The reason why hash rate differs when mining is attributed to the fact that mining devices have different mining power associated with it. Cryptocurrency mining is very common today. Getting involved in this currency revolution requires the understanding of a few things, for instance, hash rates. The hash rate is common terminology in the world of cryptocurrency and affects overall earnings. Even if you are just trying out cryptocurrency mining as a hobby, it is important that you become well acquainted with hash rates to make rational decisions. Hash rate is also referred to as hash power and can increase or decrease. It also differs from cryptocurrencie’s hash rate. This is simply the amount of computing power thrown at the network by users worldwide.
For each cryptocurrency network, the hash rate goes up with more people joining the network. It is also worth noting that different crypto miners come with different hash rates. Generally, higher hash rates are the most expensive ones. Therefore, it is important to do a comparison of different miners and their costs before making a purchase.
For example, one type of GPU for mining is the AMD Radeon R9 295X2 for Ethereum. It is one of the powerful mining GPUs with a hash rate of about 46 Mh/s. A used one will cost approximately $1500 or more. Since cryptocurrency is just a guessing game, the speed really matters.
The term ‘mining’ does not suggest that the involving process is linear with a beginning and an end. With each mining device, there are tens of millions of guesses per second to find the precise answer to the puzzle, solving the existing block.
It is possible to solve existing block puzzles and earn a full mining reward using an old laptop, though the odds are impossible.
It is easy to compare the mining device’s hash rate. The device’s hash rate is equal to the number of guesses it can make each second in a bid to solve the block and earn a reward. The reward a mining device earn if affected by the pool you are mining on. The hash rates are measured using Tera Hashes, Mega Hashes, Giga Hashes, and Kilo Hashes. The lowest measure of hash rate is Hashes. If a device hashes at 60 H/s, it means the mining device makes 60 guesses each second, trying to solve a puzzle.
After Hashes, the next lowest unit is Kilo Hashes (KH/s), followed by mega hashes (MH/s), Giga Hashes (GH/s), Tera Hashes (TH/s), and finally Peta Hashes (PH/s). As we mentioned, not all hashes are equal. Though there are many hashing algorithms today, SHA-256 algorithm is the one used to mine Bitcoins. Most modern mining devices operate in Mega hash range.
An ASIC (Application Specific Integrated Circuit) on the other hand operates in Tera hash range. ASICs are vastly superior to CPUs and GPUs. ASICs are built from ground up to do one task and one task only. It is to calculate hashes. Because of this, ASICs are incredibly good at mining. This does not mean that GPUs and CPUs are useless. Though it is merely impossible to mine bitcoin from a GPU or CPU, there are many other coins you can mine. Check out our guide to learn which coin should you mine with a GPU or CPU here.
How to calculate profitability
It is possible to calculate the estimated profitability of a miner based on its hash rate, now that we know, not all hashes are the same, it is important to estimate mining profitability before you start mining. You can calculate your profitability using an online mining calculator.
Let’s start with Bitcoin. These days, a decent ASIC produces around 12 Tera hashes of mining power. Based on the current difficulty, it means mining will provide an average of 0.318 BTC per year. In case the same 12 Terahashes were used to produce Bitcoin cash, which uses similar mining algorithm like BTC, the results would be 2.7635 BCH every year. When you compare that with the current trading price, you will notice a slight difference. Nevertheless, the BTC produced are rather more valuable.
Looking at Ethereum mining, a good GPU will get somewhere in the range of 50 megahashes a second. 50 Megahashes would mean somebody mining Ethereum could earn around 1.45 Ether every year at the current difficulty. Most of Ethereum mining devices have seven GPU’s in them. Using seven GPUs and assuming that all of them have the same speed, the expected earnings would be slightly over 10 Ether a year.
Including Electricity Costs
As we mentioned, cryptocurrency mining is power intensive. Electricity is an important factor of consideration when mining. In the past, it was possible to mine Bitcoin using a GPU. That has really changed today. The amount of electricity wasted against the hash rate the GPU mines at would produce unprofitable results. That is why ASICs are becoming popular. They produce higher hash rates with relatively low energy consumption. Sometimes the harsh rate doesn’t count much but rather the efficiency. For example, a device that produces a 10% higher hash rate at 50% higher cost of electricity would be unprofitable and inefficient.
When to Buy an ASIC
Right now is the best time to buy an ASIC. In this bear market, all ASICs have come down in price. You can check out the latest ASICs here. These machines aren’t cheap. You will break-even with your investment usually within 1-3 months depending on various factors. Use a mining calculator to estimate your return on investment. If you can’t afford an ASIC, but serious about mining, you can buy a mining rig. These are devices that have powerful GPUs in them for the sole purpose of mining. At this point, you might want to consider mining other cryptocurrencies and converting them to Bitcoin.
An alternate way of mining is cloud mining. This is where you pay someone else to mine coins for you. You can learn about it here.
Hash rates effectively measure the hashing power of the device, be it ASIC, GPU or a CPU. A bit of understanding is needed to grasp the concept behind mining. Sometimes these hash rates can be misleading. It is important to understand hashing algorithms before you start mining. Check out our article, “Why do I Get Different Hash Rates When Mining Different Cryptocurrencies?” to fully understand this concept. Your goal is to make profits, and so when it comes to mining cryptocurrency, efficiency, or rather the amount of electricity used in comparison to hash rate is crucial information. This will make sure your operations are profitable, or at least break even.