We have heard that cryptocurrency hard drive mining has become very popular over the last few years. Once the market starts moving higher, investors want to buy ASIC miners or powerful GPU and start Bitcoin mining and that of other cryptocurrencies. However, these ASIC miners are usually cost a lot and consume a lot of energy.
Mining with a hard drive is something different and relatively unexplored in the crypto market. Although there are some projects trying to offer new mining solutions, cryptocurrency hard drive mining hasn’t reached a large number of users.
What is Cryptocurrency Mining?
Cryptocurrency mining is an economic activity that takes place in the virtual currency market on digital assets with a consensus algorithm called Proof-of-Work (PoW). Many cryptocurrencies use this mining algorithim to secure their networks, however, it consumes a lot of energy.
Interestingly, before Bitcoin cloud mining became hard, one could use a hard disk to mine the coin.
This all changed as more coins entered the network and more people engaged in the activity, it became harder to mine Bitcoin this way. You had to invest in devices that cost more to gain an advantage.
Bitcoin price increases also did not help as they made Bitcoin mining more profitable. Bringing in more individuals and highlighting the need for high capacity drives. Eventually it became impossible to mine with a personal computer once highly sophisticated devices entered the market.
Cryptocurrency miners can be part of a mining pool or work alone. The most popular cryptocurrencies today require more intensive processing power (hash power) in order to mine profitably. As more miners join the network, it becomes increasingly difficult to make a profit and miners must seek solutions to this problem.
In order to mine both Bitcoin and Litecoin or some other PoW digital assets, it is necessary to use ASIC miners. Some PoW digital currencies do not need ASIC miners but GPU mining, which is less energy-intensive.
Miners solve complicated puzzles in order to find a block with transactions. When they do that, they process and confirm the transactions included on that block. In this way, transactions on the network are confirmed and the blockchain continues to move forward.
Miners get paid for their services with new coins and the fees paid by the user. When we process a transaction using PoW blockchain networks, we pay a small fee. Depending on the network we use, the fee will be higher or lower. On the Bitcoin network, fees are very high. On the Litecoin network fees are very low. And its different for various projects.
When a miner finds a block on the Bitcoin network, it is rewarded with 6.25 BTC + transaction fees. Considering that mining on the Bitcoin network is certainly complicated due to a large number of miners, participants gather in mining pools to increase their chances of mining a block.
However, there are other types of mining and consensus algorithms. Proof-of-Stake (PoS) networks do not require users to buy expensive machines but to deposit coins on a wallet and process transactions and get rewarded according to their stake.
In recent years, hard drive mining has become an alternative solution to traditional mining. However, it is not yet a mainstream activity.
What is Hard Drive Mining?
Hard drive mining is a mining activity that consists of mining a digital asset using hard drives. Some of these digital assets use a Proof-of-Capacity (PoC) also known as proof of space consensus mechanisms in order to process transactions.
At its core, proof of space aims to combat unsustainable mining practices by allowing use of storage devices such as hard drives for cryptocurrency mining.
Through the PoC, miners compute large data sets that are saved on the users’ computer. This is a energy efficient method compared to Proof-of-Work as storage space is the only thing needed.
And since storage space is all that is needed to participate, anyone with unused storage or unused space on their personal computer can participate. This allows for more individuals to participate in securing of a network which makes it more decentralized.
It’s such perks that are luring new cryptocurrency projects to adopt the green alternative form of securing a blockchain network. Thus, allowing any one with hard drives, external hard drives, usb drives and any other storage space to participate and earn coins for validating transactions.
That said, hard drive mining is still in its early days and it might take some time before large projects take on this form of mining.
Indeed, most of the crypto projects that are using storage devices to mine are usually concepts that do not have large communities. Even though this mode of mining is fairly simple and helps eliminate electricity waste it is yet to achieve mass adoption.
This is unfortunate as the perks are obvious. For starters, practically any device with more storage can be used, less computational power is required compared to PoW and this eliminates the need for more energy consumption.
That said, hard drive mining proposal is far from being one of the main consensus algorithms such as Proof of Work or Proof of Stake.
Other than being less popular, lower profitability appears to be the other reason why using hard drives to mine cryptocurrency hasn’t picked up.
At the moment, the potential of this type of mining is limited. Even those that want to rent their free space could find better rates for doing other types of activities online. We will get into the details later in the article.
