What does hash in mining farms show?
One of the most popular ways to make money from the cryptocurrency is mining. To mine more coins, your hardware should have a high hash rate. Let’s see what hash is, what it depends on, and why it is so important.
What is hash in mining?
To understand what hash is, one needs to have a look how a transaction is run in the blockchain network from within: for miners and for a person that buys coffee for cryptocurrency, let’s call him Andrew. For instance, to transfer one Bitcoin, the buyer needs a private key, a public key and the address of the seller’s crypto wallet.
When Andrew installs a Bitcoin wallet, he gets a file with two generated keys. One of them is a randomly generated private key. And the other is a public key. It appears in the result of getting a hash number from Andrew’s private key. Hashing can be conducted using different algorithms, for Bitcoin blockchain SHA-256 is used.
A private key is needed to confirm the withdrawal and spending of the cryptocurrency. It should be stored privately, as a pin-code of the credit card, for instance. A public key is a kind of account number, where cryptocurrency can be transferred. In other words, the public key can be communicated to other people, while the private key cannot.
What do miners do when they receive a query for making a transaction i.e. transferring Bitcoins for a cup of coffee?
Miners calculate a hash function. At first, they confirm that Andrew has Bitcoins on his account. They search for information in blockchain saying that the transaction was performed.
Later, based on the public key of the coffee house and private key of Andre, with which he confirms the withdrawal of coins, miners check the correspondence between his private and public key. If they match, miners generate a new hash – information about the withdrawal of Bitcoins from one account and storage in the account of the coffee house. Afterwards, other miners verify the transaction and a new block (transaction data) is recorded in blockchain.
How hash is generated
To generate a new hash, a complex mathematical puzzle is solved. It is performed by graphics processors contained in graphics cards or ASIC processors intended to solve specific tasks.
The speed of mining is called hash rate. The more hashes your hardware can generate, the more blocks you can record in blockchain. And the higher will be the fees you will get for the job done.
What does the hash rate depend on?
Every cryptocurrency is mined using a specific algorithm and the speed of mining depends on its complexity. For instance, SHA-256 is used to calculate Bitcoin hash, Ethash is used to mine Ether, and Scrypt algorithm – to mine Litecoins. It means that one and the same graphics cards with identical physical parameters can have different hash rates, unlike ASICs. The latter always have one hash rate, as integrated circuits are aimed for a single algorithm, meaning that an ASIC for mining Bitcoin cannot be used to mine Ether.
How to calculate hash rate
One can calculate hash rate and mining profitability using Whattomine website.
For instance, a single AMD Radeon RX Vega 64 graphics card has different hash rate when mining different coins. The hash rate for Ethash is 40 Mh/s, and for Equihash (used to mine Bitcoin Gold) – 450 h/s.
Hash rate is one of the most important aspects that influences the profitability of the mining farm. Another vital aspect is energy consumption, as electricity costs also influence the returns.
For your farm to make profits and repay quickly, your hardware should have high hash rate and a relatively low energy consumption. You should also factor in the price of the mined cryptocurrency on the exchange. Based on these characteristics, you can choose your mining hardware.