Chia raises $61M for ‘eco-friendly’ crypto despite critics

Blockchain startup “Chia Network” has raised $61 million in a funding round which included investment from top venture capital firms Andreessen Horowitz and Richmond Global Ventures.

The decentralized smart contract platform was valued at around $500 million in the funding round, according to an anonymous source cited by Bloomberg. The funding round was also backed by the CEO and co-founder of AngelList Naval Ravikant, Breyer Capital, and True Ventures.

Chia’s president and CFO, Gene Hoffman, told Bloomberg the firm hopes to go public through an initial public offering, or IPO, this year:

Blockchain startup “Chia Network” has raised $61 million in a funding round which included investment from top venture capital firms Andreessen Horowitz and Richmond Global Ventures.

“Our goal has always been to go public relatively quickly as that will significantly clarify our regulatory environment and allow customers to use currency to hedge public market volatility, which is different from other coins.”

The Chia Network was founded in 2017 by the creator of BitTorrent, Bram Cohen, and raised more than $3.3 million in a seed round led by Ravikant and Andreessen Horowitz in 2018. The firm describes its Chia token (XCH) as “green money for a digital world.”

The Chia Network’s principal value proposition is its unique consensus mechanism, “Proof of Space and Time.” The consensus method purports to offer far greater energy efficiency than Proof-of-Work mining, seeking to identify unutilized computing power on validators’ hard drives.

To create or “farm” XCH, users install Chia’s software that writes cryptographic data known as “plots” to the their hard drive. The blockchain broadcasts a problem for each new block approximately every 18 seconds — with the likelihood of an individual winning the block determined by the availability of unused computational resources provided by farmers.

Despite the firm touting XCH as a green alternative to Bitcoin and other cryptocurrencies, some have questioned the network’s eco-friendly claims.

In a May 23 article titled Chia Is a New Way to Waste Resources for Cryptocurrency, David Gerard, the author of Attack of the 50 Foot Blockchain, slammed Chia for being “heavy on electricity” and requiring “multiple CPU threads running continuously at close to 100 percent” for farming.

Gerard emphasized that Chia’s plotting process typically uses a computer’s solid-state drive, or SSD, and can burn out an SSD in less than six weeks. By comparison, SSDs subjected to regular usage typically have a lifespan lasting more than a decade.

“Instead of carbon dioxide, Chia produces vast quantities of e-waste—rare metals, assembled into expensive computing components, turned into toxic near-unrecyclable landfill within weeks.”

Gerrard’s prediction that Chia will drive an increase in computing landfill already appears to have weight, with Fortune reporting hard drive shortages throughout the South-East Asia region in anticipation of XCH’s launch.

"In recent weeks the demand and pricing for high capacity [hard disk drives] has seen a material step higher [...] and enterprise [SSD] prices have also moved higher,” stated an analyst from Bank of America.

“[The] sustainability of this trajectory of Chia's popularity remains unclear,” they added.