In our previous newsletter, we highlighted that though China— the country with over 70% of the world's crypto mining power— has banned the production and operation of crypto, miners are still going strong.

Other than crypto value and sales climbing, one of the strong indicators of a cryptocurrency's health is its 'Hash rate'.

China's crackdown on Bitcoin and other crypto forced miners to either halt their activities or migrate. The disorder caused a drop in both the value of the crypto market and the mining hash rate. But that didn't last long. Barely 2 weeks later, both numbers have bounced back.

In the cryptocurrency lingo, mining means accessing a unit of crypto by using 'mining machines' (computers built for the task). There is only a limited amount of crypto in existence. The highest valued cryptocurrency—Bitcoin— has 21 million in total and miners are tasked with solving puzzles to unlock the units.

Hash Rate = mining speed: The hash rate is the speed at which the computer device used by a miner can solve the puzzle and develop a unit of Bitcoin.

A higher hash rate means more mining difficulty which directly correlates with security. The popularity of bitcoin means that there are more miners with better machinery trying to solve the puzzle. This usually leads to a higher hash rate on the bitcoin network making it difficult for anyone to hack the bitcoin blockchain. (successful hacking requires taking over at least 51% of a blockchain’s hash rate, which becomes less possible when the rate increases).

It's also an indication that miners believe in the success of the cryptocurrency and are investing in better, faster machinery.

A higher hash rate could also be an indication of more resource pooling: Some miners choose to combine their resources and brainpower to form a network. All miners in the network attempt to solve the mining puzzle and when the puzzle is hatched, they split the profit. This collaboration helps to optimise hash rates and is a win-win situation for everyone involved.

Investing your hard-earned money in crypto is usually in anticipation of future profits and hash rates provide a fair indication of the crypto’s future prices. A higher hash rate shows that miners are betting on an increase in the value of a cryptocurrency in the near future. It’s also an indication that a cryptocurrency is in a strong position in the crypto market.

Bitcoin's hash rate has been steadily rising since it crashed to a 6-month low of 84.3 total hash per second (TH/s) in June after the Chinese government banned crypto mining. As of October 2021, Bitcoin's hash rate is 150.291 and shows no signs of slowing down.