What is Hash Rate and its effects in Cryptocurrency market ?

 

If you have been in the complex and exciting market of cryptocurrencies for some time, you may be familiar with the term hash rate . In the case of digital assets, the concept of cryptocurrency is defined in the process of acquiring Bitcoins and other digital currencies called cryptocurrencies. Mining is the process of acquiring cryptocurrencies through the use of powerful computers and software designed with a specific purpose. Cryptocurrencies extract this method using very powerful equipment and solving very complex mathematical problems, which are so complex that users cannot solve them.

After successfully solving math problems, miners generate new Bitcoins and also verify transaction information to make the entire Bitcoin network safe and secure. This process may seem straightforward; but in fact, before technical production of Bitcoin, a lot of technical work is done. But what is the power consumption needed to solve the equations? According to a report released in June 2019, the Bitcoin network accounts for 0.2% of worldwide energy consumption, and this high-consumption network is still growing.

 

What are hash rate and hash power ?

The concepts of hash power and hash rate are different. The power to calculate and solve mathematical calculations to discover and create new blocks by miners is called hash power. The higher the hash power, the more likely it is to complete the blockchain and, of course, receive the block reward. Since the speed of finding and completing the block is very important. Yet, the hash rate indicates the speed of operation of the mining device. While mining, the higher the hash rate, the better, as this increases the chances of finding the next block and receiving a reward. Hash Rate is also referred to as hash rate. Keep in mind that the term hash rate is not unique to Bitcoin and is used in most digital currencies and cryptocurrencies.

 

What is the use of hash power in mining ?

In a Bitcoin network, mining and completing each block takes about ten minutes. The higher the hash rate of the miner, the faster the mining. The hash rate determines the amount of power required to mine and complete the hashing process of a block in 10 minutes. The higher hash rate makes it easier for the miner to find the hash of the SHA256 algorithm, which is a Bitcoin-specific hash. In principle, block authentication can be considered as confirmation of Bitcoin hashing. The higher the total hash power of the network, the more difficult the network is, so that the confirmation speed of each block remains the same for ten minutes.

 

Definition of hashing, hash unit and Bitcoin hash rate calculation

The process of completing blocks is called hashing. The first priority of most digital currency miners, including Bitcoin to buy miners, is its hash rate, and other issues such as power consumption, etc. are considered next. The hash rate of each processor is calculated based on the hash rate per second.

 

What is the effect of hash rate on Bitcoin price ?

When the Bitcoin hash rate goes down, it can be seen that the miners have left the network. Based on the history of Bitcoin price, miners are resilient investors, and in order for miners to stop working or capitulate, negative market movements must have occurred. However, Bitcoin mining is an industrial cruelty. Only the most efficient mining companies survived this difficult and arduous path, especially after Bitcoin. The industry’s desire to compete with the simplicity and beauty of the Bitcoin protocol gives us a way to predict the price floor. Bitcoin hash rate can be a useful criterion for predicting and checking the Bitcoin price floor and entry point for buying. In addition, various criteria such as ribbon hash index can be used to check entry points. Before addressing the main topic of the article, it is necessary to examine Bitcoin biting and its effects on the miners’ business.

 

What has a hash rate got to do with the price of Bitcoin ?

Miners stop mining Bitcoins only when they see that they can use their processing power in a more profitable place. This happens for two reasons: lower Bitcoin prices and higher costs.

Because of this, the price of Bitcoin and hashtags are inherently related. During the 13-year life of Bitcoin, the hash rate peaks when the price peaks and decreases as it falls. But it resumes its upward trend.

As we have said, miners are more resilient than ordinary market investors. During the three major market downturns of 2011, 2014 and 2018, miners withdrew Bitcoins later than other investors. Hash rate changes have also been less than price changes over the years. Since 2010, the biggest drop in hash rate has been 53%. Bitcoin, meanwhile, has fallen 93 percent so far. It is interesting to know that after all three big price falls, after the price reached the floor, the hash rate quickly regained its upward trend.

 

The relationship between publicity and profitability

Changes in hashing power are directly related to the difficulty, the number of miners in the network, and, ultimately, the profit that miners make from mining. As mentioned earlier, mining each block becomes more difficult if new miners are deployed to the network. Since after this event, miners have to make more guesses every second to solve calculations and receive block rewards. This makes it more difficult for miners to make a profit. As network hardness increases, so does awareness.

 

What is a hash ribbon indicator ?

The Hash Ribbon indicator is an indicator that helps us measure the capitulation of minors. Although this index is not complete, if we look at history, this indicator shows us when the selling pressure suddenly disappears.

With the end of the capitulation of the miners and the stabilization of the price, the Ribbon hash indicator gives a buy signal. In fact, when Bitcoin selling pressure suddenly subsides due to the dynamics of Bitcoin hash reduction, we can be sure that Bitcoin has reached a price floor.

Another interesting thing about this indicator is that it never sounds near the price peak. As the price starts to fall after each peak, the hash rate continues to increase. As hash rates continue to rise as prices fall, sales pressure is likely to increase across the network until miners capitulate and show us a price floor in a bear market.

Since Bitcoin is the best monetary commodity in the world ever created and we are witnessing global monetization of this currency, it is a great idea to buy more Bitcoins when the price is at the bottom and the hash ribbon represents. This is about to happen for the twelfth time in history.

When the price drops and the selling pressure drops exponentially, use the hash ribbon indicator to find the right entry point.

 

More info about : Bitcoin Taproot

 

In conclusion

Miners are die-hard investors and do not give up Bitcoin so easily. This issue has made it possible to use developments related to miners such as hash rates in checking entry points and price floor.

Bitcoin prices and hash rates are closely related. Bitcoin’s 13-year history shows that when the price peaks, the hash rate also increases.

The hash rate buying strategy works when the death and end of Bitcoin debate starts again. This debate intensifies when Bitcoin is about 30 to 90 percent away from its peak. If this is achieved, a hash rate can be used to check the price floor. In addition, the ribbon hash index can be used to identify entry points. An indicator that helps us understand the capitulation of miners and relieve sales pressure.