Filecoin and Chia hard drive mining are booming, is the era of great speculation coming?

Original title: "Hard disk out of stock? Welcome to the era of great speculation"

“Thanks to Cyberpunk 2077, even though this game has a lot of bugs, it’s because of it that I bought an RTX 3080 a year ago. Now the price has doubled. Thanks to 2077, I learned how to manage my finances.”

A Steam player's message under the game "Cyberpunk 2077" was copied and pasted by countless people and spread to major social platforms. Players smiled knowingly, knowing that this was a satire on the crazy and skyrocketing prices of graphics cards for six consecutive months. Due to insufficient production capacity and extremely strong demand, the prices of graphics cards that were in short supply in the secondary market remained high, which evolved from a technology industry event to a social event.

Now, it's the turn of hard drives to be out of stock. Even the hard drives we use to store pictures and movies are starting to be sold off.

Hard drive sellers talk about hard drive prices like stocks, changing them multiple times a day, changing them every hour, and even valid for only one hour. Users on Weibo and Moments began to take screenshots and lament that they could no longer afford hard drives. Those who previously sold graphics cards began selling hard drives part-time.

Some people say that the root of all these phenomena comes from a newly launched cryptocurrency project called "Chia". There is only one reason for this: Chia requires the use of hard drives for mining.

This statement has been confirmed on certain levels. On TikTok, a video introducing Chia hard drive mining easily received 100,000 likes; on the Baidu Index, the keyword search volume of Chia has skyrocketed since April; people who used to recruit people to build communities in the circle of friends began to talk about forming groups to mine Chia; even Hikvision, an A-share listed company with a market value of 500 billion, issued a statement that its surveillance-grade hard drives are not suitable for mining.

The thoughts of people working in the crypto industry: "The whole world is P-disk."

However, BlockBeats sorted out the hype path of hard drives and found that the price increase is not simply caused by the imbalance between supply and demand. Behind the price increase of hard drives is a microcosm of the sentiment in the secondary market and a projection of anxiety in this era of great speculation.

Hard disk mining tells a good story

Of course, hard drive mining does tell a good story, and there are reasons why it is so popular.

Friends who know about Bitcoin have more or less heard about the idea that Bitcoin consumes energy. Bitcoin converts electricity consumption into computing power, and mining Bitcoin consumes a lot of electricity.

Cambridge University has done statistics and found that Bitcoin's electricity consumption has recently reached a historical high of 12.9 billion kilowatt-hours, accounting for 0.59% of global electricity consumption.

You may have no idea about this number. 12.9 billion kWh of electricity ranks 34th in the global electricity consumption ranking, which exceeds the annual electricity consumption of countries such as Ukraine and Argentina.

As a result, we see all kinds of criticisms against Bitcoin for wasting resources, the most representative of which comes from Bill Gates.

This is what Chia is about. Mining Chia does not waste resources but uses hard disk space.

This is a project created in 2017. The founder is Bram Cohen. Almost no one knows this name, but users who have used BT download and Thunder download must know BitTorrent, which is a protocol that once occupied 60% of the global Internet traffic, and Bram is the founder of BitTorrent.

At this point, the elements of a good story are basically complete.

With top institutions in hand and a world-renowned founder, the concept directly hits the weaknesses of Bitcoin and launched the concept of "Green Bitcoin". Combined with the super bull market of cryptocurrency, with the expectation that "mining Chia is mining early Bitcoin", the story of Chia has come to fruition.

Everyone is betting on one thing: the Chia tokens they mined will skyrocket.

BlockBeats witnessed the OTC price of Chia token XCH rising from $40 to $100. It asked Jiao Nan, an active investor who participated in the OTC purchase of XCH, in the community and found that XCH could not be traded at present and could only be circulated in the market through the mining pool. The price of XCH is different on different social platforms and even in different groups. "I have made a lot of money by buying low and selling high in various groups through the mining pool as a third-party intermediary."

What to do if you don’t dare to buy because the price is too high? Then just mine. Mining Bitcoin consumes electricity, while mining Chia consumes hard disks. Hard disks become resources and consumables at the same time.

