At this point the average Hackaday reader is likely familiar with so-called “Proof of Work” (PoW) cryptocurrencies, such as Bitcoin, Ethereum, and Dogecoin. In the most basic of terms, these cryptocurrencies allow users to earn money by devoting computational power to the network. Unfortunately, it’s well past the point where your standard desktop CPU is moving enough bits to earn anything worthwhile. Individuals looking to turn a profit have therefore resorted to constructing arrays of high-end graphics cards for the express purpose of “mining” their cryptocurrency of choice.
These miners, combined with ongoing chip shortages, have ravaged the GPU market. Anyone who’s looked at building or upgrading a computer recently will know that new video cards are in short supply, and even old models that would otherwise be considered budget options, are commanding outrageous prices. In an effort to appease their core customers, NVIDIA has even introduced cryptocurrency-specific cards that lack video output. The hope was that professional miners would buy these Cryptocurrency Mining Processors (CMPs) instead of the traditional video cards, freeing up the latter for purchase by gamers. But due to the limited availability and relatively high cost of CMPs, they’ve done little to improve the situation.
Now if you don’t use your computer for gaming, this probably seems like a distant problem. You could even be forgiven for thinking of this as little more than two largely frivolous pursuits at loggerheads with each other. After all, in a community that still holds decades-old Thinkpads as the high water mark in portable computing, a certain ambivalence about cutting edge video cards is perhaps to be expected.
But there’s a new form of cryptocurrency on the rise which threatens more than just the hardcore gamers. With “Proof of Space” (PoS) cryptocurrencies, it’s not about having the fastest CPU or the highest number of GPUs; the commodity being traded is storage space, and the player with the most hard drives wins.
The Rise of Chia
Conceptually, PoS cryptocurrencies have been around for some time. The idea was first proposed in the 2013 paper “Proofs of Space” by Stefan Dziembowski, Sebastian Faust, Vladimir Kolmogorov, and Krzysztof Pietrzak, which was later presented at the 35th International Cryptology Conference in 2015. The core argument of the paper is that PoW currencies are inherently wasteful as they consume processing power to function, and notes that critics were already predicting Bitcoin would be an environmental disaster. By comparison, the difference in energy consumption between an idle computer and one running their hypothetical PoS software would be negligible. Further, they reasoned that computers already had a large amount of unused disk space that could be offered up to the network.
A few cryptocurrencies did emerge based on the concepts laid out in “Proofs of Space”, but none of them really caught on until the Chia Network was founded in 2017. Thanks at least in part to investors eager to get into anything involving blockchain technology, the startup sailed to a valuation of $500 million in May of this year. Created by BitTorrent developer Bram Cohen, the documentation for Chia leans heavily into the idea that it’s the “green” alternative to Bitcoin, requiring neither a high-performance computer nor any equipment that couldn’t be readily reused if you were no longer interested in Chia. As explained in their FAQ, nothing stops you from deleting the Chia data from your drives and using them for regular file storage.
At least on paper, Chia certainly seems like the more eco-friendly option. Consider that a modern high-end video card like the GeForce RTX 3080 can easily pull more than 300 watts when running at full tilt, while even the most power hungry SSDs top out at 8 watts. Of course that doesn’t take into account the cost of the hardware, or the relative value of each resource as measured by their respective cryptocurrencies. But if your only concern is how many watts your system is drawing, you could spin up 20 or 30 SSDs before they even got close to what a modern GPU consumes.
Life on the Farm
The term “mining” makes sense for Proof of Work cryptocurrencies, since you’re putting effort in to unlock something of value. But in the parlance of Chia, those looking to dedicate their storage space to the network are known as as “farmers”; as after the initial setup, it essentially becomes a passive activity. The user simply tends their farm, which in this case means keeping an array of disk drives powered and properly maintained, and waits for something to sprout.
In a perfect world, you could simply point your Proof of Space software at an empty hard drive, and get credit for it. But in practice, such a simplistic system would be susceptible to fraud. So if you want to dedicate your drives to Chia, the software needs to periodically verify they aren’t being used for something else. When a drive is first brought online, the Chia software will “plot” it by filling the unused space with cryptographic data. Then, when the blockchain broadcasts a challenge, the farmer’s drives will be scanned and whoever has a hash that’s the closest match will be rewarded with Chia.
As it essentially operates like a lottery, the best way to increase your chances of getting a matching hash and receiving Chia in return is to add more storage to your farm. The good news it that operating a farm doesn’t require any great computational power. In fact, the Chia documentation recommends using a single-board computer such as the Raspberry Pi 4 or ROCK Pi with an array of USB drives to tend your digital crops.
So how big of a farm does one need to make money on Chia? There’s a lot of variables, many of which are changing day to day, but the short answer is that with just one plot taking up 100 GB, you’re going to need a lot of drives to see any notable return. As of this writing, the Chia Calculator indicates that a 100 TB array could bring in $240 USD a month at current prices. But as there’s a certain element of luck involved, your real world results will absolutely vary.
The Plot Thickens
It’s clear how the growing popularity of Chia could pose a problem. Setting up a farm doesn’t take a cutting-edge video card that only a relatively small number of computer users were likely to purchase in the first place; it takes common hardware like USB hubs and external hard drives that we all take for granted. A surging Chia could even limit the availability of single-board computers, something that would impact the hacking and making community more than anyone. Shortages so far have been limited to high capacity enterprise-grade drives, but it’s not hard to imagine how that could expand into consumer hardware.
That’s because Chia has something of a dirty secret. While it’s true that farming is largely passive, the processing of creating the initial 100 GB “plot” is anything but. Creating the cryptographic hashes not only requires a decently powerful computer, but writing them out puts the target drive itself under enormous stress. To get around this farmers have taken to creating their plots on smaller SSDs, and then moving them over to higher capacity enterprise drives for long-term storage once they’re done. In such a configuration the SSDs are considered an expendable resource, with some reports claiming it takes as little as a few weeks to burn through a standard consumer drive.
The demand for drives is real. A representative from Seagate recently confirmed the manufacturer was exploring the idea of Chia-specific drives, but didn’t elaborate on what that would entail. Though given how little impact NVIDIA’s attempts to curb miners have had, it’s hard to imagine it would change much. Unless cryptocurrency tailored hardware is cheaper and more widely available than the traditional options, farmers and miners aren’t going to make the effort to switch over.
Market Volatility
It’s not all bad news. While the situation was truly looking dire for awhile there, it seems like cooler heads might be prevailing. There was a mad rush to buy up hard drives when the price of Chia skyrocketed to a little over $1,600 in May, but by June 1st the price was down to around $700. Today it sits at roughly $280.
Looking at the data, it certainly seems like Chia is running out of stream. Unless its value rebounds soon, the return on investment for prospective farmers just isn’t there. Why spend thousands of dollars to earn hundreds? There’s even a chance, given the lottery-like nature of the reward system, that you’d earn nothing at all.
With a little luck, perhaps the dreaded hard drive apocalypse will pass us by. We could certainly use a break, considering how many shortages we’ve already got to contend with. But as we’ve seen with other cryptocurrencies, a tweet from Elon Musk could be all it takes to turn Chia around overnight. So maybe picking up a couple spare drives now wouldn’t be the worst idea.
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