Bitcoin, the first cryptocurrency, has a problem: It uses ghastly quantities of electricity and thus generates as much carbon emissions as a medium-sized country. This is by design. A new cryptocurrency, Chia, avoids this problem—in favor of creating huge amounts of a different kind of waste.
Bitcoin was meant to be decentralized so as to stay out of any central control. The “proof-of-work mining” process allocates fresh coins by a lottery. You enter this lottery by guessing numbers and running calculations on them as fast as possible—that is, you waste electricity to show your commitment. There is one winner every 10 minutes; as more people join the lottery, the guessing gets harder to stay at one winner every 10 minutes.
As long as people can make money wasting electricity, they’ll add more computing resources to win more bitcoins in an ever-escalating arms race. Bitcoin thus uses as much electricity as the Netherlands.
Proof of work has economies of scale: The bigger you are, the more efficiently you can create lottery tickets. Despite the grandiose claims of putting financial power in the public’s hands, bitcoin mining functionally centralized by 2014. The majority of bitcoin mining is three large pools. An electricity outage in one small area of Xinjiang in April 2021 took a quarter of all bitcoin mining offline. Bitcoin mining also uses specialized computers that just calculate cryptographic hashes as fast as possible; once the mining computers are obsolete, they’re just e-waste.
Other cryptocurrencies are similarly wasteful. Ethereum uses as much electricity as Peru. There are smaller cryptocurrencies that don’t use this process, but Bitcoin and Ethereum are the two cryptos that are widely exchangeable for actual money. Cryptos failed as usable currencies, so their only remaining use case is to be traded in the hope of actual money.
Bram Cohen is famed as the creator of the hugely popular BitTorrent file distribution protocol. Cohen turned his attention to the proof-of-work problem. He explicitly wanted a “green bitcoin,” so Chia, founded by Cohen, works very much like Bitcoin apart from proof of work. Chia’s business white paper advocates the same conspiracy theory economics that was embraced by the Bitcoin subculture: It assumes that governments fundamentally cannot be trusted to issue money and wasting a country’s worth of electricity is a better alternative.
The resource Cohen chose to use for his so-called green cryptocurrency, Chia, was computer hard disk space. This is a generic, reusable form of computer hardware, it’s widely available, and he thought this would use less electricity than proof of work. Cohen anticipated that casual Chia users could use “the unused storage of your laptop, desktop, or corporate network.”
To “farm” chia, the software writes a “plot,” a large chunk of cryptographic data, to the disk. The Chia blockchain software broadcasts a “challenge” every 18 seconds or so, 4,608 times a day; if you have a close enough answer to the challenge, you win two fresh chia tokens. As more disk space is added to the network, the challenges get harder.
Cohen’s company, Chia Network, secured venture capital funding in 2018 and developed the Chia software. The network was launched in March 2021, with the promise users could run it in a “normal apartment.” Chia’s business white paper assumes that hard disk space is “over-provisioned.” However, aspiring chia farmers bought hard disks in vast quantities, thousands of terabytes at a time—as they only had to spend less money than they expected to make back.
During the COVID-19 pandemic, manufacturing supply chains were already disrupted in multiple industries, leading to shortages of many basic components. By April, just a month after it was launched, chia farmers were straining the hard disk market, with reports from Hong Kong of large disks, over 4 terabytes, having tripled in price. Hard disk shortages and price rises were reported across Southeast Asia and in the United States.
Chia’s initial plotting process is usually done on a solid-state drive (SSD), such as you’d find in a desktop or laptop. In normal usage, a modern SSD will last over a decade; an SSD that’s plotting chia may burn out in less than six weeks. SSD manufacturers are now refusing to honor warranties on SSDs used for crypto mining. Secondhand SSDs and hard disks manufactured since 2021 can no longer be trusted not to be burnt-out wrecks. In Germany, the popular cloud service Hetzner has banned chia farming.
Instead of carbon dioxide, Chia produces vast quantities of e-waste—rare metals, assembled into expensive computing components, turned into toxic near-unrecyclable landfill within weeks. Cohen has tweeted that the claim that Chia destroys disks is mostly “just plain wrong”—though he ends the tweet thread by effectively admitting that it’s true but blames users for using “consumer SSD,” even though Chia’s own FAQ states that it can be run on mobile phones or laptops.
Chia plotting is heavy on electricity, too—plotting requires arbitrary calculations by a computing device’s central processing unit (CPU), an intensive task. Chia’s business white paper anticipates farming on “one Raspberry Pi” (a small computer about as powerful as a 2007 iPhone)—but in practice, chia plotting requires multiple CPU threads running continuously at close to 100 percent.
Chia failed at decentralization for the same reason that Bitcoin did: Centralization is more efficient. The largest Chia pool, HPool, is winning 36 percent of chia farming rewards and increasing. Smaller chia farmers have complained that HPool was given a head start by Chia Network. The first 21 million chia coins were created ahead of time and are held by Chia Network, in anticipation of being distributed in the event that Chia Network holds an initial public offering.
Chia ran headlong into the known psychology of cryptocurrency mining: People will do anything that will generate a net profit—and damn the externalities.
Cryptocurrency mining has also trashed the market for computer video cards. Bitcoin mining uses specialized chips that can only mine bitcoin; but ethereum and many other “altcoins” that use proof of work are still mined on video cards as they’re well suited to complex numerical computation. With the price of bitcoin in an economic asset bubble, the other coins have gone up as well; so high-end Nvidia video cards are all but unavailable, with prices going through the roof and the cards being snapped up as quickly as possible. The latest Nvidia cards have resorted to drivers—the software that runs the hardware—that detect and block cryptocurrency mining. And, just as with hard disks, secondhand video cards can’t be trusted not to be burnt-out wrecks.
Almost any service that can do general computation is immediately swarmed by parasitical crypto miners. Continuous integration (CI) systems take computer program source code, and build it afresh after every change, to allow quick testing of all changes. Some public CI services used to offer a free tier for small projects—but crypto miners started spamming these services with CPU-based crypto mining. One CI service engineer said: “If we, for example, had a team of 20 working on our CI offering, we would have re-allocated at least 50% of them to work full-time on combating the miners. And this trend is not slowing, it is only accelerating.”
Cryptocurrency decentralization is a performative waste of resources in order to avoid having to trust a government to issue currency. But since cryptocurrencies don’t actually function as currencies, it just generates new types of otherwise worthless magic beans to sell for real money. Your system will waste unlimited amounts of whatever resource you’re throwing away—and incentivize the theft of whatever resources other people can waste to turn into money.
Cryptocurrency spews out a country’s worth of carbon dioxide and mountains of toxic e-waste, makes basic computing hardware that could be used for productive purposes unavailable, and destroys any sort of commons that someone might want to offer the world if general computation could be done on it. Decentralized cryptocurrencies are a cyberpunk parody of unregulated capitalism. They are a disastrous resource drain on the world, by design. The designers look only for fresh resources to abuse. The only functional purpose of decentralized cryptocurrencies is to further idiosyncratic bitcoin economic ideas that don’t work in the hope of making money from speculation. Every cryptocurrency is a new form of waste—and the only way to stop that is to stop cryptocurrencies.
