The first bitcoin was mined in 2009, and since then, crypto mining has been an intriguing concept for everyone in the blockchain space. We see people every day developing an interest to get started in this world of crypto, and mining has been proven to be a lucrative opportunity, given proper machinery is in place.
However, when it comes to crypto mining, we always had a barrier of entry for an average person. One was never able to bring in decent revenue without heavily investing in GPUs and other advanced computers. Even if one is able to invest in the machinery, the electricity costs and environmental concerns always pose a huge threat in the long term.
To solve this sustainability problem and provide a mining solution for wider market distribution, a new type of crypto mining surfaced, and it is called HDD mining. Very few blockchain projects have incorporated such a mining method. They are rising in popularity, as this kind of mining is a lot easier and doesn’t contribute to any harmful emissions. This article will deep dive into HDD mining and understand the current landscape by answering all the critical questions surrounding it.
What is HDD mining?
HDD mining is a new crypto mining method involving hard disk drives. It is totally a new concept owing to the fact that it does not need any type of graphics processing units or data centers. HDD mining farms follow a different approach to add new blocks and record data in a blockchain. The installation and configuration of the software are unique, given its speed and simple interface. HDD crypto mining dissipates a fraction of the heat generated while functioning, so the equipment will have more lifespan compared to energy-intensive mining networks.
How does HDD Mining work?
Cryptocurrency mining using hard disks and SSDs usually involves three main steps:
- Generating data blocks to plot and save to a hard disk. Space allocation is also done in parallel. This also determines the speed of mining. If a user plots more space and stores it on his hard disk, the mining speed will increase.
- The second step is for setting up a reward beneficiary. It ensures the miner receives his earned rewards, given his block is verified. Note- If a user participates in a pool, then the end reward is given in a distributed fashion. That is why individual mining is more beneficial.
- The final step after plotting and saving is launching the actual mining software. Once the software begins to function, the system sets a deadline, and your hard disk will idle until the next block gets created.
With HDD mining, the components in the system don’t simply wear out after repeated use, considering its energy efficiency. However, if one wants to speed up the process and create more blocks, it is suggested to use Solid-state-drives. Note- SSDs only help with the plotting process, and it has a shorter life cycle than HDD.
Proof-of-storage VS Proof-of-Capacity- Which is better?
PoC and PoS algorithms are used for HDD mining, and they function in their unique way. In PoC algorithms, users can free their disk space for the system to accomplish a particular task and generate new data blocks. On the other hand, the Proof-of-Storage mechanism uses this free disk space to form decentralized cloud storage, and users can even rent HDD space.
To effectively manage disk space using PoC, users need to have more hashes on their hard drives, increasing their chances of getting a reward. In PoS, users can use several service facilities provided by cloud storage to form cryptocurrency mining rewards. Both of them have special characteristics associated with HDD mining, so in the end, it comes down to one’s preference and ability to manage multiple hard disks.
Major Players using HDD Mining
Cryptocurrencies like bitcoin faced increased scrutiny, majorly due to their energy-intensive mining networks, so the need for an eco-friendly alternative is rising each day. To capitalize on this market gap and the sentiment of many investors, we are seeing emerging projects like Chia, Sia, and Storj. A well-known PoC-based project is Burst, and it is also the pioneer of hard disk mining.
The biggest fish in the HDD mining space is the Chia network. Founded by Bram Cohen, the creator of BitTorrent protocol, Chia is claiming to be the next bitcoin by leveraging the over-provisioned exabytes of disk space. From a technical standpoint, Chia seems to add a new function called Verifiable Delay Function to assess the quality of each block. Chia farming has seen significant growth in the last few months; however, we have also seen reports stating that consumer-grade hard disks are wearing out within 40 days.
One of the leading members in this space was Burstcoin, but due to internal conflicts between developers and other community members, the project could not reach expectations. Now, they are starting a new blockchain platform called Signum, and the front-end framework is also being redesigned. As it is a community-driven project, the growth is going to depend on different forces coming together and building innovative technology. Their main goals are truly sustainable mining and empowering small miners to achieve real decentralization.
Why are hard disk prices skyrocketing?
One of the biggest reasons for the HDD shortage is Chia Network. Though it is not a global issue, Chia farming encouraged miners to buy large quantities of hard disks, driving the prices up to new levels. Few reports from Tomshardware and other Asian publications confirm that hard disk pricing is going through the roof in some regions of China.
Hard disk maker Seagate also announced recently that their financial earnings are reflecting a surplus demand in crypto mining equipment. During this spike, some clever resellers made millions in a single day by flipping units at a higher price.
This is directly reflected in the growth of Chia Network. They have added more than 6800 petabytes in three to four months. It roughly grew by more than 84% in a single week, so it is the biggest driver for hard disk pricing in China and other Asian countries.
History of Chia Network Growth
The same applies to Hong Kong. According to a report, the price of hard disks and SSDs increased by more than 100%. These are usually 4TB and 8TB HHDs, which cost $26, but now, they are priced above $70.
Can this be a sustainable solution to promote wider distribution in crypto mining?
It is too early to say it is sustainable, as it also comes with some vulnerabilities. Some reports highlight that hard disks are burning out within 40-50 days, and they cannot manage heat dissipation. Hard disks are the new gold, and they are going to help ordinary users enter into the mining space of crypto. With that being said, we still have to see significant improvements in the hardware, as it needs higher built-in endurance to sustain long-term.
Pooling seems like a viable option right now, as it allows users to sell their plots at a decent rate and make some profits. There is a catch to this. You need to keep up with the network every week, so that means you need to plot 1TB/day, and many regular miners don’t have that bandwidth yet. That is why we cannot conclude it will be better than bitcoin mining or revolutionize the entire mining space. It is a great “green” alternative that needs more improvements and will be around for many years to come.
The major problem in the cryptocurrency market is not only market volatility, but also the ever-increasing carbon footprint is increasing across the world. While we see top companies encourage renewable resource usage, there is still a demand for greener alternatives to bitcoin mining. That is where projects like Chia and Burst come into the picture. HDD mining can be a reliable second option for many small miners, and it can help achieve true decentralization in the network. Though we are in the early stages of HDD mining, it is an excellent alternative to the ones that are energy-hungry, and we will see more involvement from all corners of the world sooner than later.
Born and brought up in India, Karthikeya Gutta is a crypto journalist and freelance contributor for ItsBlockchain. He covers various aspects of the industry with in-depth analysis and research. His passion towards blockchain and crypto ecosystem is mainly because he believes it can really change the world and help millions of people.
Subscribe To Our Newsletter
Join our mailing list to receive Cryptocurrency investing and trading recommendations to your mailbox.
You have Successfully Subscribed!
Subscribe to get notified on latest posts.