A somewhat tardy issue of NewScientist (15 May 2021, paywall) informs me of yet another strategy in the process of forming for cryptocurrencies:
Cryptocurrencies based on owning a large number of hard discs, rather than using computer processors, could offer a less energy-intensive alternative to bitcoin and might even make it cheaper to build data centres – although one is already causing soaring demand for hard discs that is disrupting supply chains. …
… rival currencies [to Bitcoin] are emerging that instead make use of large numbers of empty hard discs, a concept known as proof of space.
Because hard drives are less energy-intensive to run than processors, proof-of-space currencies are touted as being more environmentally friendly. However, demand for one such currency, Chia, has become so high that some Asian countries, such as Vietnam, are reporting shortages of hard discs. The same phenomenon occurred with graphics cards, which proved to be extremely efficient at mining certain proof-of-work cryptocurrencies. Currently, around 3 million terabytes of hard disc space are being devoted entirely to mining Chia, enough to store 3 billion movies.
“Proof of space” is defined on BitcoinWiki:
Proof-of-space (PoSpace), also called proof-of-capacity (PoC), is a means of showing that one has a legitimate interest in a service (such as sending an email) by allocating a non-trivial amount of memory or disk space to solve a challenge presented by the service provider. The concept was formulated by Dziembowski et al.
in 2015. Proofs of space are very similar to proofs of work, except that instead of computation, storage is used. Proof-of-space is related to, but also considerably different from, memory-hard functions and proofs of retrievability. (The work of [?] is titled proof-of-space, but is in fact a memory-hard proof-of-work.)
After the release of Bitcoin, alternatives to its PoW mining mechanism were researched and PoSpace was studied in the context of cryptocurrencies. Proofs of space are seen a fairer and greener alternative due to the general-purpose nature of storage the lower energy cost required by storage. Several theoretical and practical implementations of PoSpace have been released and discussed, such as SpaceMint and Burstcoin.
Which seems to be missing a few words here and there. Basically, the miner must provide proof that they can, or perhaps have, dedicated a certain portion of static memory to the mining operation.
And the unanticipated result, according to NS:
Jason Feist at hard drive manufacturer Seagate says the company is experiencing strong orders and that staff were working to “adjust to market demand”.
He also suggested that these new cryptocurrencies could provide a way for companies building large data centres to offset the cost by turning them over to mining. “Chia, and similar technologies such as Filecoin and Sia, show potential ways businesses can turn their idle infrastructure into ongoing revenue,” says Feist.
Sometimes it’s difficult to diagnose desperation in engineers and scientists, but I’m beginning to wonder if that’s what we’re seeing here. Remember Proof of Stake? It was supposed to replace the original Bitcoin strategy, Proof of Work. Now, in Proof of Space, we have a different way to use up resources.
If you wish to don your paranoia bowler hat, note that Chia, the cryptocurrency company behind this scheme, is China based, which supposedly disapproves of cryptocurrencies. Indeed, a later NS (non-magazine) article notes:
Chia, a cryptocurrency intended to be a “green” alternative to bitcoin has instead caused a global shortage of hard discs. Gene Hoffman, the president of Chia Network, the company behind the currency, admits that “we’ve kind of destroyed the short-term supply chain”, but he denies it will become an environmental drain.
I have to wonder if China benefits from driving an artificial need for disc space.
In any case, this hopping from solution to solution to solution for a functional part of cryptocurrencies really makes me wonder if this is the Achilles’ Heel of cryptocurrencies. I’ve expressed the thought before: Currency is a human construct and may require human, not algorithmic, management.
The future should be very interesting in this area, but I’ll not be risking any of my money in it, I think.
