What exactly is Chia (XCH)? How to Farm on a Hard Drive

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Instead of Bitcoin’s proof of work consensus process, Chia employs a new “proof of space” concept that makes use of hard drive storage capacity.

Cryptocurrency mining has recently made headlines—and not in a good way. The environmental effect of crypto mining, notably the energy-intensive “proof of work” (PoW) mining used by Bitcoin and (for the time being) Ethereum, has received more attention.

Chia intends to change all of that with a revolutionary “proof of space and time” consensus technique that secures the network through storage rather than computing power. Its developers believe that it is more secure, more dispersed, and less wasteful than proof-of-work cryptocurrencies like Bitcoin—and it has already proven popular with miners, who have been scooping up the hard drives needed to “farm” it.

Here’s how it works—and how you can become a Chia farmer.

Chia is a blockchain

, digital currency, and smart transaction platform that’s intended to facilitate cross-border payments, escrow services and institutional custody.

Developed by BitTorrent creator Bram Cohen, Chia was first conceived of in August 2017 and launched in May 2021, with farming rewards coming online in March and the cryptocurrency going live with transactions enabled in May.

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It’s attracted big-name backers include Andreessen Horowitz and Galaxy Digital, and has ambitious plans to create a “configurable international commercial bank that’s faster than Bitcoin.”

Where Chia differs from other cryptocurrencies is in its unique “proof of space and time” consensus mechanism, the method by which the blockchain is secured.

Did you know?

Chia was developed by Bram Cohen, the inventor of BitTorrent.

How does Chia work? What is proof of space and time?

Chia uses a unique consensus mechanism (the system that guarantees the integrity of a blockchain). Where Bitcoin uses a proof of work model based on processing power, and blockchains such as Flow and Cosmos use proof of stake, Chia uses something called “proof of space and time.”

Instead of having powerful computers compete to solve math problems, Chia uses space on hard drives (HDDs) and solid-state drives (SSDs), coupled with a lottery mechanic. Chia “farmers” write 100GB “plots” on their hard drives; each plot is then filled with hashes. When a new block is added to the Chia blockchain, its hash is compared with the hashes on farmers’ drivers. The user with the closest match wins the block and receives the block reward.

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That’s the “proof of space” element. However, because filling hard drives with data doesn’t take much computational power, in theory the chain would be vulnerable to a “grinding” attack, where an attacker tries multiple possibilities to hit on the best one.

To protect against this, the network also requires that a specific amount of time has elapsed between blocks; that means users can’t simply rewrite plots indefinitely in order to crack the solution.

What’s so special about it?

The key benefit of Chia’s proof of space and time concept, according to the company, is that it is more ecologically friendly than proof of work cryptocurrencies such as Bitcoin.

Bitcoin has sparked an arms race among miners since it compels miners to invest in computing power (and, by implication, electricity). The Bitcoin network’s overall power usage is currently more than that of several countries. The flooding of a Chinese coal mine in April 2021, and the subsequent impact on the Bitcoin mining business, has also served to highlight the cryptocurrency’s continued reliance on fossil fuels.

Chia utilizes orders of magnitude less energy by relying on storage space rather than computing power to protect its network. However, as some opponents have pointed out, this does not imply it has no environmental impact. Because it is necessary to employ hard drives for the express purpose of cultivating Chia, the environmental effect of producing such drives may be attributed to Chia. Running a proof of space node also necessitates the use of power, which, while far less than that of a proof of labor node, is nevertheless greater than zero—the amount that would be consumed if Chia did not exist.

There have also been claims that Chia farming damages drives, particularly the smaller SSDs used for “plotting” by farmers. Although Chia founder Bram Cohen has disputed the idea that Chia “burns out” hard drives as long as farmers stick to HDDs or enterprise-class SSDs, German cloud service provider Hetzner has banned crypto mining on its servers, citing concerns that Chia farming could lead to premature breakdowns of its storage drives.

And if Chia farming does cause drives to wear out prematurely, it could lead to a corresponding increase in e-waste, denting its environmentally friendly credentials.

What is XCH token?

XCH is the native token of Chia Network. It’s used for transactions and to provide rewards as incentives for users.

