What does it mean when a hash rate is down?


Jul 2, 2019
A hash rate in the blockchain and cryptocurrency world is the number of hash operations that are done in any given amount of time, or the speed of the miner’s performance. Maybe you think that you don’t really need to understand what a hash rate is in order to be a successful cryptocurrency trader - but hash rates actually have a massive impact on the performance of a cryptocurrency, both in terms of market value and the performance of the blockchain. So, what does it mean when a hashrate is down? Let’s take a look.

What is a hash rate?

Simply put, a hash rate is a way of measuring the processing power of a particular network. For the purpose of this article let’s look at Bitcoin. As Bitcoins are mined, blocks of verified transactions are “hashed” before they’re added to the blockchain. Each hash is created when a miner successfully completes a complex mathematical puzzle.

The hash rate measures how many times the miners can attempt to complete the puzzle in a second, and how difficult it is to complete the puzzle. The hash rate is a pretty good indicator of the health of a network. The higher the hash rate the more secure the blockchain is against 51% attacks.

Why do I need to know about hash rates?

In order to be a successful cryptocurrency trader, you should know as much about the operations of a blockchain as possible. With that being said, hash rates can have a massive impact on the performance of a coin. For example, eToro reports that Litecoin’s hash rate has been down by 60% due to its latest halving and that has caused mining profitability to plummet. According to eToro, poor mining profitability “has caused many miners to switch off their mining equipment or move to other networks.” This is contributing to the low hash rate.

A lower hash rate leads to less security on the network. The less secure the network is, the more susceptible it is to 51% attacks. Naturally you want to invest in a secure blockchain, and if your coin of choice is going to be less secure because of a low hash rate you might need to make some decisions. With that being said, hash rates do rise and fall with about as much volatility as the crypto markets, so don’t be too nervous if your coin’s hash rate plummets for a short while.

So, what does it mean when a hash rate is down? Quite a lot! The coin’s price can dip, the network is less secure and more susceptible to 51% attacks, and miners leave to move to other more profitable networks.

Want to learn more about how hash rates can impact a coin? Read here. If you’re looking to trade, looking at the hash rate is always a good metric to look at. If you’re looking to learn to trade, platforms like eToro should be your first port of call.

Hash rates are important - there’s no way around it

Hash rates are important when we’re trying to understand the performance of a network. They impact the security and viability of a blockchain, and you should definitely keep an eye on them if you’re into trading cryptocurrencies. So, what does it mean when a hash rate is down? More than you’d think.