The Chia network and its XCH cryptocurrency got a boost from Elon Musk’s recent lambasting of Bitcoin’s energy consumption. Last week, Chia was trending on Twitter and in the five days since May 12 ̶ when Musk tweeted that he would no longer be accepting Bitcoin as a payment mechanism for Teslas because of Bitcoin’s …
The Chia network and its XCH cryptocurrency got a boost from Elon Musk’s recent lambasting of Bitcoin’s energy consumption.
Last week, Chia was trending on Twitter and in the five days since May 12 ̶ when Musk tweeted that he would no longer be accepting Bitcoin as a payment mechanism for Teslas because of Bitcoin’s “insane” energy usage ̶ XCH’s price has risen more than 30%.
XCH just earlier this month began trading on exchanges like OkEx and LBank. It is now trading at $1,278, up more than 18% in the past seven days, while both ETH and BTC have slid more than 10% in that time. Immediately upon launch, the token jumped above $1,200, steadied around $1,000, and then climbed to a high of over $1,600 on Saturday, according to CoinMarketCap.
Get the 5-minute newsletter keeping 80K+ crypto innovators in the loop.
Proof of Space and Time
Founded by Bram Cohen, the inventor of BitTorrent, Chia touts itself as a green cryptocurrency, its consensus mechanism utilizing unused disk space in computers to mine. The consensus algorithm, called proof of space and time, and is more energy-efficient than proof of work consensus, which utilizes massive amounts of electricity through the use of custom-purpose ASIC hardware.
From the start, the project has received significant attention, notably because of its lead Cohen. The network launched on 2017, and since March 17, 2021, early adopters have been mining, what the project calls “farming,” but the coin has not been available for transfer or trade until earlier this month.
Especially as cryptocurrencies see adoption from more mainstream audiences, blockchains will likely continue to come under scrutiny for their energy-exhaustive mining processes. The debate comes up every couple years or so, with opponents saying that proof of work blockchains contribute to climate change. These challengers, for one, draw on the fact that Bitcoin is responsible for nearly 37 million metric tons of carbon emissions each year, which is comparable to the carbon footprint of several nations combined.
Dat Nguyen, an Industrial Designer at Fiat Chrysler Automobiles, expressed on Quora that he believes blockchain enthusiasts recognize that mining has the potential to be a major problem and have been actively developing new concepts to improve the creation of crypto.
Sure enough, many crypto enthusiasts and blockchain builders have ideated and even launched blockchains that they tout as more conscientious of the environment. And for the Chia community, the overarching belief is that the network will not only be more energy efficient, but also faster, cheaper and more secure.
“Chia is Bitcoin 2.0. BTC proof of work is incredibly energy-wasteful, but until now nothing matched it in terms of network security,” said a Chia enthusiast, @mifixit, on Twitter.
Boldly Competing With Bitcoin
While crypto enthusiasts generally point to other environmentally unsustainble processes ̶ and to be fair, 73% of Bitcoin miners use at least some renewable energy, according to CoinShares ̶ the question of how to update mining to be less energy reliant is top of mind for more and more innovators.
And for the Chia team, they’re boldly trying to compete with the OG cryptocurrency.
Jeff Atwood, founder of Stack Overflow and a major Chia miner and contributor, said, “Previous generation cryptos make GPUs expensive, and consume vast amounts of energy. New, eco-conscious cryptos like Chia just… make very large hard drives slightly more expensive.”
For comparison, at the time of writing, 462,898 XCH have been mined, using 3,143 kW of power, if that same amount of Bitcoin were mined, it would take 72 billion kW of power.
“This is a company with a vision first with an augmentation of a crypto to drive it,” said Wes Spencer, chief information security officer at Perch Security, on YouTube. Perch is a Chia hobby miner.
Chia plans to embrace regulators, particularly with plans for the company to go public, which could strengthen its credibility with institutions, like banks, corporates and governments. But this may not be as palatable for some crypto diehards and decentralization purists.
“I don’t see it being fully decentralized. [But] is it a good project? I think potentially it is; I see what problem they’re trying solve,” Son of a Tech, another Chia enthusiast and hobby miner, said on YouTube.
Making Hobby Mining Feasible Again?
One of Chia’s big selling points has been the idea of mining a cryptocurrency at home.
Bitcoin, was once, able to be mined from a home computer, but as the cryptocurrency gained popularity and its price soared, the space became more competitive until one-off hobby mining wasn’t feasible anymore.
By utilizing a person’s computer disk space ̶ a place where the person might have previously stored old vacation pictures, long and rambling crypto whitepapers or unused applications ̶ Chia brings back the idea of mining from your personal computer. Chia miners earn XCH by “seeding” their SSDs or hard drives. Already, some have pointed to interest in Chia for causing supply chain disruptions because of the increased demand for hard discs.
While Chia could level the mining playing field by allowing anyone to participate, there are still some hurdles.
A good amount of technical knowledge is required to set up your computer to mine Chia.
Here’s how Chia farming works: You need to “clear a field,” meaning delete files on your storage device. You then “plow and seed the field” or compute a plot for Chia. The process of waiting for your crops to grow is analogous to the process of each block of transactions being verified and authenticated by algorithmic rules set hardcoded into the Chia network. If your plot verified the block ̶ much like in Bitcoin mining ̶ you get the block reward of XCH.
Based on talking with other Chia miners, my experience has been smoother than some, although it still took time ̶ I was able to start my environment with two weeks of research and a 9 hour set-up time. And while I’ve been able to farm a nominal amount of Chia, it’s uncertain if I’ll continue to have success mining as the competition grows.
Separately, tech publications are starting to report on the intensity of mining on machines. According to Chinese site Fast Technology, on a 512GB SSD, mining Chia continuously can reduce the device’s life to just 40 days, whereas these devices usually last between five and 10 years.
In an interview with an ETH miner who is also currently farming Chia, time constraints to plotting could be the biggest bottleneck actually. With ETH mining your success is proportional to your hash rate, so you could buy more GPUs if you wanted a better hash rate and better chance of success. With Chia, miners have to wait to create plots, which currently takes 10 hours (although times may vary), before they can increase their chances of mining XCH.
“Whether the network growth outpaces plot creation and profitability would be the deciding factor to whether or not to stick around,” the ETH miner told The Defiant.
So while Chia looks to be gaining steam in terms of mining power, it’s yet to be seen whether, in the long run, the protocol will be able to offer an eco-friendly cryptocurrency that doesn’t require users to purchase new hardware every month.
Get Smarter on DeFi and Web3
Get the 5-minute newsletter keeping 80K+ crypto innovators in the loop.