New cryptocurrency Chia blamed for hard drive shortages
A new cryptocurrency is being blamed for shortages of hard drives and other storage systems, as speculatorsbuy up critical components in anticipation of a price rise.
Chia is the creation of Bram Cohen, the entrepreneur behind the BitTorrent file-sharing system. It aims to improve on more popular cryptocurrencies such as bitcoin and ethereum by removing the incentives to burn massive amounts of electricity.
But Chia’s replacement for bitcoin’s energy-intensive “proof of work” system, called “proof of space and time”, instead requires users to devote massive amounts of hard drive space to generating and storing random numbers, with rewards doled out to those with the most space used up. That, plus the skyrocketing value of the cryptocurrency, has led to huge demand for the specific types of hard drive that work best with the system.
Most affected have been large hard drives, which are used to store the random numbers, and a specific type of solid-state drive (SSD) called an NVMe drive, which is used to generate the random numbers. Prices for both types of drive have noticeably gone up in the past week, according to David Gerard, a cryptocurrency expert and author of Libra Shrugged. The problem is particularly acute for SSDs, which have a limited number of uses before they break.
“Chia claims to do decentralisation just like bitcoin: waste some resource as unfakeable proof that you are claiming a share of the winnings,” Gerard says. “Instead of just wasting electricity, Chia chews through SSDs at a fantastic rate, and also has thoroughly wrecked the market for big HDs.”
In absolute terms, Chia is relatively minor. About $50m (£35m) worth of the currency was traded in the last 24 hours, according to CoinMarketCap, compared with $50bn worth of Bitcoin. But the expectation of growth in its value has led to a surge in demand for the hardware required to “mine” it, since the earlier the work is done, the more likely users are to get a payout, according to Cohen, the currency’s creator. “At the moment there’s a huge premium on plotting quickly,” Cohen tweeted last week, referring to the act of filling the hard drives with random numbers.
“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.”
But the current shortages show no signs of going away. While Cohen emphasised that consumer hardware should not be used for the task, the site’s own guidance suggests it can be done by “anyone with a mobile phone [or] laptop”. Fast SSDs are a key component in a number of already scarce consumer goods, including the new Xbox and PlayStation consoles.
Chia isn’t the first cryptocurrency with ramifications spilling over into the real world. Graphics cards, a key component used in both video gaming and AI research, have suffered huge shortages because of their use in mining Ethereum, to the extent that Nvidia, the leading manufacturer, has released specific products with artificial restrictions preventing them from being used that way, in order to ensure supply is maintained for gamers.
Bitcoin, which is usually mined using specialist chips, has even been implicated in widespread blackouts in Iran. The cryptocurrency is popular for evading sanctions on the oil-rich nation, but on Wednesday, the country banned cryptocurrency mining altogether in order to prevent power being diverted to the sector.