Still, with more innovation and experimentation, hard drive mining could eventually become an alternative to PoW and PoS in the future.
In order for this to happen, a few blockchain challenges need to be solved. Also, projects that are working with this implementation should show that they are efficient and that could economically be a better and competitive solution to PoW and PoS. Still, there is no telling what the future holds.
Hard Drive Mining Rig
We have heard about mining rigs and how they work. Most of them include different shelves that allow users to place their GPUs or ASIC miners. The larger the mining rig you have for your Proof of Work cryptocurrency, the larger your hash rate would be.
When we talk about a mining rig, we also need to take into consideration that they make it easier for a user to ventilate the machines, protect them, make them run, organize them, refrigerate them and control them cost effectively. Thus, using a mining rig for PoW mining is very important.
PoS users do not even need to use a mining rig. Why? Because they do not require equipment or machines to process transactions. Everything is done by using a wallet and coins they have deposited on it.
But what about hard drive mining rigs? The first thing we should know is that this type of mining procedure is not mainstream yet. This is why there might not be hard drive mining rigs available online. If you are lucky enough to find one, you might not even need it if you are a small or retail investor.
Several users prefer to improve their PoW rigs by doing them at home or with their own specifications. This is something that could be more suitable for hard drive miners that want to keep their hard drives ordered and protected at all times. Nevertheless, as we mentioned before, it might not be easy to find hard drive miners out there, at least for now.
Advantages and Disadvantages of Hard Drive Mining
There are many advantages and disadvantages of hard drive mining. The same happens with PoW or PoS blockchain network mining.
That said, like anything thing else in life, there are positives and negatives.
Although there are some advantages and disadvantages, we should wait until more cryptocurrencies start implementing this type of consensus algorithm.
Hard drive mining should expand to more users and blockchain networks for us to be able to pin point the pros and cons.
Advantages of Hard Drive Mining
These are some of hard drive mining advantages. However, depending on your needs, you might add other benefits to the list.
- It cost less than Proof of Work mining
- There is less noise than using ASIC miners
- Hard drive mining consumes less energy
- It might be an innovative way to mine virtual currencies
- There is a lot of potential avialable for this type of mining
Disadvantages of Hard Drive Mining
These are some of hard drive mining disadvantages. As we already said, it is always important that you would analyse your positive and negative things about mining with a hard drive.
- There are few projects working with hard drive mining
- The experience we have is very limited
- We do not know other types of applications for this type of mining
Hard Drive Mining Coins
There are at least two hard drive mining coins available in the cryptocurrency market. However, they didn’t have hype or positive comments. Thus, we also do not know a lot about these projects and how they could interact with other crypto and blockchain solutions.
In the future, there might be a larger number of coins using hard drive mining.
Everything would depend on the expansion of the market and the experience these few projects have.
The main question blockchain developers should answer is whether there is a need to implement hard drive mining and whether there are advantages related to it compared to the most common consensus algorithms (PoS and PoW).
Below are a few projects that are using hard drive mining to power their operations.
Sia is known for being a decentralized blockchain network that uses underutilized hard drive storage space. In order to operate, this blockchain network created the Sia Storage Platform in order to trade data storage. In this way, users can enjoy a free market where they could pay for storage to deposit information and get it once they need it.
One of the benefits of using the Sia network is related to the lower costs it has for users. That means that it is easier and cheaper for users to get access to decentralized storage solutions rather than using centralized cloud storage services.
It is worth taking into consideration that users hold their private keys. That means that you are the real owner of your funds. Additionally, there is no outside entity that could get access to your data on the Sia blockchain network.
Thus, with the Sia project, users can rent out unused hard drive space. Nowadays, it is clear that networks and individuals require a large amount of space to store even larger images, better content, videos and more. In addition to it, users could also sell their space if they have storage that is not being used.
With your hard drive, you share a part of the space you have with other users. This allows them to store their files in a decentralized and secure way. Those that sell the storage can decide which rates they charge for this renting.
The network works with the Siacon (SC) digital asset that works as a utility token. With it, users can pay for the trades they do on this platform. The larger the network, the larger the price of the coin (as there is a large demand for it).
Burst is a cryptocurrency project that claims to be “the pioneer of proof of capacity.” Additionally, they claim to be an eco-friendly blockchain network compared to PoW. The Burstcoin (BURST) network allows you to communicate with other parties (businesses or individuals) to do business or even sign contracts. Through this decentralized and open-source platform, users can easily get access to the services they need.
