If your business has been looking for storage devices recently, you may have noticed a stock shortage and price increase with many OEMs and vendors. This situation is a byproduct of the exploding popularity of crypto mining. With reports predicting that the cryptocurrency mining hardware market is poised to grow by $2.80 billion in the next five years1, it is likely that the mining craze will continue to have huge implications on the global supply and pricing of essential computer components.
Crypto mining is a core aspect of how cryptocurrency functions. In contrast to a standard fiat currency, cryptocurrency is decentralized, meaning it does not rely on a central authority to validate every transaction. Instead, cryptocurrency runs on a peer-to-peer network, delegating the validation process to the users in the network. This means that anybody with the appropriate computer hardware has the opportunity to “audit” a transaction.
To incentivize users to verify transactions, the cryptocurrency system generates a crypto token as a reward for successful work on validated transactions. This is the “mining” aspect of cryptocurrency and the system’s way of creating additional currency to put into circulation. The opportunity to earn crypto without directly purchasing it is why crypto mining has become so popular among fintech enthusiasts.
Due to the complexity of the cryptography involved, crypto mining is very compute intensive and can only be done with computer hardware. This is by design; the more complex and taxing the process is, the more difficult it is to game the system. Many popular cryptocurrencies use a “proof of work” system to validate transactions. Every time transactions are made, users must solve a mathematical puzzle by generating a 64-digit, hexadecimal number that matches the target hash for the transaction. The system then cross-checks the hash with other users in the network to arrive at a consensus, before recording the transactions onto a public ledger called a blockchain.
There is also an element of luck involved. Since millions of prospective miners will be vying for the reward, the token is rewarded to the first user to solve the puzzle. This means that the better the hardware, the faster it can generate hashes, increasing the likelihood that it “wins the race.” For this very reason, high-end hardware such as consumer GPUs (graphic processing units) and ASICs (application-specific integrated circuits) have become hot commodities for mining, leading to massive shortages in stock.
In the past few months, the launch of a new cryptocurrency called Chia has taken the storage industry by storm. Chia has popularized a form of mining (also called farming in this case) called the “proof of space and time” system. Instead of using graphics cards or ASICs, Chia utilizes storage drives for mining/farming. The storage-based mining system plots hash values onto unused space in the storage drive and when a challenge is issued, the system checks which users have the correct hash values plotted on the drive. The user with the correct hashes is then rewarded with the crypto token. Storage vs GPU mining may involve different mechanisms, but the general idea is similar: users are incentivized to validate transactions for the blockchain, competing against each other in the process.
The launch of the highly anticipated Chia cryptocurrency has already caused huge disruptions in the storage device market. It has led to excess hoarding of storage devices, as crypto miners are seeking to hop on the next big wave in cryptocurrency. In one month since Chia’s debut, the mining network has reportedly grown from 600 petabytes to 10 exabytes2, illustrating the extent to which the mining craze has affected the storage industry.
Higher-capacity drives are well-suited for Chia mining because the higher the capacity on a drive, the more storage space can be used for plotting values. With more values plotted on the drive, miners are more likely to have the correct hash values and win the reward. Because HDDs (hard disk drives) offer significantly higher capacities relative to their prices, users are able to spend less overall while aggregating a larger amount of unused storage space.
The Chia mining craze has kicked off a worldwide buying frenzy for HDDs. High-capacity hard drives are being wiped from the shelves and prices have gone through the roof for a wide range of storage capacities. According to reports, range-topping 16TB and 18TB models are either greatly overpriced or are sold out.3 Reports indicate that there has been skyrocketing demand for hard drives that has sent retail prices to record highs.4
The usage of SSDs (solid state drives) in Chia mining has also raised concerns, particularly for enterprise SSDs. With higher capacities and faster write speeds, enterprise SSDs excel at the plotting aspect of storage mining. While the argument in favor of storage-centric crypto mining is that it consumes less energy compared to GPU-centric crypto mining, it comes at the expense of burning out SSDs, which can be problematic because SSDs have finite write cycles.
According to a recent report, a 512GB SSD can be completely wrecked in as little as 6 weeks.5 This rate of usage is alarming because enterprise SSDs are built with higher endurance as well as higher TBW (terabytes written), which means they can be used for many years under normal circumstances. Instead, SSDs are quickly being burnt out at a record pace for a type of activity that was never intended to be under its scope of usage.
The current hard drive shortage situation mirrors the graphics card (GPU) shortage from three years ago, which deprived users from acquiring graphics cards for gaming, content creation and other needs. Fast forward to today and the concerns about the excess hoarding and availability of storage drives are similar. The storage shortage is preventing users and businesses from acquiring hard drives for their personal storage, data center, virtualization needs and more.
The storage market looks poised to deal with shortages and high prices for the foreseeable future. According to reports, drive vendors expect the exceptionally high price per TB for flash to persist through next year, especially because of bitcoin mining and Chia farming.6
As a renowned supplier of storage solutions, Axiom has been carefully monitoring the hard drive shortage situation. We have been working closely with our customers and suppliers in response to the situation and will keep you updated on the latest news regarding the storage drive shortage.
To learn more about our hardware solutions or to talk with our sales team about the availability of storage solutions,
contact an Axiom representative today. To view our full lineup of storage solutions,