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Home » What is Chia, the ‘Green’ Cryptocurrency?

What is Chia, the ‘Green’ Cryptocurrency?

Chia’s selling point is that Chia is green money, a concept that seeks to counter the enormous amount of resources other cryptocurrencies require, especially Bitcoin.

What is Chia, the ‘Green’ Cryptocurrency? One of Chia’s selling points is that Chia is green money. A concept that seeks to counter the enormous amount of computing and energy resources mining other cryptocurrencies requires, especially the well-known ‘Bitcoin.’

Its creator, Bram Cohen, was also the BitTorrent “peer-to-peer” network founder. He claims that he devised his currency to be more environmentally friendly and reduce the carbon footprint of transactions.

Instead of using the simile of mining, he opted for agriculture, which translated into computer science means that the blockchain network does not use the brute force of graphic cards to mine, as is the case with other Proof of Work coins like Bitcoin. Instead, Chia uses the free space of the hard disks of the computers like farms.

The currency is called Chia, like the grain, because it is ‘grown‘ and promises to be a ‘green‘ cryptocurrency, although that may not be as true as its creators suggest.


The ‘blockchain’ and Proof of Work to certify blocks

The whole mining concept and the ‘blockchain’ is based on trust. The system uses cryptographic challenges to prevent someone from doing evil things, which are rough operations to certify that all new entries in the cryptocurrency ledger are correct. The blockchain users see is always the same and verified by the network participants. 

There are different types of consensus algorithms: Proof of Work, which is the typical one used by Bitcoin; Proof of Stake, which now uses some newer cryptocurrencies such as ‘Cardano’; and there are space-time tests, which is what Chia uses.


How do consensus algorithms work?

Proof of Work: The network achieves consensus using computer force to certify a blockchain transaction. You must guess a very long number by trying all the possible combinations until you find the correct one. For that, you need a lot of computer power, or what are the same, many mighty graphics cards (or more specialized hardware like ASICs ) working at full capacity 24/7. 

The process generates heat and consumes a considerable amount of electrical energy. Because of this, people say Bitcoin is not ecological, so Elon Musk stopped accepting it as payment for his Tesla cars. The announcement caused a collapse in the cryptocurrency price that has been experiencing enormous volatility for weeks. 

Proof of Stake, used by the Cardano cryptocurrency and others of recent creation, is based on the amount of currency you already have. The more coins you stake on the network, the more chances you have to certify an operation. PoS blockchains risk someone taking control of the entire network if they accumulate enough wealth in the cryptocurrency. Proof of Space uses your free space on your hard drives to sign those blockchain blocks. It is the consensus algorithm used by Chia. 

Chia is trying to turn cryptocurrency mining around to reduce its energy consumption while giving it a much more ‘green’ orientation. That is why it is called ‘harvesting’ and not ‘mining.’ All the terminology used in this new way of signing the blocks aims to defend their more ‘green’ character.

Money that ‘grows’ on trees

A ‘storage space farmer’ can ‘plot’ over-provisioned hard drive space to prove that a certain amount of space is available to the network. Once you have the plots prepared, you will start to harvest. The system uses the plots you have ready to make a series of computations. The procedure often asks for a test from someone (a farmer) to certify a block in the chain. If you are the elected ‘farmer,’ your plot serves to sign that block, and in return, you receive a reward in the form of a cryptocurrency. 

How many Chia coins (ticker: XCH) are in circulation? According to the Chia Network website, the system issues sixteen ‘Chiacoin’ every 5 minutes during the first five years. After that, the system reduces the XCH by half, and then two chia coins will be released every five minutes indefinitely.

And how much is Chia worth? Since trading in early May, their maximum price has been just over $1,500 per unit. At the time of writing, Chia’s price ranges around $400.

The farm is a ‘green’ alternative to the mine

How do you become a cryptocurrency farmer? As in any farm, the first thing you need is a plantation. The bigger, the better because the more you sow, the more you reap. It is precisely the phase in which you prepare your garden, clear it, remove weeds, and plow to leave the field ready for sowing, in which more time and resources you’re consuming. 