Before starting hard disk mining, you need to P-disk. P-disk means Plot, which is also called drawing or seeding. In the P-disk stage, the hard disk will write encrypted data. In this process, a large amount of data will be generated. We found the official advice of Chia, who said to use a solid-state drive (SSD) with a fast write speed as a cache disk and a mechanical hard disk (HDD) as the final file storage disk. According to the actual test of BlockBeats, P-ing a minimum file (about 101 GB) requires writing about 2TB of data to the cache disk. 2TB of data is equivalent to about 300 high-definition movies (1080P) that are usually watched.

However, writing a large amount of data will greatly shorten the life of the hard disk.

Chia mining is not really a reuse of idle hard drives. Let’s take a 1TB Samsung 970 EVO as an example. Its theoretical lifespan can only produce 30TB of final files.

Checking the current Chia computing power, we found that the total network computing power is 413 PB. If 413 PB is converted to a 1TB Samsung 970 EVO hard drive, about 42,300 hard drives will be used up.

In addition to consuming the hard disk, P disk also takes a lot of time. It takes at least 7 hours to P a 101 GB file.

BlockBeats conducted a Chia mining test on March 26, when it took 10 months to mine a block with a 101.4 GB plot file. Now on April 19, it takes up to 3 years to mine a block with a 101.4 GB plot file.

For miners, the earlier you buy hard disks, the earlier you can produce blocks, and time is money. This is one of the reasons why a large number of miners buy a large number of hard disks in a short period of time regardless of the cost price.

The wealth effect emerged and market sentiment accelerated, resulting in a real increase in hard drive prices.

All hard drives with a capacity of 4TB or above are out of stock, and the spot price has increased by more than 50% from the lowest level last week.

Western Digital Red 12TB Hard Drive Price Trend

The price of Western Digital Red 12TB hard disk on JD.com is currently 3,499 yuan, but it is out of stock. On Taobao, the spot price has risen to 11,659 yuan.

Western Digital Red 12TB Spot Price

High-capacity and high-performance hard drives are not aimed at ordinary users, so why are all social media discussing the price increase of hard drives?

Old news is rehashed again. Hard disk mining is a concept that was only 3 years ago.

Chia has a good story, but it is not the leader. In the field of hard disk mining, the recognized leader is a project called Filecoin, which is backed by top capital, a well-known concept, a top-level project, and the 17th largest cryptocurrency project in the world. It is the absolute leader in hard disk mining.

Filecoin hard disk mining machines have been on sale since 2018. According to incomplete estimates, there are 200-300 manufacturers selling Filecoin mining machines in Huaqiangbei. Because Filecoin is so popular, both real and fake mining machines are everywhere in the market.

There were media reports that a manufacturer called "Snail Miner" sold nearly 300,000 fake Filecoin mining machines in 5 months, with sales of nearly 2 billion yuan.

BlockBeats has also learned about the market size of Filecoin mining machines. In 2020, the sales of Filecoin mining machines were approximately RMB 20 billion.

From the browser, the real storage space of the Filecoin network is 4.41 EB. This storage space is more than 10 times the effective storage space of the Chia network. Even without calculating this number, the capacity of Filecoin's millions of fake mining machines has far exceeded the real storage space of the Chia network.

The problem is that even as popular as Filecoin is, it has not caused widespread shortages, price increases, or speculation in the hard drive industry.

Why can Chia change the hard drive industry?

The mining principles of the two are different, but in essence they both use hard drives. Fake mining machines also need hard drives. The leading companies do not have such influence, so why does a Chia have such great power?

In other words, who is driving up hard drive prices?

When BlockBeats was searching for information, it found a blockchain summit agenda map, in which a senior engineer from Seagate was listed.

This is not a coincidence. In early 2020, Seagate China's senior channel director, senior manager, senior storage solution expert, and key account manager for South China visited Interstellar Continental and expressed their willingness to cooperate on products and technologies. Interstellar Continental is a company founded in 2018 whose main business is Filecoin (IPFS) mining.

Could it be that the shortage and price increase of hard drives is a conspiracy by the manufacturers?

Just like Nvidia, which wants to harvest gamers but doesn't want to give up the mining market. After launching the RTX 3060, it found that the graphics card market premium was not much, so it "accidentally" leaked the graphics card driver that can mine at full speed. It talks about thinking about gamers, but its heart is all about business with miners.

