Bitcoin‘s (CRYPTO:BTC) value in U.S. dollars has reached all-time highs in recent weeks. As the price climbs, so does the Bitcoin network’s hash rate — or the computing power being used to verify transactions and mine new Bitcoin.
But what exactly is hashrate, and does it matter? Here’s what you need to know.
Bitcoin hashrate and mining on the rise
For a proof-of-work cryptocurrency like Bitcoin, hashrate is used to measure the total computational power being used to process transactions and mine new coins. Each transaction in a cryptocurrency network needs to be added to the digital ledger, or blockchain.
But before data on a transaction is recorded on the blockchain, miners (the powerful computers used to manage the network) need to guess an alphanumeric code (called a hash) representing the data from the transaction. Each hash is random and complex, so it takes significant energy to power these computers. Once miners solve the hash, a new block is added to the blockchain, and a new unit of digital currency is rewarded to the successful miner.