Where and how to buy XCH

Chia’s XCH token, being a relative newcomer to the cryptocurrency world, is not yet available on several of the top exchanges, including Coinbase and Binance. It is available for purchase through OKEx, Gate.io, and MXC, among other places. Here’s a step-by-step instruction on buying XCH at OKEx, starting with Tether, a stablecoin, and exchanging it for XCH.

Step 1: Create or log in to your OKEx account. Once logged in, click on “Buy/Sell”, and select USDT from the drop-down menu. Pick your preferred payment method and amount, and click “Buy USDT.”

OKEx screenshot
Image: OKEx

Step 2: After you’ve added USDT to your wallet, go to the Markets tab and scroll down until you discover Chia’s XCH coin. Click on it, then select the “Convert.” option. Choose an amount to convert—in this case, 20 USDT—and click the “Convert now” button. XCH should now be in your exchange wallet.

OKEx screenshot
Converting USDT to XCH on OKEx. Image: OKEx

How to farm Chia with a hard drive

Chia farming is rather different from conventional crypto mining. In order to plant your crop, you’ll need to stock up on some storage first.

Chia growers often write their plots on a huge, fast SSD—small consumer-grade SSDs wear out rapidly, while HDDs, though big in storage capacity, are far slower. The farmers then move their completed plots to a huge HDD. Chia plots are somewhat larger than 100GB, but they require up to 350GB of temporary storage. You’ll need to carefully examine your initial investment, including SSD capacity, HDD capacity, and the cost of additional components if you’re building from the ground up, and then measure it against your chances of winning the “lottery” that distributes Chia prizes.

Fortunately, there are online calculators that will handle much of the heavy lifting for you, allowing you to predict your profits depending on the number of plots you want to farm, your hardware expenditures, and the current price of XCH.

After you’ve completed your build, you’ll need to visit Chia’s website to install Chia. Clicking “Install Chia blockchain” will take you to the project’s Github website, where you may choose from a number of supported operating systems (including Windows, MacOS, and Ubuntu) and download the appropriate installer.

Chia screenshot
Once you’ve installed Chia, you can set up a wallet. Image: Chia

After you’ve downloaded and executed the installer, you’ll be presented with a page that allows you to create a new private key or import an existing private key. Click the “create a new private key.” button. This will produce your 24-word seed phrase, which you should write down and keep somewhere secure (it’s recommended not to snap a picture of it or save it on a cloud drive, since these can be hacked and allow someone else to access your cash).

Chia screenshot
Select “Add plot” to start your farming setup. Image: Chia

After you’ve navigated to the main screen, select “Plots,” then “Add a plot.” This is where you will assign disk space to your Chia plots.

On this page, you may specify the size of your plot (usually slightly over 100GB), the number of plots on your disk, and the number of plots to run in series. You must also specify your temporary and final folders. The interim directory is where plots are produced (generally on a fast SSD), and the final directory is where they are stored for farming before being compared to the block challenge (typically on a commercial-grade HDD).

Chia screenshot
The Chia plot setup screen. Image: Chia

Once you’ve installed Chia, it’ll take a while for the blockchain to sync up before you can begin farming, though you can set to work on plotting straight away.

What’s next for Chia?

Chia has had a phenomenal start; even before it went online, it was apparently generating hard drive shortages throughout Southeast Asia. The Chia network was roughly 600 petabytes in size at the time; by May 2021, it had grown to 10 exabytes. Chia farmers, like Ethereum miners, have rushed to get their hands on hard drives, with Chia Network chief Gene Hoffman admitting that “we’ve kind of destroyed the short-term supply chain.”

Hard drive makers aren’t complaining, since their stock prices have been unexpectedly bolstered by the sudden rise in demand for their goods.

Chia Network’s value has more than quadrupled to $500 million, thanks to a $61 million investment from Andreessen Horowitz, Richmond Global Ventures, and Breyer Capital. Hoffman referred to the money as “rocket fuel” for recruiting and announced ambitions for an IPO or public listing through a SPAC merger as early as this year.

Meanwhile, the business intends to go on with its goal of attaining institutional adoption for its trading and payment system. “Chia is what Bitcoin would look like if it was designed with knowledge from the last 13 years,” Richmond Global Ventures managing partner David Frazee told Bloomberg. It’s a tall goal, but with Bitcoin under fire for its environmental effect, there might be room for an eco-friendly cryptocurrency.

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