The truth behind the crazy rise in hard drive prices: Chinese agents are hoarding goods, sellers are raising prices by the hour, and someone in Zhongguancun makes 3 million in one day

Source: GlitchTech

Author: Xu Dan

There is actually no shortage of hard drives; what is fueling the situation is the artificial pressure to keep the stock in stock.

Author | Xu Dan Editor | Shi Chengchao

Header Image | GlitchTech

After graphics cards, cryptocurrency is now affecting the price of hard drives.

Recently, a cryptocurrency called Chia has become popular in the mining circle. According to official data, Chia was registered in August 2017 with the aim of developing a platform that can optimize blockchain and smart transactions. The Chia Network is currently being established to improve the global financial and payment systems. Chia will become the first enterprise-level digital currency.

Unlike most cryptocurrencies that use computing power for mining, Chia uses idle disk space on the hard drive to run Proof of Space (Pospace) and coordinates with another consensus algorithm, Proof of Time (Potime) to verify the blockchain. The income of Chia "farmers" (miners) is proportional to the amount of resources - storage space, that is, if you have 10 times the space, you will get 10 times the reward.

In layman's terms, Chia coins can be mined using hard drives, and the larger the hard drive space, the higher the mining efficiency. With the popularity of Chia coins, the demand for hard drives has increased, and hard drive prices have risen across the board. The hard drives that are most suitable for mining, 8T and above, are the hardest hit. These hard drives are in serious shortage, and the price has increased by nearly 3 times.

On April 19, Times Finance visited hard drive merchants in Zhongguancun Science and Technology Electronics City and found that the fundamental reason for the price increase of hard drives was not shortage of goods, but because Chinese agents were hoarding goods and the sales channels were monopolized by a small number of people.

Some people are hoarding mechanical hard drives in large quantities. Image source: GlitchTech

Large-capacity enterprise-class hard drives "increase in price by the hour"

Seagate and Western Digital are the main brands of large-capacity mechanical hard drives. Both are American companies and sell in China through agents.

Currently, on the two e-commerce platforms, JD.com and Taobao, Seagate and Western Digital enterprise hard disks with 6TB and above are all out of stock. Seagate JD.com customer service said, "The large-capacity hard disks are basically sold out, and the products are being actively stocked and purchased. The specific arrival time has not yet been notified."

Image source: Western Digital JD flagship store

However, on Xianyu, QQ groups, WeChat groups and offline stores, many people are selling large-capacity mechanical hard drives at high prices.

At noon on April 19, Times Finance went to Zhongguancun Science and Technology Electronics City to ask if a hard drive merchant had 8T enterprise-level hard drives. The seller, Lin Feng (pseudonym), understood and took out two Western Digital 6T enterprise-level hard drives. "I know why you buy them (meaning mining), and my price is the most cost-effective. 6T and 8T hard drives are the most in short supply now, because they are entry-level for mining. People who want to try but don't want to spend a lot of money will choose this kind of hard drive."

Western Digital's 6T enterprise-class hard drive in Lin Feng's hand. Photo provided by the interviewee

Lin Feng's Western Digital 6T enterprise-class hard drive is priced at 1,450 yuan. Before the price increase, the prices of ordinary 6T, 8T, and 16T enterprise-class hard drives were 820 yuan, 1,249 yuan, and 3,300 yuan respectively.

According to Lin Feng, about four days ago, the price of mechanical hard disks in Zhongguancun Science and Technology Electronics City began to rise wildly, and the price increases were hourly, with different prices in the morning and afternoon. "Take an 8T hard disk for example. The price was 1,370 yuan in the morning two days ago, but it became 1,500 yuan in the afternoon. Look at how much it is now."

Times Finance inquired about several shops in Zhongguancun and found that, except for the goods in Lin Feng's hands, the prices of large-capacity mechanical hard disks in various shops were basically at the same level, with little difference between them. The prices of 6T, 8T, and 16T were 1,620 yuan, 2,900 yuan, and 6,200 yuan respectively. When Times Finance tentatively mentioned that other shops had cheaper prices, the other party said, "Then I advise you to buy from them quickly. It's not about how much it is now, but whether it is in stock. If you go back again, they may not be offering the same price."

On online communities and second-hand trading platforms, some hard drives are cheaper than offline. On April 19, Times Finance entered a QQ group called "chia Qia Technology Bug Exchange" through keyword search. Although the group rules stated that only mining technology was discussed, a large number of people selling hard drives still joined the group.

At 15:27, a seller sent a message in the group, "Seagate 16T SATA 4125 pieces, available for sale, in stock in Shanghai, shipped with full payment, can be picked up in person! Price 5XXX." Times Finance asked him about the price at 15:36, and the other party said, "The price is 5,300 yuan, and there are more than 300 pieces. They have just been reserved. Do you think there is no shortage of this stuff?" When asked about the source of the goods, the other party said that he had stockpiled them a month ago, but he was not convenient to disclose the specific source.

There are also many sellers on Xianyu selling enterprise-level mechanical hard drives at different prices, and some even sell hard drives through auctions. A seller in Kunming started auctioning Western Digital enterprise-level 18T hard drives three days ago, saying, "I bought too many and my capital chain is about to break, so I'm selling five to get back on track." Currently, there are 10 people participating in the bidding, with the highest bid being 20,300 yuan.

When enterprise-level hard drives are out of stock, some people will settle for surveillance-level hard drives, which are generally used in the field of streaming media playback and video surveillance. They are less reliable than enterprise-level hard drives but more reliable than ordinary hard drives. A merchant recommended to Times Finance, "There are currently 9 8T surveillance-level hard drives in stock, priced at more than 2,600 yuan, while the price of enterprise-level hard drives is around 3,000 yuan, and they are out of stock. (Surveillance-level hard drives) can also be used for mining, but the rotation speed is a bit lower." According to the photos provided by the other party, their stock is Seagate 8T surveillance-level hard drives.