However, hard drives are not graphics cards, and they do not have high technical content. They have more shipments, and some consumer-grade products have been able to achieve domestic substitution. According to Trendfocus statistics, the total shipments of solid-state drives in 2020 were 330 million units, with a total storage capacity of 27 EB. The total shipments of mechanical hard drives were 259 million units, of which Seagate shipped 110 million units, with a total storage capacity of 1018 EB, which is 2524 times the total computing power of the current Chia network.

There is no dominant player in the hard drive market. Seagate is just one of the manufacturers with a large shipment volume. Amazon in the United States, which can provide direct shipping to China, still has reasonable prices and has become the preferred purchasing place for some players and miners.

If manufacturers are not hoarding and selling at a high price to promote hunger marketing, then where have all the hard drives gone?

The player eventually becomes a dragon

At the end of March, Lvdong purchased two Seagate Barracuda 4TB hard drives for testing Chia mining at a price of 559 yuan per unit. However, the price of this hard drive on different social media platforms is over 1,000 yuan.

Image source: Weibo and Jike users

At the same time, when Rhythm inquired about the "ASUS Flagship Store" with a price tag of 1,199 yuan, the reply it received was "market reasons."

The price increase of hard disks may have nothing to do with Chia or hard disk manufacturers. Ordinary consumers do not understand mining or the hard disk market. Driven by the sentiment of KOLs and social media, they generally believe that hard disks will be out of stock and prices will skyrocket. Some merchants use this to raise prices and reap profits. Without knowing the truth, the whole nation began to hoard hard disks. What the hard disk mining market lacks is larger capacity, such as mechanical hard disks above 8T and high TBW solid-state drives, rather than ordinary consumer-grade products. Most products used by ordinary consumers are not suitable for hard disk mining.

The final result is that KOLs get more traffic, consumers spend more money to buy products, manufacturers sell more products, and miners get more attention for their tokens. Except for ordinary consumers, everyone seems to win in the end.

Perhaps, as Jiao Nan said, the price of Chia tokens is like a blind box. Only when it is opened can the emotions in the hard drive market stop.

Buying electronic products early and enjoying them early, and buying them later and enjoying discounts has become an ideal state. The voices of buying early and getting rich first have overwhelmed the voices of reason. Just like the gamers who speculate on hard drives said, after missing out on the surge in memory sticks and graphics cards, do you still want to miss out on the surge in hard drives?

The reason why Chinese people cannot buy hard disks is precisely because of Chinese people themselves. Gamers have finally become the scalpers they hate the most.

Do you remember the hard drive we bought and marked as 1,000 yuan on social media? At the time of writing, it is still available at the "Seagate JD flagship store" for 609 yuan, and some cities can also enjoy next-day delivery service.

The Age of Great Speculation

The COVID-19 outbreak at the end of 2019 was a turning point. It was the first global crisis faced by humans after they had enough food and clothing. Body pain, palpitations, depression and chronic fatigue may accompany some people who have recovered from COVID-19 for the rest of their lives.

At the beginning of the epidemic, mask manufacturers were accused of making money from the national crisis, and the purchase of masks returned to the era of social relationships based on personal relationships. All this led humans to rethink the relationship between wealth and health.

All carriers that can carry wealth anxiety have experienced a surge in value, including cryptocurrencies, Tesla, Moutai, and even shoes, graphics cards, and hard drives.

Back when Filecoin was at its hottest, most people could hardly imagine that a sentiment alone could set off the market. However, the memory of the price increase of memory and graphics cards in the past was too deep for users. To this day, the market price of graphics cards is still three times the official price. Whether the price is reasonable is no longer important. Shoes with low cost and process requirements can skyrocket under various names, not to mention hard drives that require a certain threshold.

It no longer matters whether cryptocurrency can change the world.

Almost no native cryptocurrency practitioners and investors have bought Dogecoin (DOGE). People are more concerned about and like valuable and cool products. However, Elon Musk has led users outside the cryptocurrency circle to buy a large number of Dogecoins. The market value of Dogecoin has exceeded 50 billion US dollars, ranking fifth among all crypto assets.

Ironically, Dogecoin was created to mock and prank cryptocurrencies.

Obviously, the pan-financialization of the entire society is inevitable, and we will usher in a new era. Just like the sexual liberation in the United States after World War II, the Z generation after the new crown is more speculative and generally believes that everything can be speculated, and only all-in can bring more wealth.

Finally, welcome to this era of great speculation.