Chia’s Impact on Storage

By Hubert Yoshida posted 06-09-2021 00:46

In 2020 the amount of data that was created and replicated exceeded previous expectations due to the pandemic which required more people to work and learn from home. The amount of data for 2020 is now expected to come in at 64.2 zettabytes, up from 41 zettabytes in 2019. At the beginning of this year the projection for 2021 had been increased to 79 zettabytes. Now that number may have to be increased due to another phenomena which started in April with the announcement of Chia.
If you are in the storage industry, you know about Chia since it has bumped up the cost of SSD’s in just a matter of weeks, especially high performance NVMe SSDs. Chia is the new ‘Eco Friendly” crypto currency that is set to replace Bitcoin and Ethereum.
What’s different about Chia is that instead of other crypto currencies like Bitcoin it does not require the use of high performance, energy consuming, processors to solve complex, compute intensive hashing puzzles to verify transactions which are added to the blockchain. Bitcoin miners receive Bitcoin as a reward for completing "blocks" of verified transactions, which are added to the blockchain. Mining rewards are paid to the miner who discovers a solution to a complex hashing puzzle first, so Bitcoin miners require the fastest processors. This consumes a lot of energy. According to the Cambridge Center for Alternative Finance (CCAF), Bitcoin currently consumes around 110 Terawatt Hours per year — 0.55% of global electricity production, or roughly equivalent to the annual energy draw of small countries like Malaysia or Sweden.
Chia has changed the equation for crypto currencies from compute power to storage space. When the Chia blockchain broadcasts a challenge for the next block, farmers will earn a reward if they have a hash that is closest to the challenge in a “plot” which is contained on a storage device. A plot is a dedicated storage space where Chia has downloaded and installed software to “seed” unused storage space with a collection of cryptographic numbers. Each Chia plot ends up being sort of like a complex Bingo card. However, there is a lot of math behind it, Each time a block challenge comes up, the Chia network determines a winner based on various rules. If your plot matches and 'wins' the block, you get the block reward (currently 2 XCH, Chia's coin abbreviation). The more plots a farmer has, the higher his probability of winning. So instead of buying up compute power a Chia farmer is buying up high performance storage space. A farmer's probability of winning a block is the percentage of the total space that a farmer has compared to the entire network.
The storage consumed by Chia farmers was already 1 EiB when it went live in April and a month later it was 17 EiB. This has caused the price of storage to increase almost immediately. A Tom’s Hardware report said Chai farming had increased demand for high-capacity disk drives and retail/etail prices have risen $100 – $300 in the first half of May. This has also affected the stock prices of SSD manufacturers. Chris Mellor reported that shares in both Seagate and Western Digital have risen recently. On May 12 Seagate shares were priced at $84.05. They are now valued at $102.29, a 21.8 per cent rise in six days. May 12 saw Western Digital shares priced at $64.38.  The current price is $74.96, meaning there has been a 16.4 per cent increase in six days.
Today the price of Chia and other crypto currencies has been declining but the cat is out of the bag and crypto currencies are now a part of many people’s portfolios. Many countries and large companies are talking about the advantages of eliminating the middleman and dealing directly through crypto currencies. Now with storage based crypto currencies like Chia, we should expect to see the already high demand for storage increase even further.