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Mining has always been a hot topic in the field of cryptocurrency. As long as you have a mining machine, you can "turn stones into gold" and realize huge profits. Especially during the cryptocurrency bull market, whether it is the current shortage of graphics cards in the market or the mining machine orders that have been scheduled for delivery in the fall, all reflect people's pursuit of this wealth opportunity. Today, Chia, an old project born in 2017, has also gained new popularity under the blessing of the cryptocurrency bull market and has become a new object of pursuit in the mining field.
1. Chia’s “Aura of Nobility”
When talking about Chia, the three most well-known things about it are: "Silicon Valley genius founder", "star investment institution" and "green and environmentally friendly mining".
In terms of team background, the founder of Chia is Bram Cohen, the inventor of BitTorrent. The BT protocol, a free and open source protocol that once occupied 1/3 of the global network, represents the earliest decentralized digital sharing economy, which undoubtedly brought great glory to Bram when he founded the Cina project.
In terms of investment institutions, Chia received two rounds of financing in 2017 and 2018, including well-known first-tier investment institutions such as A16Z, Greylock Partners, DCM Ventures, and Coinbase. It is the background of these star investment institutions that makes the market more expectant of Chia's future performance.
Of course, in addition to the above honors, what Chia attracts the most attention is its unique "green and environmentally friendly mining".
When Satoshi Nakamoto published the Bitcoin white paper, his main vision was that everyone could participate in Bitcoin mining through CPU; however, the computing power competition brought about by proof of work eventually led to Bitcoin mining becoming a competition between professional mining equipment and cheap electricity. Currently, unless an ordinary person has a professional ASCI mining machine, it is impossible to mine Bitcoin; similarly, according to the Cambridge Bitcoin Electricity Consumption Index, the current annual electricity consumption of Bitcoin has reached 134.68 TWh, which has exceeded the annual electricity consumption of a medium-sized country. This is no longer appropriate at a time when the world is paying more and more attention to environmental protection and climate issues.
In contrast, Chia aims to be a Bitcoin alternative - a "green, eco-friendly digital currency"; and its computing power is based on "a widely distributed, ASIC-resistant, electricity-independent commodity - hard disk space". How does Chia achieve its vision? Mainly relying on its Proof of Space and Time consensus mechanism.
Proof of Space is a way to prove that a user has reserved some unused storage space on their hard drive. Users of the Chia blockchain "seed" unused space on their hard drives by installing the Chia mining software. These users are called "farmers." When the blockchain broadcasts the next block challenge, farmers can scan their plots to see if they have the closest hash to the challenge. The probability of a farmer winning a block is the percentage of the total space that the farmer holds across the entire network.
The proof of time is to sort the blocks in chronological order to form a complete and valid main chain of blocks. The proof of time is achieved through a verifiable delay function, which takes a certain amount of time to calculate, but the verification speed is very fast. The key idea of VDF is that they need to be calculated sequentially, and since having many parallel machines does not generate any benefits, it can minimize the waste of electricity.
Perhaps the above terms are too obscure and complicated. Let’s better understand the time-space proof mechanism through the Chia mining process:
(1) Farming stage (P plate):
P-disk means plotting. Chia will generate a large number of Nonce (arbitrary or non-repeating random values used only once) through a hash algorithm and write them to the hard disk in the Plot file format. The P-disk process is a bit like farmers sowing seeds (Nonce) on the land (hard disk space), so China vividly calls this process "farming", and users participating in Farming are called "farmers".
(2) Harvest stage:
After the user sows on the land, he can wait for the harvest. The specific process is that when a new block is broadcast on the Chia network, farmers will scan the seeds (Plot) on their land (hard disk) and obtain a value through a small amount of calculation. If the value is close to the target value (Target) given by Chia, the farmer will get the Chia coin reward. In this process, Chia will give a "space proof" to prove that the user has indeed provided a certain amount of land (storage space) for sowing. Similarly, in order to prevent farmers with a large amount of storage space from creating backup transaction records to attack the system, Chia uses VDF (verifiable delay function) to implement time sorting of blocks, thereby creating valid historical transaction records for the system and ensuring network security.
2. Chia’s “Common People’s Feast”
From the above, we can see that the probability of a farmer winning a block reward is the ratio of his storage space to the total network space. Therefore, the more land a farmer has, the greater the probability of getting a reward. Therefore, we see that Chia miners are rushing to buy hard drives in large quantities to expand their land space, which has caused a shortage of hard drives and a wave of price increases, which has also caused Chia's network space to continue to rise exponentially. Figure 1. Chia network space growth Source: chiaexplorer, OKEx Research Institute When Satoshi Nakamoto first designed the Bitcoin mining model, his vision was that everyone could use the CPU on their computer to mine. However, with the emergence of hardware devices such as ASIC that specialize in processing calculations, using CPU mining has become an unattainable dream---it is difficult for ordinary people to participate in Bitcoin mining activities because of the lack of dedicated ASIC mining machines; similarly, Filecoin mining, which is often mentioned together with Chia, has extremely high requirements for the configuration of hardware equipment, consumes a lot of bandwidth, and cannot be disconnected from the Internet or the power supply, otherwise it will trigger a penalty mechanism. Therefore, BTC and FIL mining has gradually become an aristocratic mining movement for a small number of professionals.
From the above, we can see that the key to Chia mining lies in the size of the storage hard disk space---anyone on the market can obtain this hardware equipment. Therefore, compared with Bitcoin and Filecoin, Chia has a lower threshold for mining hardware, and everyone can participate and obtain Chia benefits.
This is one of the reasons why Chia is so popular now. In addition to the fact that people are unwilling to miss the Chia wealth opportunity during the bull market, which leads to FOMO emotions, ordinary people can also participate in it, which can be called a "feast for the common people."
3. Chia mining analysis Like Bitcoin, the difficulty of work on the Chia blockchain network is also dynamically adjusted to ensure that the block time remains unchanged and is maintained at an average of 10 minutes for every 32 blocks to complete the target time, achieving a stable release of XCH in the Chia network. On the other hand, as the competition for P disks intensifies, Chia's network space will increase, which will eventually lead to a decrease in the reward income per unit of "farming space". As shown in the figure below, in the past half month, the number of XCH rewards per TB per day in Chia has been getting lower and lower. As of April 30, only about 0.0076 XCH rewards can be obtained per 1 TB of storage space per day. With the influx of more and more farmers, the number of XCH rewards per TB per day will further decline in the future. Figure 2. The amount of XCH rewards obtained per day for 1TB storage space in the Chia network Source: chiaexplorer, OKEx Research Institute On the other hand, it should be noted that the network can be disconnected during the P disk process, but it takes a very long time. The main reason is that it takes a long time to write a large number of Nonce to the disk during P disk. In general, the speed of P disk depends on the CPU power and the disk read and write speed. The faster the P disk is written, the faster the farming can be completed, and the earlier the farmers can enter the harvest stage. This means that when some farmers are still stuck in the time dilemma of P disk, other farmers are already harvesting XCH, and the longer the P disk time, the larger the network space, and the less future benefits.
Therefore, Chia mining is a game of "racing against time". The larger the "land area", the higher the income of farmers who enter earlier. Since it is impossible to shorten the time required for P disk, more farmers adopt the strategy of "trading space for time" - using a large number of hard disks at one time to obtain a larger "cultivated area" to reduce the time loss caused by the P disk "cultivation" stage.
In general, Chia is still in the early dividend stage. Driven by FOMO sentiment, Chia's popularity will continue for some time. For users who seek short-term investment, participating in this project is a good choice. (OKEx Research Institute) |