But that night, a group called "Hard Drive Procurement Channel" that was dedicated to discussing Chia hard drive mining circulated a statement from Hikvision's small and medium-sized enterprise service business, which stated, "Hikvision's surveillance-grade hard drives cannot support third-party systems, let alone mining scenarios. Surveillance hard drives used for mining will not be eligible for the normal limited warranty service."

Image source: WeChat group "Hard Drive Purchasing Channels"

However, some players said that surveillance-grade hard drives can still be used for mining normally. "They can be used, but they are not covered by warranty if they break down, and they are not as good as enterprise-grade hard drives." Currently, the prices of surveillance-grade hard drives have also risen across the board.

The shortage of mechanical hard disks has also driven up the price of solid-state hard disks, which have generally increased by about 100 to 200 yuan. "Many people who want to buy mechanical hard disks cannot buy them, or the prices are too expensive, so they buy solid-state hard disks, which drives up the price." Lin Feng told Times Finance that a few days ago, someone working in the film and television industry came to buy a hard disk, but because he couldn't find a large-capacity mechanical hard disk, he ended up buying nearly 70 small solid-state hard disks.

Why is there a shortage of goods? Chinese agents are hoarding goods, and some people make 3 million yuan a day

Is such a large-scale price increase due to real shortage or is it man-made?

Times Finance visited Zhongguancun Science and Technology Electronics City and found that all hard drive merchants in the electronics city did not have stock. When customers needed the product, they called the dealers on the spot to inquire about the inventory and price, but there was only a small amount of stock.

"Now that prices have risen so high, we dare not stock up. Who can afford to pay if the price drops?" A merchant said that the current price merchants pay from distributors is also very high, and the profit from selling one piece is about 100 yuan. "I don't know who made the money."

Western Digital and Seagate are both American companies with Chinese agents. Generally, hard drives will flow from agents to dealers, then from dealers to merchants, and finally from merchants to consumers.

More than one merchant told Times Finance that there is no shortage of hard drives at the moment, but the Chinese agents of Seagate and Western Digital are holding back shipments. "My friend works for a Western Digital agent, and last night (April 18) they held a meeting and said they could not ship to dealers and that many products were to be recalled," Lin Feng told Times Finance.

Some people who have access to Chinese agents took this opportunity to stock up. Lin Feng originally only sold mobile phones, but now he has a total of 5 6T Seagate enterprise hard drives, all of which he bought from a friend on April 18 at a price of 1,150 yuan. However, he said he was "not very courageous" and did not dare to buy on a large scale. Lin Feng revealed to Times Finance that a merchant in Zhongguancun Science and Technology Trade Electronics City who originally sold computers sold computers and stocked up a batch of hard drives because he received news of the hard drive price increase in advance. When the price increased, he made 3 million yuan a day.

Times Finance also contacted a merchant who was hoarding goods on a large scale. He said that he received the news of price increase a month ago, and then he hoarded 500 16T enterprise edition hard drives. Now there are only a few left, but he can continue to place orders. "16T enterprise edition hard drives are 5,800 yuan, I can get you as many as you want." Seeing that Times Finance had no desire to buy, the other party added, "Do you sell hard drives? I'll buy yours for 5,000 yuan."

People who stock up will look for various channels to sell hard drives. Times Finance joined a WeChat group called "Hard Drive Procurement Channel Group". The group owner created a WeChat group specifically for selling hard drives. It accepts reservations at 9 a.m. every day and closes the warehouse at midnight. As of the evening of the 20th, there were 192 people in the group. The prices of Seagate 4T, 6T, and 8T enterprise-level hard drives sold were 1,450 yuan, 1,550 yuan, and 2,400 yuan respectively. As of 5 p.m., the inventory was 200, 300, and 90 hard drives respectively.

The group leader told Times Finance that his source of goods is from Dahua, a first-level agent under Seagate. "Now the market is stockpiling goods. We sell in different regions, and local peers in Chengdu will transfer goods to each other. The goods we purchase are in bulk, and we supply wherever there is a need." As for sales, the group leader said that the demand for hard drives is relatively large at present, and both delivery and delivery are very fast. "We deliver quickly, and the goods will arrive in two days at most. Two batches arrived today."

There is a certain regionality in the hoarding of hard drives. When asked in the group whether they were buying hard drives, the group leader said, "We only buy goods from the surrounding areas of Chengdu and from familiar dealers." When asked by Times Finance about the purchase cost, the other party simply said that the purchase price was not cheap and a part of it was earned by the agents, but it was an acceptable price.

The group administrator would encourage everyone to stock up, "Ask the group owner to stock up less, you won't suffer any loss, if the price goes up sharply, you will make money, if it goes down, you won't lose much." Some people also stock up on a large scale in the group: "16T enterprise version, 3000, can you please add me, I need 20,000, I only buy in bulk, not bulk goods, sign the contract directly, and make an advance payment."

As for when the price of hard disk will fall, no one can tell. Some people think that with the opening of Chia coin trading in the future, the price of hard disk will only rise, while others think that the current price is just artificially raised and will fall soon.

A customer soliciting at the entrance of Electronic City warned when hearing that Times Finance wanted to buy hard disks: "It is definitely not cost-effective to buy now, the price will drop in a few days." The hard disk trading group was also full of news of price cuts. Some people could not bear it anymore and started to sell their hard disks. "I'll borrow the group owner's space. Western Digital Enterprise Hard Disk 12TB is really the lowest price. I'm selling the last few dozen. Each one is 3,500 yuan. I don't want to stock up."