Usually, it’s not that easy to mine cryptocurrencies. This applies especially to Bitcoin because the miners need one-purpose machines (ASICs) consuming a lot of electricity. The process, then, can be more expensive and not very eco-friendly. With that in mind, the Chia Network (and cryptocurrency) was officially launched in March 2021.
Chia was announced back in 2017, though. The first thing that caught the attention then was its main creator: Bram Cohen, famous for the invention of the BitTorrent protocol and company, twenty years ago. The second thing was its promise to be greener than Bitcoin (BTC). Now, the possibility to mine this currency with barely hard disk drives (HDD) or solid-state drives (SDD) is what catches the eye.
Amid the recent environmental concerns surrounding the first cryptocurrency, and all those using the Proof-of-Work (PoW) algorithm for mining, the arrival of Chia seems like something strategic. So, let’s know a bit more about this ecological cryptocurrency.
Why is Chia greener?
The answer lies inside its code. Unlike Bitcoin and other cryptocurrencies, Chia verifies transactions and “mines” new coins using a system dubbed “Proof of Space and Time” (PoST). It’s important not confusing this algorithm with Proof-of-Stake (PoS), which calls itself eco-friendly too.
PoS systems (and coins) replace the figure of the “miner” for the “validator”. This validator, which can be anybody who wants to, won’t need energy or specialized machines. Instead, what they’ll do is locking inside a special wallet a certain amount of native tokens that they previously acquired. Like this, they’ll obtain the right to verify transactions and mint new coins. So, in PoS systems, the more coins you own, the more power you have.
In a way, PoST is kind of similar, but the “validators” are instead “farmers”. And it doesn’t matter the number of coins they have or not. What matters here is the unused storage space these farmers have inside their HDD and/or SDD. Depending on this, they’ll have higher chances (or not) of verifying transactions and mint new coins. Energy and ASICs aren’t necessary for this blockchain, so, it’s considered very eco-friendly in that sense.
As they explain on the official webpage:
“Mining requires expensive single-use hardware that consumes exorbitant amounts of electricity. We are mitigating this problem through a fair, eco-friendly, and better blockchain that uses farming to leverage existing empty hard disk space distributed on nodes around the globe. Farming remains decentralized because anyone that has installed our software and has plots can win the next block.”
What can you do with Chia?
The potential functions of Chia are only starting since the mainnet was launched barely last March. For now, PoST farming (green mining), common transactions, colored coins, rate-limited wallets, and distributed identity wallets are available. New features will come soon, though.
The transactions can be done with their native currency, Chia (XCH). The rewards for green mining are received in this coin as well. According to CoinMarketCap, XCH has a current price of over $535 per coin, and it’s being traded in at least 13 cryptocurrency exchanges worldwide. Its total market capitalization (self-reported by the project) would be over $275m.
As for colored coins, these are lightweight and customized tokens that anyone can issue inside Chia Network for different purposes. For example, a company or small business can create a bunch of customized colored coins to facilitate payments or create loyalty programs for their clients. Additionally, it’s also possible to create unfinished transactions as “offers”. That’s achieved by creating some colored coins out of nothing and burning XCH at the same time. Then, anyone can finish the other side as a paired transaction.
And there’s more to come. As indicated on their Business Whitepaper:
“Chia Network intends to sell software service and support for its open-source blockchain and smart transaction software to governments, financial institutions, corporations, and large buyers and sellers of storage. Chia also expects to foster grass roots development of DeFi, DeX, cross border payments, and new end-user wallet innovations.”
This way, Chia (as a private company) is aiming for a future Initial Public Offering (IPO) in the United States. They pre-farmed a large supply of coins to stabilize the network in the long-term, but also to make corporate loans with Chia coins eventually.
About “green mining” with Chia
If you’re wondering how to perform this mining with HDD and/or SDD memories, you should consider first that a certain amount of technical knowledge will be very useful, to begin with. Besides, it’ll be necessary, as minimum specs, a quad-core 1.5Ghz CPU (must be 64 bit), 2 GB RAM, Python 3.7 and above, drives formatted to support large files (NTFS, APFS, etc.), 256 GB of free storage, and between 10 and 24 hours with a turned-on machine.
What farmers need to do first is download the entire Chia blockchain. Then, they should create their own “plots”, which are large files for collecting cryptographic numbers. Every plot should be of at least 108 GB, but it’s necessary to have available 256 GB to create them. Besides, in the case of SDD and NVME drives, it’s recommended at least 1 TB for more than one plot at a time.
The reward per block is 2 XCH, with 4,608 block rewards per day (split for everyone) during the first three years. However, it’s not that easy to win the coins by using little available storage space. For example, according to Chia Calculator, with only one plot (108 GB) fully farming, the earnings would be barely 0.088 XCH (around $47) every six months.
Beyond this, with 46 plots fully farming (5 TB), the earnings would be of over 4 XCH ($2k+) every six months. This is why pools for farming Chia are being developed. That way, several small farmers can join forces to win faster rewards.
Worries about SSD and HDD shortages
As you can see now, Chia may not need power or ASICs, but it does need an awful lot of space to function. This is why some people and companies are starting to worry about a possible SDD and HDD shortage in the foreseeable future. It already happened with graphic cards (GPUs), very used in PoW cryptocurrency mining.
Brands like Galax and Seagate have noticed that the demand for their drives has increased recently. Even more, Galax warned that cryptocurrency mining that requires excessive volume and speed on storage devices will void the warranty of their SSDs. They didn’t mention Chia specifically, but the message is duly noted.
Currently, according to the e-commerce analytics website Manmanbuy, the prices of hard drives in China have increased by over 300% since the end of 2020. The potential Chia farmers in Asia might have something to do with the high demand, and, therefore, the rise of prices. In the meantime, only the Asian markets seem affected by this, but that’s no guarantee for western markets in the future.
The space invested so far on Chia Network is over 23.1 million TB. And they’re only starting. At this rate, we’ll see sooner rather than later how efficient and eco-friendly can really be this currency.
Originally published at https://blog.alfa.cash on June 8, 2021.