Cloud storage and data backup company Backblaze published a blog post today outlining its search for the answer to a relatively simple question: Would it make sense for the company to farm the Chia cryptocurrency using the HDDs it keeps as a buffer to allow its cloud storage platform to scale quickly? Well, it turns out the answer is a resounding no.
The company said the online Chia Calculator initially put its weekly earnings at $250,000 before expenses. It also wouldn't have the same upfront costs as other wannabe Chia farmers because it could simply use the HDDs in its buffer to devote 150 petabytes to plots. Unfortunately, free storage space isn't the only factor at play.
Backblaze noted that creating a plot is an intensive task requiring "a multi-core processor with fast cores so you can make multiple plots at once (parallel plotting) and a high amount of RAM." Plotting is tough on drives too. The company said the process involves "about 1.8TB of reading and writing" to start.
Even if Backblaze wanted to purchase enterprise SSDs capable of handling that strain, that $250,000 weekly payout was based on the amount of storage devoted to the Chia network and the value of a single Chia coin (XCH) at the time of calculation. So it attempted to predict future earnings based on the network's expansion.
Backblaze's calculations assumed that it wouldn't have any operating costs and that XCH would be stable. Even those rose-tinted glasses couldn't make its findings look good.
"If the Chia Netspace continued to grow at an exponential rate," the company said, "our farming income per week would be effectively 0 after 16 weeks."
Acknowledging that farming Chia at scale wouldn't be free even for a cloud storage provider didn't make the prospect seem much more attractive.
"To quickly understand what costs would look like, we used our standard pricing of $5/TB/month as our effective 'cost' as it factors in our cost of goods sold, overheard and the additional work this effort would require," Backblaze explained.
"At $5/TB/month, 150PB costs $175,000 per week. Assuming exponential growth, our costs would exceed total expected income if we started farming any later than 7 weeks out from when we ran the analysis. Assuming constant growth, costs would exceed total expected income around week 28."
Even those projections were trying to be as favorable to the idea of farming Chia as possible. Backblaze said its calculations were based on the $584.60 opening price XCH had on June 8. "In the time since, it has dipped as low as $205.73 before increasing to $278.59 at the time of publishing," the company said.
All of which means that a cloud storage provider sitting on 150PB of storage couldn't turn a profit farming Chia on its own. That makes the introduction of pooling—which The Chia Network described as "lottery insurance"—seem less like a nice-to-have for collaboration-inclined Chia farmers and more like a must-have for profit seekers.
But the real kicker is that Backblaze will continue to offer the farm-in-the-cloud service its own estimates deemed unprofitable.
"Farming Chia didn’t make sense for us," the company said, "but we love watching people experiment with storage."
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