What makes Chia, the so-called “bitcoin killer”, ignite the mining market?

How to participate in Chia mining?

The most important thing in a bull market is hot spots and investment enthusiasm, and since April, after dogcoin, Chia has become the headline topic in the recent cryptocurrency circle, catching fire throughout the “mining circle”. After the main Chia website went online, the price of the hard drive continued to be hyped up, and miners, miners, and retail investors flocked to it. The company’s main business is to provide a wide range of products and services to the market, including the XCH token, XCH/USDT, XCH/BTC and other trading pairs. Why can it drive the whole mining circle with its own power? Is the current hot mining worth participating in?

What makes Chia, the so-called "bitcoin killer", ignite the mining market?

What is the Chia project?

Founded in August 2017, Chia is a blockchain and smart trading platform created by Bram Cohen, the inventor of BitTorrent. The team has built the Chia Network to improve global financial and payment systems, while working to make the Chia token an enterprise-grade digital currency.

Since its inception, Chia has been known as the “Bitcoin killer”, claiming to be a safer, more decentralized, and greener digital currency. Its founder, Cohen, believes that Bitcoin has two major problems. In addition to its negative impact on the environment, it is also unfair for a few Bitcoin miners to use cheap electricity to produce. As a result, Chia is using a new Satoshi Nakamoto consensus algorithm known as Proof of Space and Time. Its network resource is not computing power, but disk space. Compared to traditional proof-of-work, proof-of-space does not consume a lot of power and waste single-purpose ASIC hardware to verify transactions, removing the need for energy consumption using PoW systems.

In terms of technology, Chia has developed a new dedicated smart contract language called chiisp, given the security issues and vulnerabilities plaguing the Ethernet Solidity programming language. applications running on the Chia blockchain network are designed to have functionality suitable for banking, payments and financial applications.

In terms of team strength, in addition to the big-name founder Cohen, Chia’s team includes Gene Hoffman, former founder and CEO of eMusic.com and Vindicia, and Mitch Edwards, former acting CEO of Overstock.com.

According to officials, Chia Network has received approximately $16 million in venture capital since its inception in 2017 from investors and institutions including AngelList co-founder Naval Ravikant, A16Z, Greylock, True Ventures, Slow Ventures Galaxy Digital, DCM Ventures, Dan Wah Capital, MetaStable Capital, and others.

Chia Token Model Analysis

The Chia token name is XCH and the total amount is uncapped. Chia pre-mines 21 million tokens at the network launch as a strategic reserve (controlled by the board of directors), which will be announced as a circulation plan after the company goes public.

On March 18, Chia main network went online and started mining, and it was not tradable for the first 6 weeks; in the early morning of May 4, Chia opened the transfer function and OEE OKEx launched Chia token XCH, whose price once shot up to $2,500 a piece and then started to fall back, and the current price is stable at around $600.

The mining rewards are created after the Chia network blocks are updated with new Chia, and its token reward plan is directly modeled after Bitcoin’s halving mechanism with corresponding halving rules, initially releasing 64 XCH every 10 minutes, halving once every 3 years, and remaining unchanged after being reduced to 4 XCH every 10 minutes (in the 13th year).

The following is the Chia coin mining halving plan.

64 chia : 64 Chia will be generated every 10 minutes for the first 3 years after the mainnet is launched.

32 chia : 32 chia will be generated every 10 minutes during the fourth to sixth years after the mainnet launch.

16 chia : 16 chia will be produced every 10 minutes in years 7 to 9 after the start of the main network

8 chia : 8 chia will be produced every 10 minutes in years 10 to 12

4 chia: after the 12th year, 4 chia will be produced every 10 minutes in each year.

There is no limit to the total number of Chia coins that may be generated through farming rewards on the Chia network, and from the start of the main network, it will take approximately 21 years for the number of all farming rewards to equal the strategic reserve size of the Chia network as Chia token releases begin to slow down in year 13 under the halving mechanism.

After year 12, the release rate is fixed at 4 Chia per 10 minutes, so inflation as a percentage of supply is declining all the time, and according to official projections, inflation will fall below 0.5% in the 25th year after release.

Before the Chia token went live on the trading platform, mining (Farming) was the only way to get XCH. As a result, miners hoarded a large number of hard drives in advance after the main website went online, directly driving the price of hard drives to skyrocket some time ago.

A Brief Analysis of Chia Mining Mechanism

Unlike traditional mining, mining in the Chia network is called “farming” and relies on unused hard drive space. Anyone can use unused storage capacity to join the Chia network, and these users are called “farmers.” Blockchain users of the Chia network install software that plots unused space on their hard drives, known as “P-discs. “. Once the plotting is complete, the software will generate and store the collection of cryptographic numbers on the disk as plots.

Unlike PoW mining, Chia’s mining process is like opening a lottery. When a new block is broadcast on the Chia blockchain, miners scan their plots to see if they have a number close to the new challenge number derived from the previous block. Whichever miner’s block is closest to the one broadcasted will receive XCH tokens. The miner’s probability of “winning” is the percentage of the overall network space he takes up for each challenge, and mining consumes almost no additional energy other than hard drive resources. According to the official introduction, miners with a few dozen dollars of Raspberry Pi plus a few USB Hub can drive 1PB of computing power.

This mining logic is very similar to the previous Filecoin, but Chia has a lower threshold, the requirements for mining equipment are not as high as Filecoin, and there is no collateral and penalty mechanism, which is the reason why Chia is able to fire up the mining circle with lightning speed.

The steps for ordinary users to participate in mining are as follows: 1) Prepare an SSD (solid state drive) larger than 332 GB and an HDD (mechanical hard disk) larger than 101.4 GB. 2) Download and install Chia Blockchain software and create a wallet address. 3) Plot disk (P disk); 4) Check the Farm status. (Note: SSD is used to store cache files and HDD is used to store final plot files.)

It should be noted that it is not advisable to chase high when HDD prices are soaring, and HDDs purchased at a premium can easily be snared or even lost in blood, so investors need to be cautious. In addition, the P-disk cycle is too long, consider accessing the mining pool to mine.

In Chia’s opinion, idle space is a widely distributed, asic-resistant, oversupplied commodity that has nothing to do with the price of electricity. Anyone’s cell phone or computer with idle space can be utilized, and after farming is completed, the storage space can be reused, such as storing photos, etc. Therefore, Chia mining is more decentralized and much less energy and resource intensive than PoW or PoS.

There is no doubt that distributed storage is a promising and valuable market, both for Filecoin and Chia, which is why they are getting attention. However, the evolutionary patterns of the two markets seem to be similar, with the current mining boom and storage space spike mainly stemming from pre-existing high headline mining dividend expectations and fomo sentiment, and the Chia network will gradually smooth out over time in the future.

As of May 6, 2021, the storage space of Chia main network is 2,448 PiB. Currently, XCH/TiB produces about 0.00367XCH per day.

As network-wide computing power continues to grow and mining becomes more competitive, the payback period per unit of computing power will be stretched. If you are still considering mining, you need to evaluate the cost and benefit by taking into account the coin price trend, arithmetic power growth curve, hard disk configuration, P-disk cycle, etc.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/what-makes-chia-the-so-called-bitcoin-killer-ignite-the-mining-market/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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