Chia is the new kid on the cryptocurrency block, billing itself as an eco-friendly answer to bitcoin that seeks “to make digital currency easier to use than cash” and has already generated plenty of excitement since its launch in March.
Unlike bitcoin, which runs on a “proof-of-work” system that requires miners to deploy whole banks of computers to solve complex but arbitrary mathematical calculations in competition with one another, a battle that devours huge quantities of cheap electricity, Chia’s platform is based on “proofs-of-time-and-space”.
This means that miners are rewarded for how much unused disc space they make available, not how much energy they tear through validating transactions and adding blocks to an ever-growing blockchain – a practice that has become so intense in the case of bitcoin that rolling blackouts have been seen in hubs like Iran, prompting its government to impose an outright ban.
The new coin – created by Bram Cohen, the San Francisco-based entrepreneur behind the BitTorrent file sharing system – this week doubled its estimated value to $500m after raising $61m in new funding, securing investment from the likes of Richmond Global Ventures, Andreessen Horowitz, Breyer Capital, Slow Ventures, True Ventures, Cygni Capital, Naval Ravikant, Collab+Currency and DHVC, according to Bloomberg.
“Our goal has always been to go public relatively quickly as that will significantly clarify our regulatory environment and allow customers to use currency to hedge public market volatility, which is different from other coins,” said Chia’s president and chief operating officer Gene Hoffman.
But the new cryptocurrency is already being accused of failing to live up to its environmental promises after miners involved in generating currency were found to be burning through hard drives (HDs) and solid-state drives (SSDs) at a rate of knots, creating a spike in demand for new hardware and an inevitable shortage.
“Instead of just wasting electricity, Chia chews through SSDs at a fantastic rate, and also has thoroughly wrecked the market for big HDs,” industry expert and author David Gerard told The Guardian.
SSDs like NVME drives are understood to be in particularly short supply while the share price of manufacturers Western Digital and Seagate have risen from $52 to $73 and from $60 to $94 respectively since the start of the year, according to New Scientist.
More demand means more mass production, which in turn only serves to ramp up the hardware industry’s impact on the environment.
“We’ve kind of destroyed the short-term supply chain,” Mr Hoffman told the same publication, which reports that approximately 12 million terabytes of hard disc space are currently being used to mine the coin.
But Mr Hoffman suggests that the demand being driven by Chia could ultimately end up lowering the cost of hard discs and argues that even if every single one sold in a year (amounting to roughly 1 billion terabytes or 1 zettabyte of data) were devoted to mining his currency, it would still use less than one per cent of the energy chewed up by the market leader, bitcoin, which has been estimated to consume consume 0.53 per cent of the entire world’s electricity supply.
“I’m pretty sure that if we had all 7 zettabytes of storage, every piece of storage out there – you shut down Google, you shut down Amazon, you shut down Facebook – it’d still be less annual energy consumption,” he said.
Mr Cohen has also defended Chia against the charge that it is just generating more e-waste, tweeting a long thread on the subject recently and saying: “In this environment there’s a huge premium on getting plotting done fast because the work difficulty is going up so quickly that the same amount of space now is worth a lot more than it will be in the future. Once work difficulty gets high enough this will settle down.”
He urged miners against using consumer SSDs in mining and likened the problem to cleaning non-stick frying pans with wire wool, washing vegetables with soap or using a smartphone for a doorstop.
“These aren’t arguments against steel wool, soap, or phones, they’re basic guidelines about using your tools properly,” he explained.
A company spokesperson told The Independent: “Chia published its basic guide to farming in February 2021, and explicitly cautioned farmers to limit the amount of plots they create that use internal/consumer grade SSD as the temporary space, as SSDs have very different wear lives.
“For those interested in farming Chia, the guide to plotting basics has been and will continue to be available on the Chia website.”
The speed of the company’s growth is also raising eyebrows among analysts, with Rick Branson of Planet Scale Data noting that the currency’s network space had grown by nearly one exabyte in 24 hours on Wednesday.
“Creating plots at this rate burns up the equivalent of one 1TB Samsung Evo SSD every three seconds,” he said on Twitter. “An exabyte is 125,000 8TB drives or $25,000,000 in Seagate USB drives.”
Pinboard also expressed concern, noting that Chia’s share of netspace had grown to 10 exabytes in just one month at a time when the global monthly turnout of new hard drives stands at 70 exabytes.
A similar charge regarding e-waste was previously levelled at another leading cryptocurrency, ethereum, after miners caused a run on graphics cards vital to its own processes, moving chip manufacturer Nvidia to modify its products to restrict their use in coin mining.
Chia is by no means the only “green” altcoin out there, with the likes of cardano and litecoin also springing up and claiming to be much more energy efficient than bitcoin thanks to their “proof-of-stake” blockchains, which validate transactions based on how many coins are held by a network participant.
Others like solarcoin go even further by not only minimising their energy usage but actively promoting cleaner ways of generating it, the latter passing out new coins as a reward for producing energy, with every MWh of solar production rewarded.
This article has been updated to include Chia’s spokesperson’s response.