As we mentioned, Bitcoin and PoW networks consume large amounts of energy to operate. Indeed, Bitcoin consumption reached the level of a medium country such as Finland or Argentina. With the Burst network, miners work with a proof of capacity consensus algorithm.
Miners use the free space they have on their hard drives in order to back up the whole network. This hard drive mining project consumes less than Bitcoin and makes it possible for the network to properly operate.
Users can enjoy a wide range of services such as proof of capacity, payment solutions, a token designed to run on this platform, arbitrary messages, smart contract implementation, an alias system and crowd-funding, among other things.
At the moment, there are more than 1.1 million wallets and 411 full nodes operating on this network. Moreover, there have been more than 733 smart contracts created on this blockchain and 416 tokens deployed on top of it.
Chia is a new cryptocurrency where mining is based on the amount of hard disk storage space you have on your computing device. It was created by a California based company known as Chia Network, Inc.
As things stand, Chia is one of the most decentralized blockchains by node count, boasting over 100,000 global nodes.
Mining Chia is known as farming Chia. It takes place on the Chia Network. In contrast to PoW, where you dedicate computing power to a specific task to mine, farming Chia necessitates the dedication of storage plots.
These plots have to be filled with the correct data.
The process resembles real world farming. First, you need to clear a field. This happens by deleting any files on your storage device that are consuming space. Then you plow and seed the field or compute a plot for Chia. Then you wait for the crops to grow. This can take some time, especially if those crops are Chia blocks.
Each chia plot ends up being like a massive, complex Bingo card. There is a lot of math behind farming Chia. But lets try and simplify it.
Each time a block challenge comes up, the Chia network will determine the winner using a set of rules. If your plot matches and “wins” the block, you get the block reward. Currently, that stands at 2 Chia tokens.
The Chia network is designed in such a manner that the block reward should decrease every three years for the first 12 years. After that each block reward would be static ad infinitum.
According to the official Chia Network website, the reward rate stands at 64 XCH per 10 minutes, and it will continue to reduce by half every three years until it’s 4 XCH per 10 minutes. Then you can expect to earn 0.125 XCH per block.
That said, when farming Chia, your chances of solving a block equate to the total size of your network space. As of now, Chia’s netspace sits at roughly 32 EiB (Exbibytes which is the binary SI unit).
Therefore,“1 EiB equals 1 EiB equals 2^60 bytes, or 1,152,921,504,606,846,976 bytes in decimal, and 32 EiB equals 36.9 EB (exabytes, using 10^18 for the SI decimal units). That means if you dedicate a complete 10TB (10 trillion bytes) of storage to Chia plots, your odds of winning are 0.000027%, or 0.0000000271 if we drop the percentage part. If those sound-like terrible odds, they are, but the catch is that there are approximately 4,608 Chia blocks created every day (a rate of 32 blocks per 10 minutes, or 18.75 seconds per block), and any one of them could match your plot.”
There is a Chia calculator to aid with this complex mathematics, so don’t panic. You can use it to determine how much unused storage you need for Chia farming to be profitable.
Long story short, farming Chia successfully will require you to invest in capacity drives.
Hard Drive Mining Calculator
Before starting with hard drive mining, it is necessary to calculate the consumption, rewards and profitability of this consensus algorithm. However, this is something that would change over time and according to your needs.
Depending on the network you operate, the profitability and solutions would be different. For example, Sia would require you to offer or pay a price for space while Burstcoin would reward users that share their hard drive space to conduct the proof of capacity consensus algorithm.
At the same time, the profitability would depend on how much available space you have, how much space you offer to others and the electricity costs of keeping your device turn on 24 hours a day, 7 days a week. In the future, as new projects release their hard drive mining solutions, there could also be hard drive mining calculators.
Is it Profitable to do Hard Drive Coin Mining?
At the moment, most of the users on Reddit claim that it is not profitable to do hard drive mining. This would definitely depend on lots of factors, but most of the users claim that it is not even worth the effort to start doing hard drive mining.
In the future, with new projects being released, we might find better solutions and larger profitability. One thing is clear, the larger the blockchain community, the easier it would be to find out some solutions to do hard drive mining. Everything would depend on the needs of different blockchain companies and how hard drive mining could become a reliable option to proof of work and proof of stake consensus algorithms.