Bitcoin needs a killer app at all
This green crypto currency wants to change everything - and fails after just 10 days
Since May 3, 2021 there is a new crypto currency with Chia that wants to change everything. Founder Bram Cohen presents it as a green, energy-saving and democratic alternative to Bitcoin and Co. But after just two weeks the idea is obsolete. An analysis.
Green cryptocurrency Chia has a brilliant start
With Chia, the American programmer Bram Cohen and his team have launched a new crypto currency. The special thing about it: In contrast to Bitcoin and Co., the crypto currency should represent a green alternative.
The concept works. After the price was estimated at around US $ 20 before the official launch on May 3, 2021, the price is already over US $ 1,000 just two weeks after the launch.
The problem of Bitcoin and Co.
But why is the concept of a green cryptocurrency so interesting at all? The answer is a look at Bitcoin. The mining of what is probably the most famous cryptocurrency and the energy costs involved in mining and making transactions are gigantic.
The University of Cambridge continuously studies and calculates the energy consumption of Bitcoin. This is currently included 148.89 terawatt hours (TWh) per year. That is the equivalent of almost 150 billion kilowatt hours. Bitcoin is thus on par with Egypt (150.58 TWh) and Poland (152.57 TWh).
Chia relies on storage space instead of computing power
When mining the Bitcoin, the so-called "Proof of Work" is used. That means: With the help of computing power, Bitcoin miners solve increasingly complex computing tasks, to put it simply. Accordingly, the energy requirement increases with every bitcoin mined.
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Chia, on the other hand, pursues a different concept with the “Proof of Space”. The idea behind it is simple: Instead of computing power, the green cryptocurrency relies on storage space. So if you expand Chia's storage network with free capacities, you have the chance of digital coins.
Is chia really a democratic and green alternative to Bitcoin?
Anyone who provides the Chia network with free storage space via one of the more than 100,000 network nodes can participate in the success of the new crypto currency.
With the Chia Calculator, interested parties can find out how much storage space they need to make available in order to obtain a Chia. If you only want to wait a day, you need 460 terabytes of storage space. On the other hand, if you provide a terabyte, you wait around 20 years.
This simple calculation already shows that Bram Cohen's promise of the "simplest crypto currency for normal people" no longer works after a very short time.
Professional crypto miners take over chia in no time
The background to this is understandable too. After a very short time, large crypto miners and entire crypto farms pounced on Chia. Some of them provide more than 1,000 terabytes and access the green cryptocurrency on a large scale. As a result, the waiting time for the "normal" user increases enormously quickly.
And the green and sustainable aspect of Chia is already being taken ad absurdum. For example, there have been no hard drives with eight or twelve terabytes in China for days. The warehouses are empty and the scarcity of raw materials for hard drives is increasing.
In some cases, even complete data centers are used to make new farmland available for chia to speak in pictures.
The conclusion on Chia is correspondingly sobering. After just a few days, the new cryptocurrency is no longer attractive for normal users with free storage space. Anyone who has to wait more than 20 years for a digital coin does not get on board at all.
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And the aspect of sustainability has already disappeared. When hard drives and storage media are bought up and data centers are converted, this also drives up energy consumption, both directly and indirectly.
The actually good idea seems to have failed after just two weeks.
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