New cryptocurrency Chia Is Causing Hard Drive Shortages in Asian Markets
Cryptocurrencies have always remained in limelight- sometimes for good reasons while sometimes for bad ones. Recently, a new cryptocurrency Chia has been gaining attention for causing massive hard drive shortages in Asian markets. The self-proclaimed “green” cryptocurrency, Chia has been created as an alternative to Bitcoin. This new crypto coin aims to reduce the harmful environmental impact that comes with mining Bitcoin. The developers of this new cryptocurrency claim it to be a green coin because, unlike Bitcoin mining that needs processors, GPUs, or ASIC mining machines, mining Chia requires more storage space rather than processing capacity. Lately, this eco-friendly blockchain gained popularity after the billionaire CEO of SpaceX and Tesla, Elon Musk, tweeted about the environmental impacts of mining. In his tweet, Elon Musk revoked Tesla’s decision to accept Bitcoin as payment for Tesla cars because mining cryptocurrencies like Bitcoin are driving up fossil fuel consumption. This led to the sudden popularity of mining Chia crypto coin in China that resulted in a serious hard drive shortage around the nation.
As you might already know, Bitcoin mining works on a proof-of-work algorithm while Ethereum uses proof-of-stake. Proof of work consumes a lot of electricity to solve computationally difficult puzzles. According to some reports, the annual electricity consumption of Bitcoin mining is around 148 terawatt-hours and it continues to rise. Chia was introduced as a green alternative to compute-intensive digital currencies like Bitcoin and Ethereum. Unlike other cryptos that need immense computational power, Chia mining needs ‘proof-of-space’ in hard drives and SSDs. With the rise in the popularity of the Chia coin, the demand for hard drives has escalated suddenly creating a shortage in the market. In some Asian countries like Vietnam, there’s an acute shortage of hard discs and it is estimated that about 3 million terabytes of hard drive space are currently being used to mine Chia coin which is equivalent to storing 3 billion movies. Isn’t it crazy? Let’s find out more about this cryptocurrency.
What is Chia Cryptocurrency?
The Chia network/Token was launched as an eco-friendly blockchain developed by Bram Cohen, the founder of BitTorrent. The goal of creating this cryptocurrency was to eliminate the problem of massive power usage that comes with mining Bitcoin and other digital currencies. It utilizes unused disk space for reading and writing which means that devoting more space to mining would yield a higher probability of receiving new coins.
Typical crypto mining requires dedicated mining rigs to solve complex algorithms. The process consumes immense electricity due to which the majority of crypto mining is done in China and other parts of Asia that have access to cheap electricity. With the introduction of Chia, it has become possible to make use of large numbers of empty hard discs. This new coin is developed using a cryptographic technique called ‘proof of space and time’. It does not need the processing power of high-end graphic cards which makes Chia more energy-efficient than Bitcoin and Ethereum. The mining process involves using a cluster of 100GB on a hard drive which is known as plots. A miner needs to get more plots to increase the chance of winning some coin. Some experts have estimated that a 10TB drive could possibly have odds of winning at 0.000257 percent. The Chia mining craze in China resulted in bulk hard drive orders because the more blocks you have, the higher chance of winning Chiacoin.
Impact on Hard Drives
Unlike mining Bitcoin that consumes immense electricity, Chia mining requires hard drive space. However, running these hard drives also requires energy. The energy consumption could be far less than mining Bitcoin but it could be devastating for the hard drives and SSDs. Chia mining involves constant reading and writing that would cause damage to the drive within a few weeks and render the hard drive useless. However, some experts claim that only low-quality hard drives fail due to mining. Another problem created due to mining Chia is the short supply and increased prices of hard drives. With a sudden increase in the demand for high-end hard drives, the prices of these drives have also gone up. Also, most large-capacity hard drives have gone out of stock in many Asian markets and customers who need large capacity drives of 6TB or more are forced to get multiple smaller capacity hard drives and combine them to work.
Due to the increased demand, the leading hard drive manufacturer Western Digital recorded an increase in share price from $52 at the start of the year to $73. Likewise, Seagate is working to meet the market demands as the sudden increase has put a burden on their supplies. The speed at which Chia mining is gaining popularity, it could cause disruptions to the supply chain for some time. It is believed that as hard drive companies ramp up production, the cost of hard drives could decrease in the long term. Moreover, even if Chia mining continues to grow, it will never consume as much energy as required by the Bitcoin network.
As the high-capacity SSDs are going out of stock in several markets, their prices are also going up. The mining process puts excessive volume and speed on the drives that could also void the warranty of hard drives and SSDs. Chia mining requires many reading and writing operations that could quickly shorten the life of an SSD. The graphic processing unit used for Bitcoin mining can be used for long-terms and can even be used for other purposes like gaming. However, new SSDs can fail just after two to three months of mining.