Chia Cryptocurrency Drives HDD Sales in Europe

The European HDD market continued to soar in 2Q21 with its largest ever total addressable market (TAM) size, thanks to the impact of the Chia cryptocurrency, according to research group Context. (Source)

Unlike regular cryptocurrencies that are based around a “proof of work” mechanism which puts the emphasis on building powerful computers for mining, Chia is founded on a greener “proof of space” principle which prioritises storage space.

As a result, demand for storage devices has surged over recent months. In 2Q21, HDD unit sales through distribution grew by 141% Y/Y to reach 454,512 across Europe – the biggest quarter on record.

Nearline HDDs are particularly sought after as these models have the highest capacity and endurance of all drives on the market.

Context figures revealed that sales of the largest 18Tb capacity nearline HDD models reached 84,726 in 2Q21 – a 125% increase from the previous quarter and far exceeding the second placed 16TB model (51,515). Other HDD segments also continue to be in high demand thanks to the “Chia effect”.

Y/Y volume growth for desktop NAS devices hit 73,5% in 2Q21, with total sales reaching 642,267 – the second highest TAM on record for the segment.

SSD volume sales also soared in the quarter, especially in the NVMe Gen4 segment and categories such as 1TB and 2TB disks. The 1TB category saw volume sales reach 74,771 across Europe, an astonishing 1,147% Y/Y growth. The second highest sales in SSDs went to 2TB devices at 27,066.

“The tremendous Chia-driven demand for storage capacity has turned the European market on its head with buyers rushing to snap up HDDs,” says Gurvan Meyer, business enterprise analyst, Context. “Although it’s having a knock-on effect for SSDs and NAS segments, it’s nearline HDDs that are really driving this spike. As long as there’s money to be made in mining Chia coins we can’t see these trends changing much.”

The Bitcoin and Ethereum “proof of work” mechanism is used to secure and validate transactions. In this process, global computers essentially compete to be the first to complete calculations to confirm each transaction. The network rewards successful miners with freshly minted coins. The more powerful the computer, the greater chance it will be able to claim the reward. This is why the availability of graphics cards and associated hardware has decreased – and their price increased – over the past few years.

Chia’s alternative “proof of space” principle means users set aside a dedicated amount of storage on their computers and the software allocates a unique number to each section of this space. When the network needs to validate a new transaction, it selects one of these unique numbers at random and the computer that segment belongs to then validates the transaction.

“So, rather than using computing power in a race, it’s using a lottery system,” Meyer says. “This is not only greener (in terms of passive power consumption) than proof of work, but also more accessible. The barrier to entry is lower as almost anyone in the world might have unused storage space on their computer – perhaps even their phone – that could be used.“