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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.

Chia Coin Logo
Chia Coin Logo

Key Facts

  • It sells itself as green because it does not require powerful graphics cards to certify its operations.

  • Chia uses a 'blockchain' system based on empty storage space on the 'farmers' hard drive.

  • The number of terabytes dedicated to 'growing' has tripled in two weeks, and several analysts warn of rises in the price of discs and stock problems.

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.

That is why 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 concept of mining and the 'blockchain' is based on trust between each other. The system uses cryptographic challenges to prevent someone from doing evil things, which are roughly operations to certify that all new entries in the cryptocurrency ledger are correct. The blockchain that 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 the 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 have to 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 is 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 that Bitcoin is not ecological and is why 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 the 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 the free space you have on your hard drives to sign those blockchain blocks. It the consensus algorithm used by Chia.

Chia is trying to turn cryptocurrency mining around to reduce its energy consumption and at the same time give 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, that is when you would start to harvest. The system uses those plots that 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 they started trading in early May, their maximum price has been just over $1,500 per unit. At the time of writing, Chia price ranges around $400.

The farm as a 'green' alternative to the mine

How do you become a cryptocurrency farmer? The first thing, as in any farm, what you need is a plantation. The bigger, the better, because the more you sow, the more you will 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 nothing more than large blocks of storage that you have to 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? Well, again, using the agricultural simile, the better and faster your brush cutter is, the sooner you will 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 some 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 that 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 of these devices. In the future, everything will depend on the volatility of Chia as a currency. It may work very well, it may not work, or that 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, but not to create farms, but hoard them while waiting for the market evolution to sell them in the future 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 happens. 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 price of hard drives is the size of the farms. As in any agricultural activity, the larger the plantation, the greater the harvest. The more arable land (plots) you have, the more likely it is that 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 very at the limit of profitability. The volume of terabytes dedicated to farms to collect Chia has almost tripled in a few weeks.

Space allocated to Chia network measured in PiB (Peta Binary Bytes)
Space allocated to 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 they whole gets a reward, they share it out.

The reward you get if selected varies according to the price of the cryptocurrency. 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 generates garbage and pollutes.

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, and these 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, what you are doing is destroying the hard drives you use in plot preparation to the point that you have to dispose of the hardware in a short time. 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 to obtain an economic return. Some say that Chia selling itself as a green cryptocurrency is simply the strategy they have used to make it known to the public.

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