News from multiple sources is confirming the idea that “panic” buying ahead of a new cryptocurrency launch is making storage hard to find right now in Asia. Whether it’s going to continue to be an issue is less clear, but it looks as though some of this panic buying is more about deliberately cornering a market than actually responding to market conditions.
When news of Chia first broke, we noted that any attempt to cause a storage shortage by spreading scary rumors of a new cryptocurrency about to hit the market could be to the advantage of hardware vendors who want to raise prices for other PC components. A new report by Chinese publication Time Finance (via THG) reports that hard drives are not particularly out of stock, except that some vendors are specifically hoarding them.
Chia is a cryptocurrency that uses a “proof of spacetime” (PoSt) algorithm instead of the “proof of capacity” algorithm that has previously been used in other cryptocurrencies. PoSt differs from proof of capacity in that it is impossible to re-use the same storage pool over again. If cryptocurrencies like Chia were to succeed, you could plausibly measure the value of your local storage pool directly in monetary value. Companies like Dell could advertise computers as shipping with “500 Chia” worth of storage, instead of worthless, outdated metrics like “TB.”
But here’s the kicker: Chia hasn’t even launched yet. I want to stress that the reports of price increases aren’t just vague rumors; THG notes that Seagate affirmed a demand surge related to crypto mining. According to the Times Finance report, the reason hard drives and even SSDs are hard to find right now is that individual resellers are hoarding them. The theory seems to be that robust Chia demand, combined with panic buying from resellers who are afraid to lose access to drives, will allow companies to clear inventory in the future. To goal is to constrict supplies now, before the cryptocurrency launches, before shipping already-purchased hardware in volume to meet suddenly spiking demand.
Imagine the regular price of a hard drive is $100 and demand sends it up to $150. Now, imagine you could go back in time and buy all the hard drives before the demand spike ever hit. In doing so, you guarantee that HDDs are selling for $200 on the day the same 1.5x spike arrives. This results in you clearing $300 per drive instead of $150, while you (theoretically) bought drives for just $100 back when they were cheaper. The people hoarding hard drives are hoping to engage in this type of speculation.
Again: The concept of a cryptocurrency in which you are required to maintain a 1:1 allocation with total dedicated TB = dollars, in whatever tortured path it takes to get there, is a terrible idea. Regardless of what one thinks of the humble dollar bill, at least it doesn’t require electricity to function. Chia is rewarded based on how much capacity you contribute to the total storage capacity of the network, but there’s a temporal component to the requirement that requires dedicated capacity. This implies that you’ll need to continually build out the amount of storage within a pool to retain an even share of the earnings. Any lost capacity must be replaced.
Best outcome here seems to be for Chia to debut, promptly smash face-first into the pavement, and a bunch of predatory people get stuck with tons of hard drives they bought at premium pricing and don’t need anymore. Having spent nearly half of the last five years wrecking the GPU market, we don’t need any help with storage, thanks.
Source From Extremetech
Author: Joel Hruska