Before starting, you have to prepare plots. These plots are only large blocks of storage that you must have on a hard drive. The cost of computing that this entails is not too high, but the time required for them to be ready is considerable. 

How can that time be reduced? Again, using the agricultural simile, the better and faster your brush cutter is, the sooner you finish the job. In this sense, and broadly speaking, there are two types of hard drives on the market: there are hard drives, which are slow but durable, and those known as SSDs or the new NVMe, which are extremely fast, but whose durability is determined by a finite number of writes and overwrites of the information. 

To create the plots as soon as possible, you need fast disks, and once completed, you can transfer them to other slower and larger disks. In other words, we’ll use the quickest and most powerful machines available for plowing and sowing; harvesting does not matter if we do it by hand.

Hard Drive demand surges

Some call into question the supposed ‘green’ spirit of the Chia. We see hard drive price surges and broken stocks in significant storage media retailers. 

A similar situation occurred a year ago with the shortage of graphics cards for computers and the price bubble these devices have suffered. The phenomenon of graphic cards is related, in part, to the demand for this type of hardware for cryptocurrency mining and others, such as the slowdown in chip manufacturing derived from the pandemic and other circumstances. 

There have been 30% to 60% price increases in these devices. In the future, everything will depend on Chia’s currency volatility. It may work very well, it may not work, or it doesn’t work now, and we’ll see increasing demand in four years, and that’s when we’ll have a severe problem with the price of hard drives. 

Another problem is speculators who buy hard drives not to create farms but hoard them while waiting for the market to sell them at a higher price. In the worst-case scenario, these speculators will sell them at an average price and not lose money. It is not the first time something similar has happened. A few years ago, there was a problem in the RAM factories in China, and the memory increased tenfold.


A ‘green’ model with some doubts

Another feature of the cryptocurrency harvest that can affect the hard drives’ price is the farms’ size. As in any agricultural activity, the larger the plantation, the greater the harvest. The more arable land (plots) you have, the more likely you will have to certify an operation in one of them. It is a bit like a lottery. Of course, it is not exactly like that, and there is a lot of mathematics behind it. 

For this reason, if we are trying to get Chia only, we are at the limit of profitability. The terabytes dedicated to farms to collect Chia have almost tripled in a few weeks.

Space allocated to Chia network measured in PiB
Space allocated to the Chia network measured in PiB (Peta Binary Bytes)


That means that if more and more people come in, the probability that one of your plots is selected (you win the ‘lottery’) decreases. 

The small family farms are at a clear disadvantage with the large estates, and that is where the ‘pools‘ come in, which we could define as agricultural cooperatives. Each farmer joins with his parcels a bigger group, and when the whole gets a reward, they share it.

The reward you get if selected varies according to the cryptocurrency’s price. And, more importantly, the number of farmers who join and the size of the fields or plots they make available to the system.


Broken Hard Drives generate garbage and pollute

Although the entry of more farmers may lead to a rise in the prices of hard drives in the market, the ‘Chia Network’ system also presents another problem that questions its presumed character as a ‘green’ cryptocurrency. 

As we have already mentioned, the most laborious part of this system is creating the plots. To save time, farmers use the fastest drives available, which are finite. Therefore, they have a relatively short life. Hard disk lifetime is more than enough for day-to-day use but not enough to constantly perform the multiple data writes and overwrites required by plot preparation. 

Unlike Bitcoin, you do not have Bitcoin’s energy consumption, but in return, you are destroying the hard drives you use in plot preparation to the point that you have to dispose of the hardware quickly. So it is greener from an energy point of view, but you have to consider the hardware you will destroy and throw away. And how, if possible, someone can recycle the drives. 

Greater demand for storage devices would cause an increase in production, and the manufacture of hard drives also requires natural resources and is highly polluting.



The philosophy of Chia is to create a global network where people use the free space on their hard drives to generate a new kind of ‘blockchain’ that is more environmentally friendly. But people will spend money on specific hardware, which they will destroy for an economic return. Some say that their strategy to make it public is Chia selling itself as a green cryptocurrency.

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