The Bitcoin hash rate is MASSIVE right now.
What exactly causes the hashrate to increase?
asked Mar 9, 2016 at 0:20
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3The hash rate doesn't really change how fast transactions are processed.– Nick ODellMar 9, 2016 at 0:56
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@NickODell Thanks! It seems I have misunderstood how processing speed works then. What does a higher difficulty do then? I was under the impression it makes blocks harder to process and therefor transactions take longer.– Albert RenshawMar 9, 2016 at 1:05
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2Blocks are created every 10 minutes on average. If blocks are found faster than that then the difficulty of increased to get the average back to 10 minutes. For practical purposes the 10 minutes average can be considered a constant.– JannesMar 9, 2016 at 5:06
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Hey Albert, as the above commenters have explained, the title of this question and the topic asked about in its body are completely unrelated. Could you please edit the question to clarify which of the two topics you would like to get answered here? Please ask the other question as another post instead! I'm putting this on hold as "Unclear what you're asking". This doesn't mean that we don't want the question, just that it isn't clear in its current state. Please edit it and then flag it for reopening.– Murch ♦Mar 9, 2016 at 9:33
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@Murch Thanks for the respect. I've edited the question– Albert RenshawMar 9, 2016 at 10:03
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1 Answer
Miners are competing to find valid blocks because each block allows the successful miner to collect a mining reward. The mining reward consists of an amount of newly generated coins as defined by the reward schedule (currently 25 BTC per block) as well as any transaction fees attached to transactions they confirmed with the block.
At ~$400 per BTC, this values a block reward at approximately $10,000. Blocks are found at about 10 minute intervals, valuing the block rewards each day at about $1.4 million.
As the hashpower of your equipment in relation to the network's total hashpower determines the likelihood of you succeeding at finding the next block, miners invest in better equipment, which in turn creates a market for manufacturers to produce such.
Over the past years, mining hardware has progressed from CPU, to GPU, to application specific chips (ASIC) that can exclusively perform the computations required in Bitcoin mining. Back in 2015 this specialized mining equipment pretty much caught up to the technological state of the art, as the first 14nm chips were produced.
Altogether, the race of ASIC manufacturers to provide the fastest mining equipment and the miners to deploy the same has built up the networks hashrate to an impressive 1.4 exahashes per second, which is about a 50,000x increase since the about 21.6 terahashes per second when the first ASICs were delivered in January 2013.
