Cloud Server Provider Hetzner Bans Cryptocurrency Mining As Chia Becomes More Popular

Cloud Server Provider Hetzner Bans Cryptocurrency Mining As Chia Becomes More Popular

Hetzner, a German cloud hosting and dedicated server provider, has banned cryptomining on its servers.

The company made the decision after users have been using its server power to mine Chia.

Chia is a platform – or a new blockchain as they call it – for mining the cryptocurrency using a new principle called Proof of Space and Time, which is more energy-efficient, but requires a lot of storage space.

“Users of the Chia blockchain will ‘seed’ unused space on their hard-disk drive by installing software which stores a collection of cryptographic numbers on the disk into ‘plots.’ These users are called “farmers,” the Chia FAQ explains.

“When the blockchain broadcasts a challenge for the next block, farmers can scan their plots to see if they have the hash that is closest to the challenge. A farmer’s probability of winning a block is the percentage of the total space that a farmer has compared to the entire network,” the company further explains.

Chia is an increasingly popular cryptocurrency to mine, currently valued at around $1,000.

Because of the increased popularity, Hetzner saw an influx of people renting their high-capacity ‘Storage Boxes’ for Chia plotting and farming. 

Hetzner’s flagship product, BX60 Storage box, comes at €47.48 per month and offers 10 TB of storage which is a good deal of power for crypto mining.

As mining is done round the clock, the company was concerned that Chia mining will damage their drives due to heavy use. 

Therefore, Hetzner has banned all mining on their cloud servers, hosting services, and storage boxes.

“In order for us to operate a high-performing and reliable network for our customers, the operation of applications for mining cryptocurrencies is prohibited,” says the Hetzner service agreement.

Hetzner later confirmed it on Twitter:

“Yes, it’s true, we have expanded the terms and conditions and banned crypto mining. We have received many orders for our large hard drive servers. For this, however, large storage boxes are increasingly being rented,” Hetzner tweeted today.

The company states the mining activity is hard on the bandwidth of the host systems:

“With storage boxes this leads to problems with the bandwidth on the host systems. With chia mining there is also the problem that the hard drives are extremely stressed by the many read and write processes and will therefore break.”

However, Chia creator Bram Cohen has claimed that plotting on enterprise SSD or hard disk drives will not harm them, whereas plotting on consumer-grade SSDs can quickly wear them down indeed.

In contrast, Western Digital and Seagate have become unlikely beneficiaries of Chia mining, as they’ve seen their stock prices rise due to the increased demand for their hard drives.

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