Filecoin mainnet approaching! Chinese miners speculate wildly, will "hard drive mining" become mainstream?

After several delays and raising $257 million in just one hour in 2017, Filecoin has finally launched a testnet reward program in June. The official mainnet launch is expected to take place between July 20 and August 20. As the mainnet deployment date approaches, speculation on Filecoin's mining machines and token prices once again shows significant speculative behavior. Overseas media CoinDesk analyzed this phenomenon and explored how intense the "FOMO" sentiment can be when the mining return rate is uncertain.

Filecoin aims to build a distributed storage network and has introduced a token (FIL) reward mechanism to incentivize users and promote wider adoption.

In addition to raising $200 million in the Foundation Protocol Labs' ICO in 2017, prominent venture capital firms such as Digital Currency Group, a16z, and Sequoia Capital also injected $50 million at that time.

Testnet Incentive Program

Since Protocol Labs launched the testnet last December, they have recently introduced an incentive program to invite miners to participate in a competition to mine 4 million Filecoin tokens. The purpose is to conduct stress tests on its infrastructure before the mainnet is officially launched, and the tokens rewarded in the testnet will be distributed after the mainnet goes live.

Even though the mining reward parameters after the mainnet goes live are not yet determined, many Chinese companies have started selling cloud mining contracts and physical mining machines. According to the block explorer of the Filecoin testnet, eight out of the top ten miners are from China, with an effective storage power of 15 PB, accounting for over 85% of the total power of the testnet, which is 17.86 PB.

Note: 1PB (Petabyte) = 1024 TB.

Since 2018, the hype around Filecoin mining in China has never stopped. Andy Tian, co-founder of mining machine manufacturer "1475," commented:

Cryptocurrency mining has always been popular in China. Although Filecoin mining is much more technically complex, using "hard drives" instead of specialized mining machines like Bitcoin ASICs may be easier for retail businesses to understand.

Uncertainty in Returns

While the block explorer of the Filecoin testnet has displayed relevant data such as mined Filecoin amounts and block reward information, this can only serve as a reference, as the final parameters after the mainnet launch remain unknown. Andy Tian also emphasized that "having more hard drive storage does not necessarily equate to more efficient mining capabilities."

Overall, there is currently no clear formula to calculate the mining return rate after the mainnet goes live. Therefore, the cloud mining contracts and mining machines flooding the market at this stage leave investors unable to determine how long it will take to break even. Andy Tian stated:

Until all incentive economics are finalized, Filecoin cloud mining contracts remain a false proposition. While some Filecoin hashing power contracts claim annualized returns as high as 300%, they do not specify how many tokens can be mined per 1TB of storage power purchased.

Although the mainnet has not been released yet, Filecoin has been highly anticipated since its launch in 2017. As a result, some exchanges like Gate.io and Biki have already listed Filecoin futures.

With the mainnet expected to launch in August, the futures price is also starting to show movement, with nearly a doubling in price over the past month.