What is the hashrate market and how does it work?

At the core of Bitcoin and many other proof-of-work (PoW) cryptocurrencies lies a key concept: hashrate. Understanding hashrate is key to understanding how decentralized mining works – and NiceHash turns it into a powerful open market.

What is hashrate?
Hashrate is a measure of computing power used to mine and secure a blockchain network. It represents the number of cryptographic hash guesses a miner can make per second to find the correct solution (called a nonce) that meets the network’s difficulty target.

The higher the hashrate, the greater the chance of solving a block and receiving a reward.

Hashrate is usually measured in hashes per second, such as KH/s – kilohashes per second (1,000 hashes).

Different mining algorithms produce different hashrates. For example, if an ASIC miner produces 15TH/s on the kHeavyHash algorithm (used to mine Kaspa), it means it can make 15 trillion guesses per second.

The role of hashrate in proof-of-work
Proof-of-work is the consensus mechanism that drives blockchains like Bitcoin. It relies on miners competing to solve complex mathematical puzzles by hashing transaction data. The first miner to solve the problem adds the block to the blockchain and receives a block reward.

Hash power is crucial here. The more hash power a miner has, the more likely they are to solve a block and receive a reward. From a network level, total hash power measures the security of the network - the higher the hash power, the harder it is to attack the network.