In recent weeks we have seen how the new Chia cryptocurrency, which instead of being “mined” with the power of the GPU is “cultivated” using storage devices, is affecting the hardware industry. The high demand for large capacity hard drives has forced some of the major hard drive manufacturers such as Seagate or WD to maximize their manufacturing capacity, and are close to reaching the tipping point where demand would exceed supply and there would be shortage, in this case hard drives.
There are many effects that the Chia cryptocurrency is causing in the hardware industry: we have already seen how “farmers” have taken over stocks of large capacity hard drives in stores, causing a certain shortage with the consequent rise in prices, and We have also seen how the cultivation of this crypto ends the useful life of consumer SSDs in just a few days with the problems that this entails. Now the problem that arises is a potential shortage of hard drives as manufacturers have their factories already at maximum production capacity.
Seagate and WD, maxed out because of Chia
The demand for hard drives has increased significantly due to Chia cryptocurrency mining in recent times, leading to some shortages and price increases at retailers as we have already denoted. Manufacturers Seagate and WD are now increasing the production level of their high-capacity hard drive models, increasing the utilization rate of their existing production lines in an attempt to meet demand.
This raises several problems: On the one hand, manufacturers are increasing the manufacture of the higher capacity hard drives leaving the lower capacity ones, which are the best sellers, a bit in the lurch, something that could potentially cause shortages in these. The second problem is that companies have limited options to increase production in the short term because they currently have contracts that account for around 70% of their production capacity and none of them have said they have planned build new factories.
This means that the Seagate and WD factories were already 70% before the Chia boom, and now they have put them up to speed. manufacture to 100% of its capacity to try to meet the demand. However, this raises the possibility that demand exceeds supply, which is what is happening in the semiconductor industry, causing a situation from shortage, price rise and the consequent problems that this brings and that, again, we have already seen in the semiconductor industry.
The total global storage capacity allocated to Chia mining has recently exceeded 20 Exabytes compared to 1 Exabyte in April and shows no signs of stopping, quite the opposite. This means that the demand for hard drives for Chia has been multiplied by 20 in just two months, and it seems that the shortage will continue with both companies happy to monitor the situation and take advantage of the increase in demand before deciding on expansion plans. futures in the next few years.