computer hardware and access to inexpensive energy sources.1
How mining works step by step
Collect transactions
A miner gathers pending transactions into a candidate block.
Guess at the puzzle
Run specialised machines that make trillions of attempts per second.2
Difficulty sets the bar
Difficulty sets how hard it is to find a block compared with the easiest possible case.3
Win the block
The first miner to find a valid answer broadcasts the block to the network.
Collect the reward
The first transaction in each block creates new coins for whoever mined it.4
Fees add income
Transaction fees add to the reward.4
Worked examples
Example 1 — Share of hash rate
About 4 blocks per 100A hypothetical network runs at 500 EH/s. A mining firm controls 20 EH/s.
| Share of network | 20 ÷ 500 = 4% |
| Expected blocks per 100 | 100 × 4% = 4 blocks |
More guesses per second means more chances to win, because hash rate counts the attempts to solve the puzzle per second.2
Example 2 — Rising difficulty squeezes revenue
0.1 coins a day lessA hypothetical miner earns 0.5 coins a day. Network hash rate rises 25% while the miner's own hash rate stays flat.
| New share factor | 1 ÷ 1.25 = 0.8 |
| New daily output | 0.5 × 0.8 = 0.4 coins |
| Drop | 0.5 − 0.4 = 0.1 coins a day |
More hash rate competing for the same reward pushes difficulty up, so each machine earns fewer bitcoins.5
Example 3 — Electricity cost per coin
$18,000 per coinA hypothetical rig uses 3,000 kWh a day at $0.06 per kWh and mines 0.01 coins a day.
| Daily power bill | 3,000 × $0.06 = $180 |
| Cost per coin | $180 ÷ 0.01 = $18,000 |
Energy is the core input, which is why miners seek access to inexpensive energy sources.1
Hash rate vs difficulty
| Aspect | Hash rate | Difficulty |
|---|---|---|
| What it measures | Guesses per second across the network | How hard a valid block is to find |
| Who sets it | Miners, by adding or removing machines | The protocol, adjusting to hash rate |
| Typical unit | Hashes per second (EH/s) | A relative number |
| What traders read from it | Miner commitment and security | Pressure on miner margins |
Where mining data helps traders
Miner selling pressure
Squeezed margins can push miners to sell, affecting Liquidity.
Security checks
Low hash rate on small coins raises attack risk and Counterparty Risk for deposits.
Context for moves
Hash rate trends add background to Fundamental Analysis.
Mining stocks
Listed miners have Exposure to both coin price and power costs.
Advantages and disadvantages
Advantages
- Ties block production to real-world cost.
- Hash rate is public and easy to track.
- High hash rate makes attacks expensive.
- Rewards are open to anyone with hardware.
Disadvantages
- Uses large amounts of electricity.
- Hardware becomes outdated quickly.
- Mining tends to concentrate in large pools.
- Miner revenue swings with price and difficulty.
Going deeper
Read as far as you need. Each level builds on the one before it.
Why mining uses so much power
Beginner
Hash rate and security
Intermediate
To rewrite a proof-of-work chain, an attacker would need more than half of all mining power, so a higher hash rate makes attacks costlier.6
Difficulty and miner margins
Advanced
Rising difficulty shrinks the coins earned per machine.5 Older machines become unprofitable first, which can force sales of mined coins.
Common mistakes
Reading hash rate as a price signal
Hash rate often lags price rather than leading it.
Ignoring power costs
Revenue means little without the electricity bill.
Forgetting difficulty
Your share shrinks when the network grows.
Trusting one estimate
Hash rate is estimated from block times and varies by source.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Mining adds blocks on proof-of-work chains.
- Hash rate is total guessing power per second.
- Difficulty adjusts so blocks keep a steady pace.
- Rewards come from new coins plus fees.
- Power cost and difficulty drive miner margins.
Frequently asked questions
Does higher hash rate mean a higher price?
What is a mining pool?
Does Ethereum still use mining?
Further learning
- Fundamental Analysis
Use network data in analysis.
- Liquidity
How miner selling affects markets.
- Exposure
Mining stocks and coin exposure.
- Volatility
Why miner revenue swings.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- ethereum.org. Mining (opens in a new tab) Checked .
- U.S. Energy Information Administration. Tracking electricity consumption from U.S. cryptocurrency mining operations (opens in a new tab) Checked .
- Bitcoin Project (developer.bitcoin.org). Glossary (opens in a new tab) Checked .
- Satoshi Nakamoto. Bitcoin: A Peer-to-Peer Electronic Cash System (opens in a new tab) Checked .
- Hashrate Index (Luxor). The Halving Since The Halving: Growing Bitcoin Network Difficulty (opens in a new tab) Checked .
- ethereum.org. Proof-of-work (PoW) (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.