BackBlaze report on Chia Farming profitability

Thank you to our friends at Neowin for pointing me in this direction, but Backblaze has posted an update to their adventures with Chia and come to a formal conclusion about the profitability of Chia farming for them.

And they have concluded it is not profitable. This is one of the most efficient storage enterprises in the world, and they did a comprehensive study – including optimizing their infrastructure for the process – and have concluded its not for them.

When they started farming, with the netspace much lower and the price much higher, they estimated they might be able to store enough plots to generate $1 million per month. That was exciting enough to try, but when all was said and done with the increase in netspace and drop in coin price they predicted that they could only count on $1600 per month – about 20x less than they were looking at when they started.

On top of that, they have discovered what many of us have – its not actually that green, it just uses less electricity for consensus but there is a significant amount of waste from SSDs used in plotting and just the HDD space consumed by plots.

However, there are a few assumptions that are off by a bit – including the netspace growth. As we have seen the growth has already slowed significantly. They also are, like most people, overestimating the wear on SSDs. The recommendation for big enterprises with massive storage networks like BackBlaze would be to plot directly to final destination. They are however, correct that any other assumption but a worst case scenario would be a speculative position and not a simple business operation.

Their final reasoning not to proceed with farming on a large scale is listed here. Its worth reading their entire article, but this set of conclusions likely applies to everyone with big datacenter operations that is currently considering farming Chia. I cannot imagine too many of them can do it at scale as cheaply as BackBlaze.

• We wouldn’t reap the rewards the calculators told us we could because the calculators give a point-in-time prediction. The amount per week you could stand to make is true—for that week. Today, the Chia Calculator predicts we would only make around $400 per month.
• While it would have been a fun experiment, figuring out how to plot Chia at speed and scale would have taken time we didn’t have if we expected it to be profitable.
• We assume the total Chia Netspace will continue to grow even if it grows at a slower rate. As the Netspace grows, your chances of winning go down unless you can keep growing your plots as fast as the whole Network is growing. Even if we dedicated our whole business to it, there would come a point where we would not keep up because we have a fixed amount of storage to dedicate to farming while maintaining a non-speculative position.
• It would usurp resources we didn’t want to devote. We’d have to dedicate part of our operation to manage the process of farming on the drives without affecting core operations.
• If we farmed it using our B2 Native API to write to our live buffer, we’d risk losing plots if we had to overwrite them when demand spiked.