What is Chia: ‘Green’ cryptocurrency claims to be eco-friendly Bitcoin rival

When billionaire Elon Musk pulled the plug on bitcoin due to climate change concerns, a new player stepped up claiming it’s better for the environment.

When Elon Musk wiped billions of dollars from the cryptocurrency market after halting the purchase of his electric vehicles using bitcoin due to climate change concerns, it paved the way for green digital coins to make their rise.

The dramatic reversal from Mr Musk, formerly one of the biggest cheer squads for cryptocurrency, could place pressure on other companies about the form of payments they accept.

Alex de Vries, of Digiconomist, which analyses the carbon footprint of cryptocurrency, said Mr Musk’s decision was better late than never.

“Bitcoin mining is a dirty business, and if you are a company selling electric vehicles, it is weird to enable a currency with a substantial carbon footprint,” he told The Telegraph.

Mr Musk signalled that other cryptocurrencies that are less energy intensive could be accepted in future.

One new player, which was launched for trading at the start of May called chia, could fit the bill.

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Tesla boss Elon Musk criticised bitcoin's power consumption, particularly of energy produced from coal, and said he would no longer accept the cryptocurrency as payment for his electric cars. Picture: Odd Andersen / AFP

What is this new crypto?

Described as “green money for the digital world”, it was created by BitTorrent inventor, Bram Cohen in 2017. BitTorrent allows peer to peer file sharing, while chia is described as “magic internet money”.

The basis of this cryptocurrency is anyone can sit at home and download its technology and run it on a hard drive.

Chia also claims to be one of the easiest cryptocurrencies to access.

“It is super simple. Just download the Mac or Windows version and double click,” Gene Hoffman, Chia’s president told CoinDesk. “I’m pretty sure this will be the easiest cryptocurrency to validate for normal people ever.”

How is it green?

Chia’s released a white paper that claimed it uses up to 10,000 times less energy than bitcoin’s mining technology.

The difference? Bitcoin uses computer processors, while chia leans on hard drives.

Delving deeper, Bitcoin is mined using a concept called proof of work, churning away at solving complex equations to unlock new tokens, but also resulting in machines devouring electricity to create them. This energy is primarily sourced from fossil fuels, like coal-based power, as the majority of bitcoin is mined in China.

Some estimates suggest that bitcoin will have a carbon footprint the size of Singapore this year, while its electricity consumption is said to be around the same as Poland.

According to a report from Citigroup, Bitcoin uses around 66 times more electricity than it did at the end of 2015.

In comparison, chia uses a concept of proof of space, which requires users to use empty hard drives to house the coin based on how much space is available.

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Mining bitcoin and other cryptocurrencies requires masses of computers dedicated to guessing lengthy hexadecimal numbers – an endeavour that globally consumes more electricity than entire nations. Picture: AFP Photo / Matt Lohstroh/ Ho

But are the use of hard drives a problem?

Since its launch, chia has been insanely popular in countries such as Vietnam and China, and has reportedly caused a hard drive shortage and driven up prices. The South China Morning Post reported that 12-terabyte drives had soared by 59 per cent in price in China, while major e-commerce platforms like Alibaba have had hard drives with large capacities selling out.

“Chia’s proof of space uses a lot of hard drives,” Mr de Vries told The Telegraph. “They might reduce the need for energy, but they still have a waste of literal hard drives. They are pushing up the demand for these drives, which break down very fast when you use them for mining. It’s an e-waste issue.”

Hard drives also run out of steam fast when using chia, reducing the shelf life of a 512GB system from 10 years to just 40 days — meaning they will fail faster and more often. Some have claimed this will result in third world countries dealing with even move e-waste pollution dumped on their doorsteps, which often includes toxic components such as heavy metals like lead and lithium.

About 3 million terabytes of hard disc space are being used to mine chia, which is the equivalent of storing 3 billion movies.

Bitcoin uses a lot of electricity but there are concerns chia is creating a load of e-waste. Picture: Jack Guez / AFP)

How much does it cost?

Currently, the prices is sitting around $US1307 and has dropped by almost 10 per cent in the past 24 hours.

What else do we know about chia?

The company offering up chia is planning to go public and has said it will embrace regulation “We have seen the scams and farces that have come before our project in this space and we will instead embrace the regulators,” the white paper said.

“It should not be controversial that investors deserve protection through public disclosure and certainly the public shouldn’t be sold investments without that legally required transparency.”