Altcoin miners have already begun to get rid of hard drives that are used for cryptocurrency mining. The experts explained how the project managed to become popular and whether it has prospects
Over the past four months, the Chia Coin token has fallen by 86%. On September 7, the cryptocurrency is trading at $236. The capitalization of altcoin decreased to $391.4 million, according to CoinGecko. In mid-May, the value of the Chia Coin token reached a historical maximum — $1.64 thousand.
Due to the collapse of the Chia Coin exchange rate, miners began to massively sell hard drives (HDD) and solid-state drives (SSD), which are used for cryptocurrency mining. Miners are getting rid of the equipment, since the production of Chia Coin is currently unprofitable.
What is Chia Coin
Chia Coin is a token of the Chia Network blockchain, which was created by BitTorrent founder Bram Cohen. He believes that bitcoin and other cryptocurrencies running on the Proof-of-Work (PoW) algorithm use too much electricity. Therefore, Chia runs on the Proof-of-Space-and-Time algorithm and uses disk space as a transaction validator. Users who provide their own disk space to support the network receive a reward for this.
The popularity of Chia
The surge of interest in Chia Coin occurred in mid-April, as indicated by Google Trends data. Probably, users were attracted by an unusual method of token mining. To earn Chia Coin, not computing power is used, but disk space. Thus, anyone who has free hard disk space can start mining a coin.
The popularity of Chia Coin led to a shortage of hard drives (HDD) and solid-state drives (SSD) in Hong Kong in April. Due to the increased demand for devices, their average cost has tripled.
In May, the president and Chief Operating Officer of Chia Network Inc. Gene Hoffman announced plans to hold an IPO (initial public offering) on the stock exchange before the end of this year.
Chia Network raised $61 million from a group of investors that included Richmond Global Ventures and Andreessen Horowitz. During the investment round, the project was estimated at $500 million. The company’s executives note that they plan to create a trading and payment system that will be used by government agencies, banks and financial institutions.
In July, the developer of the Chia Coin cryptocurrency, Bram Cohen, announced plans to launch a decentralized exchange and an automated market maker. According to Cohen, in the future, other DeFi products will be developed in the Chia ecosystem.
According to Yandex. Market, at the beginning of September, the average cost of a 4 TB hard disk is 10.8 thousand rubles. According to the official Chia profitability calculator, a 4 TB hard drive per day will be able to bring $0.23. Monthly earnings will be $7.04 (512.5 rubles, taking into account the current exchange rate on September 7). Thus, the hard drive will pay off in 21 months and one week.
Mining Chia Coin on a 10 TB hard disk brings $0.58 per day. The average price of such a drive is 36 thousand rubles. The hard drive will provide a monthly income of $17.6 (1.28 thousand rubles). The payback period of the 10 TB drive will be almost 28 months.
According to the calculations of RBC-Crypto, in mid-July, the payback of a 4 TB hard disk was 18 months, and a 10 TB drive was 24 months and one week.
“Expectations are too high.” Why is it too late to start mining Chia Coin
When making calculations, the official Chia Network calculator warns that the yield estimate is based on statistical data and the real yield may differ from the one presented in the calculator. In addition, it is worth considering the increase in the complexity of mining, which occurs due to an increase in the network’s disk space due to the connection of new miners.
In May, analysts estimated that the mining of the Chia Coin cryptocurrency on a 512 GB solid-state drive (SSD) is capable of disabling the device in just 40 days. For almost a month and a half, the drive writes 256 TB of data. The average consumer of a 512 GB SSD has enough device for five years of use. When mining Chia Coin, the service life of 1 TB solid — state drives is just under three months, and a 2 TB SSD is almost six months.
Is there any prospects for Chia Coin?
The problem with the idea of Chia Network itself is the relative uselessness of the project in today’s realities, the senior analyst believes Bestchange.ru Nikita Zuborev. In his opinion, due to the speed of information dissemination and the lack of an optimal data compression algorithm, the idea of distributed information storage is greatly inferior to existing data centers.
“The project was obviously doomed to failure and was created to “hype” – to collect money from the tenants of the facilities and distribute free tokens for the company in return, which were actually thrown into the market for free floating,” the analyst explained.
The idea to create a Chia blockchain is 100% connected with an attempt to parasitize on the wave of “hype” around cryptocurrencies, Zuborev is sure. Maria Stankevich, Director of development of the EXMO crypto exchange, agreed that the hype around Chia Coin is nothing more than a “hype”. In her opinion, the price of the token was definitely artificially inflated.
“The token was definitely “pampered”, the information noise was also too positive — expectations were overstated, successes were hyperbolized, ” the expert noted.
Everyone who wanted to make money on Chia Coin has already done it, Stankevich is sure. In this regard, she does not recommend either buying a token or starting to mine it.