You may have seen the Kadena recently reach its all-time high hashrate despite Bitcoin falling recently. This growth in our network’s hashrate, coupled with Chainweb’s braided chain architecture, increases our network's decentralization and security.

What is Mining in the Context of Hashrate?

In the context of Proof of Work networks, miners use Proof-of-Work to secure the network, ensuring that only legitimate transactions are recorded on the blockchain. Mining ensures the integrity of the blockchain data. Miners put the proof in the Proof-of-Work, ensuring the blockchain works and functions properly without any bad actors trying to add illegitimate blocks to the chain.

Mining is unique to Proof-of-Work networks but is not found in Proof-of-Stake chains. However, both algorithms have the same goal– avoiding having legitimate blocks added to the chain. Unlike Proof-of-Stake networks like Ethereum, however, Proof-of-Work does not require you to have a certain number of tokens to compete, thus making PoW more true to the philosophy of a decentralized and open financial ecosystem.

Hashrate is the amount of computational power a miner can output.

History of the hashrate on Kadena

The chart begins with the network's hashrate at a relatively low point, around 63.19 Petahashes per second (PH/s), rising all the way to 666.88 PH/s

The hashrate has increased significantly over the two years, as shown on the chart. The increasing hashrate indicates more computational power has joined Kadena’s network over time. A higher hashrate on Kadena means more security for the blockchain because it becomes more challenging for a single entity to obtain most of Kadena’s computational power, preventing a 51% attack.

From a historical perspective, the increase in hashrate can reflect several things. It could indicate a growing interest in Kadena, increased investment in mining infrastructure, and a response to market conditions that make mining Kadena more profitable.

The chart shows various fluctuations in the hashrate, with a major peak at 666.88 PH/s on January 28, 2024. The fluctuations could be due to several factors which can include:

• Changes in the price of Kadena
• The availability and efficiency of mining hardware or software
• Miner’s interest in mining blocks on Kadena’s network i

Right now, miners are making a profit, according to https://www.asicminervalue.com/. In the example below, a miner using a Bitmain Antminer KA3 (166 TH/s) is making $5.13 daily, using 3154W of energy.

How does this increase in hashrate affect Kadena?

This means that Kadena is becoming more secure and decentralized over time. The more computational power, the more miners compete to earn $KDA. More computation means more security and a lower likelihood of a 51% attack.

A higher has rate also means a higher resiliency. As the hashrate rises, Kadena’s network becomes less dependent on the participation of a single entity holding the network up.

This is even more true with Chainweb’s 20 chains than other Proof-of-Work networks. Chainweb having 20 chains translates to even more security. Instead of one chain, a bad actor would need to overtake 20 chains to get most of the network’s hashrate and attack the network.

The Security Power of Braided Chains on Kadena

Additionally, Kadena’s braided chain design has an independently secure design that localizes Kadena’s network. In other words, braided chains are independent but linked together for security. See this X thread by our CEO, Stuart Popejoy, for more information.

You have the security of every other chain 3 blocks behind you on any particular chain.

Each braided chain in the network can be processed independently but with certain limitations to ensure security:

1. No single chain can progress more than one block ahead of its neighboring chains,
2. Exceed a two-block lead over the chains next to those
3. Be more than three blocks ahead compared to any other chain in the network

Creating a single block requires only the hash power allocated to that particular chain. You must harness one-fifth of the total hash power across all chains to produce two blocks.

It escalates to requiring half of the hash power from all chains for three blocks. However, when generating a sufficient number of blocks that could mislead exchanges—a scenario that poses a significant security risk—the effort necessitates the hash power from all the chains. This requirement is the backbone of the network's security, as it would demand considerable resources to compromise the system.

What is the hashrate?

The hashrate represents the computing power used to mine and process transactions on a Proof-of-Work network. Hashrate is the amount of computational power a miner can output.

Since a higher hashrate can translate to more competition among miners to execute blocks on the Kadena blockchain, miners must compete using special miners, called ASICs, to solve a puzzle in the fastest time. In return, miners are rewarded with Kadena’s $KDA token for successfully mining blocks.

For mining to make sense for the miners, they have to calculate the cost of specialty miners, electricity, and upkeep against the tokens they would earn. A simple way to think about this from a miner’s perspective is, “Is it worth it for me to spend money on the power and hardware compared to what I can potentially earn in KDA to do this.”

Kadena Hashrate vs Bitcoin Hashrate

Recently, Bitcoin’s hashrate has experienced what some have described as a nose dive, partially due to ERCOT energy restrictions in Texas. The Electricity Reliability Council of Texas (ERCOT) has been asking for energy limitations, limiting the hours that Texas residents can use energy.

Additionally, energy in Texas is becoming more expensive, with costs rising from $8B to $12B due to new legislation over the summer.

While the new legislature negatively impacts Bitcoin, Kadena has been experiencing a surge in hashrate, perhaps due to the decentralization of Kadena’s miners' location outside of Texas.

How You Can Participate

In the spirit of opening access to mining to anyone, our grantee Kadena Mining Club allows you to buy a portion of the hashrate from a miner as an NFT. The NFT holders receive a yield as though they bought a miner themselves. It’s like buying a miner and contributing to the network’s decentralization and security without the hassle of upkeep or electricity bills.

More information about the Kadena Mining Club can be found here.