What Is Hash Rate, and Why Is It Skyrocketing? – Motley Fool

What Is Hash Rate, and Why Is It Skyrocketing? – Motley Fool

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.

Someone in a cafe holding a sign that reads "Bitcoin accepted here."

Image source: Getty Images.

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. 

Besides Bitcoin, Litecoin, Dogecoin, and Monero all use