The European hard disk drive (HDD) market continued to soar in the second quarter of 2021 with its largest ever total addressable market (TAM) size, thanks to the impact of the Chia cryptocurrency, according to CONTEXT, the IT market intelligence company.
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 Q2, HDD unit sales through distribution grew by 141% year-on-year 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 Q2 2021—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.
Year-on-year volume growth for desktop network-attached storage (NAS) devices hit 73.5% in Q2 2021, with total sales reaching 642,267—the second highest TAM on record for the segment.
SSD volume sales also soared in Q2, 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% year-on-year growth. The second highest sales in SSDs in Q2 2021 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”, said Gurvan Meyer, Business Enterprise Analyst at 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. 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”, Gurvan added.