Going Green with Chia: True Decentralization and Efficiency

Open hard drive platter.
Photo by Sajad Nori on Unsplash

Cryptocurrency mining, especially Bitcoin, is not widely regarded as being energy efficient. Warehouses full of howling, power hungry machines contribute to a significant portion of global power usage.

“Mining one bitcoin in October 2020 requires outputting 0.9–2.4 trillion watts per hour. That’s a lot of power.”

— Bitcoin’s Energy Consumption by Mike Co

The overall power usage of cryptocurrencies like Bitcoin isn’t trending down either. As the mining difficulty of the network increases along with popularity and price the number of miners coming online skyrockets. When mining just a single Bitcoin is worth over $60,000 there is incredible incentive to be the biggest, fastest and loudest mining pool in the world.

This leads to yet another set of problems. Not only is Bitcoin mining consuming electricity at an astonishing rate, the hashing power stems mostly from a handful of mining pools.

“…current hash rate data shows that 9 out of the top 10 bitcoin mining pools are Chinese pools.”

China, the land of Bitcoin Mining, still? by Tuoyuan Research

The promise of complete decentralization and democratization of finance has arguably been lost with popular coins like Bitcoin. The mining pools inside China have access to exceptionally cheap power and hand in glove hardware manufacturing. If one group of miners control a majority portion of the network hash rate then they control the network. This hardly fosters the inclusive, open and community-driven network Satoshi Nakamoto dreamed of.

Throughout the history of cryptocurrency there have been numerous different attempts at creating alternative consensus mechanisms. The original and most popular mechanism currently is proof-of-work (PoW). Bitcoin and many other cryptocurrencies still use this method of securing and validating the network.

https://appinventiv.com/blog/blockchain-consensus-algorithms-guide/

Proof-of-work (PoW) relies on miners to perform progressively more difficult hashing functions in order to validate blocks. The network grows larger and more sluggish over time, forcing miners to invest in bigger and better hardware. This leads us to where we are today with cryptocurrencies like Bitcoin. High difficulty, high power usage and exclusivity. Especially when it comes to procuring hardware.

Proof-of-stake (PoS) is one alternative form of consensus. This is progressively being implemented in Ethereum and seeks to guard against some of the original shortcomings of proof-of-work. This way of controlling consensus requires (in Ethereum at least) that a significant portion of the currency be offered up as a stake. This stake is then held as a sort of collateral to prevent “validators” from performing any nefarious activities on the network or controlling too much of it. If you try and game the network you can lose some of your money.

Although proof-of-stake incorporates innovative new ideas and protection mechanisms, there are still many ways an attacker can compromise and control a network. The Long range and “nothing at stake” attacks that are possible with proof-of-stake create new alternative attack vectors for networks operating under this consensus mechanism.

Proof-of-space (PoSpace/PoC) was introduced back in 2013 as a new alternative way of achieving consensus without using high-power, costly mining hardware. Rather than use specialized ASIC miners or powerful GPUs to run countless computations, this mechanism uses raw storage space. The idea is that storage is cheaper to buy, cheaper to operate and more readily available than other hardware options. This means lower energy usage and less hardware exclusivity due to cost and manufacturing.

“While this may seem like a viable replacement of PoW, the authors found a fundamental problem — unlike computational power, space can be reused.”

Simple Proofs of Space-Time and Rational Proofs of Storage by Apograf

Unfortunately, even with something like proof-of-space there are ways to exploit the network.

So where do we go from here?

Chia network logo.
Chia network logo.
Source.

The Chia Network uses a new type of consensus mechanism that seeks to eliminate the unfairness, energy inefficiency and vulnerability of previous methods. This is called: Proofs of Space and Time (PoST).

Instead of focusing only on raw compute power or raw storage space Chia implements an elegant balance of both coupled with the added variable of time. You need some CPU cycles, some storage and some time in order to succeed in farming Chia. Investing heavily into only one element of this protocol will not exponentially improve your chances, making this network overall much more fair and secure.

Just like proof-of-space, Chia’s protocol uses large amounts of spare disk space in order to achieve consensus, but with important enhancements and restrictions that make it more energy efficient and distributed:

“… A farmer’s probability of winning a block is the percentage of the total space that a farmer has compared to the entire network.

Proof of time requires a small period of time to pass between blocks. Proof of time is implemented by a Verifiable Delay Function that takes a certain amount of time to compute, but is very fast to verify. The key idea of a VDF is that they require sequential computation, and since having many parallel machines does not yield any benefit, electricity waste is minimized…”

Chia Network FAQ

With Chia you’re not a miner grinding away day and night trying to win the lottery with a random hash function, you’re a farmer! You spend time creating “plots” using some compute power and then “farm” those “plots” by looking for a specific bit of data in them when requested to by the network.

The big important difference is that the addition of time. This is added by special machines on the Chia network called “timelords”. These machines implement a mechanism called a Verifiable Delay Function (VDF) which is responsible for controlling the start of the next block and injecting that crucial time element:

“…instead of the whole world mining at the same time, only a few computers are “mining” for each proof of space that won…”

Chia Blockchain: Beginners Guide

If all of this sounds exciting to you (and it should) then becoming a Chia farmer might be the next stop on your journey. Chia’s currency (XCH) isn’t traded on any exchanges right now, so you can get started building your plots and earning some XCH through farming.

To better understand the underlying protocol itself and how farming works, check out the published “green paper” available from Chia Network site.

You can also head over to the Chia Network GitHub to install their full node wallet software. There is a ton of different OS support as well as several GUIs for simple and easy wallet/farm management. Setting up plots and farming them using this software is straightforward and simple. You’ll be up and running in no time.

Before you go purchasing a shipping container filled with hard drives, you’ll want to read the Chia plotting basics post by Gene Hoffman. This is a very informative post on what works and more importantly what doesn’t when it comes to hardware and creating plots.

Finally, I’ll leave you with this recent video from the Chia team where Bram Cohen, Gene Hoffman and Mitch Edwards discuss technical aspects of the protocol and overall vision for the future:

The Chia Business Whitepaper Zoom — February 11, 2021 (YouTube)

Thank you for reading! I hope you’ve enjoyed exploring the exciting and endlessly intriguing Chia Network with me. If you’re interested in learning more about other cryptocurrencies, check out: What Cryptocurrencies Can You Still Mine in 2021?

Software Engineer @mixhalo & die-hard Rubyist. Amateur Radio operator with a love for old technology. Tweet at me: https://twitter.com/@Tate_Galbraith

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