There’s a new cryptocurrency in town, and it intends to avoid some of the downsides of current cryptocurrency systems while offering an easy-to-use, efficient, and secure blockchain for the everyday user. Chia Coin uses a storage-based “Proofs of Space and Time” mechanism for securing the blockchain rather than the “proofs of work” used by other blockchain systems. According to Chia’s developers, this makes the new cryptocurrency more energy-efficient and easier to use.
Current cryptocurrency systems, like Bitcoin and Ethereum, use a “proof of work” method for adding blocks to the blockchain. Proof of work means solving complex puzzles using enormously powerful computer systems, typically ones with multiple graphics processing units (GPUs) thanks to their ability to solve these sorts of algorithms very quickly. This process is called “mining,” and as miners add blocks to the chain they’re rewarded with small amounts of the cryptocurrency.
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Cryptocurrency and hardware shortages
Proof of work cryptocurrencies are responsible for a years-long shortage in GPUs as they’re bought up and added to mining rigs. They’re also very energy-intensive, with millions of computer systems mining cryptocurrency on a continuous basis. For example, Bitcoin by itself is estimated to burn through around 130 Terrawatt-hours (TWh) of electricity, or close to 0.6% of the world’s energy use.
Chia works differently. Rather than using powerful computers to solve problems and add blocks to the blockchain, Chia uses a “Proof of Time and Space” method that relies on storage space rather than intensive central processing unit (CPU) and GPU activity. According to Chia’s developers:
Proof of space can be thought of as a way to prove that you are keeping some storage unused on your hard-disk drive. Users of the Chia blockchain will “seed” unused space on their hard disk drive by installing software which stores a collection of cryptographic numbers on the disk into “plots.” These users are called “farmers.” When the blockchain broadcasts a challenge for the next block, farmers can scan their plots to see if they have the hash that is closest to the challenge. A farmer’s probability of winning a block is the percentage of the total space that a farmer has compared to the entire network.
Proof of time requires a small period of time to pass between blocks. Proof of time is implemented by a Verifiable Delay Function (VDF) that takes a certain amount of time to compute, but is very fast to verify. The key idea of a VDF is that they require sequential computation, and since having many parallel machines does not yield any benefit, electricity waste is minimized. There will likely be relatively few VDF servers (“Timelords”), as the fastest one will always finish first and it takes only one fast and fair Timelord on the network to complete a block and move the chain forward.
With Chia coin, storage is the new GPU
Clearly, the more storage space you have available to you and the faster your storage devices, the better your chances of winning a block and earning Chia coins. It’s a little more complicated than that, but we’ll keep it simple. There are two steps to the farming process: creating plots (which uses about 240 gigabytes of space or 245GB) and storing them (each plot is about 100GB). You’ll want a very fast storage device like an NVME solid-state drive (SSD) in a RAID configuration for plotting and then you can use slower and much larger spinning hard disk drives (HDDs) for storing those plots.
Even so, that means that SSDs, the fastest form of storage available today and much faster than HDDs, could potentially come under the same kind of demand as GPUs for conventional cryptocurrency. The same could be said for large-capacity HDDs. Whether we’ll see a run on SSDs and HDDs and severe shortages as with GPUs remains to be seen, but the potential is there if Chia coin takes off.
Not just any old SSD
A complication has been identified with Chia farming, and that means anyone who wants to become a farmer needs to carefully consider their choice of SSD. Basically, the process of creating plots involves a great many write transactions, something that less expensive SSDs are not designed to handle. By some estimates, an inexpensive 512GB consumer-grade SSD could be destroyed by farming within 40 days, whereas a more robust commercial-grade SSD could last for 160 days.
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The measure of whether an SSD is a good choice for farming comes down to its Terabytes Written (TBW), which is a measure of how much data can be written to a drive before it fails. That number is also converted into a number of data writes per day (DWPD) rating, which is spread out over five years. Thus, you want SSDs with high TBW and DWDP ratings. As an example, an inexpensive 1 terabyte (TB) SSD might have a TBW of 600, whereas a more expensive SSD like the Corsair Force 2TB MP600 has a TBW of 3600.
Those higher TBW SSDs are very expensive, however, meaning that getting into Chia farming isn’t a trivial affair. The details of building a Chia farming rig is beyond the scope of this article, but suffice it to say, you’ll want to do your research before delving into the process.
Conclusion
There’s no way of knowing whether Chia coin will be successful. It’s certainly more energy-efficient than conventional cryptocurrency, and it’s meant to be easier for non-experts to get into. At the same time, it’s a new cryptocurrency and we’re already seeing signs of SSD prices increasing and supply diminishing. Whether Chia coin is cost-effective remains a very important question that cryptocurrency investors will be watching closely.
