24 hours after the launch of Filecoin, a majority of its miners have gone on strike. The main reason for the same is that miners actually have to buy $FIL, in order to mine $FIL, as it currently stands.
To begin with, Filecoin is very complex and requires high-end hardware including 128GB memory.
In fact, data from 6Block, one of Filecoin’s top 10 mining pools, revealed that 1 miner requires 3 servers with 2 computing machines and 1 storage machine. Further, retail prices for the same seem to be ranging from $20k to $40k (including hosting and maintenance).
Source: 6Block
Here is where the main issue presents itself – Even with 2 computing servers, a miner can only seal 1TB/day for every 336TB of storage and it can take between 210 to 350 days to mine with the full space.
A miner also needs to stake $FIL as collateral for the space provided – but nobody has $FIL to start mining and get $FIL.
Filecoin aimed to solve this with its Calibration net which served as the final testnet and included a “space race” aimed at rewarding early miners who invested in expensive hardware, taking all the risks with $1.5 million distributed, but vested for 540 days.
Now, a miner who sealed 50TB during mainnet launch and was sealing 1TB/day needs 5FIL/TB as collateral to keep increasing, until reaching full capacity, while current mining rewards are around 0.25-0.27 FIL a day vested over 180 days. This leaves the miner in question with 0.075 FIL per day.
Essentially, this means that the miner needs to continue buying $FIL to continue ramping up to full capacity.
Further, the total network capacity data showed that 4200 PiB was installed, amounting to $240 million worth of hardware, ready at the time of mainnet launch. This, in other words, was the total amount miners actually invested.
Source: Filfox
As can be seen above, the daily power growth for many top miners is currently 0 as they have simply stopped adding more capacity.
Whilst this was happening, despite the fact that all coins are supposedly ‘vested for a minimum of 6 months to 6 years’ for team tokens, $1.5 million was sent to the likes of Huobi and OKex.
Exit scam here? 1.5 million $FIL for 200 USD each worth 300 million USD at the high. Now price is below 60 USD. 70% down. No lock-up. No announcement to the community. How much do you sell? @juanbenet @Filecoin Is this ok? @VitalikButerin @SEC_Enforcement https://t.co/qYqJzgolyX pic.twitter.com/hGpMvDxSMO
— Justin Sun? (@justinsuntron) October 16, 2020
An improvement proposal has also been suggested, one that would leave miners with 6 FIL a day, of which they would still be required to lock up 5 FIL to ramp up capacity, leaving them with only 1 FIL for 20k worth of hardware.
The @filecoin SAFT document actually doesn't mention that mining rewards should be vested. Indeed then they couldn't decide in FIL4 to change it to 75% vested.
This is rightly perceived by miners as a treason.— Nico Deva (@NicoDeva_) October 19, 2020
Chinese reports were the first to expose the unfair economic model that exists within Filecoin, however, members of the crypto-community were quick to identify the underlying issue. It would thus seem that the miners who provided a huge degree of support to the Filecoin team during its three years of development are now rekt.
