Major Filecoin miners shut down operations just hours after the network went live, protesting what they call an impossible economic model. Five of the network's largest miners participated, with Zhihu
Major Filecoin miners shut down operations just hours after the network went live, protesting what they call an impossible economic model. Five of the network's largest miners participated, with Zhihu Cloud reducing from over 8,000 machines to 276 on the strike's first day. The other four also reduced their mining operations.
The conflict centers on collateral requirements. To mine on Filecoin, operators must lock up a substantial quantity of FIL tokens, the network's native asset, before they can begin work. The developers designed this system as a guarantee mechanism. Miners stake coins to ensure they deliver the storage services they promise. The staked coins function as leverage to hold miners accountable.
That creates a chicken-and-egg problem. New miners need FIL to start mining. They can wait for block rewards released within six months after building a block, or buy tokens on exchanges. Neither option suits operators wanting to begin right away. Waiting for rewards means months without mining, and buying from exchanges may cost more than miners can recover from their operations.
"Filecoin network represents a completely new way to store and retrieve data peer-to-peer – secured by cryptographic proofs to verify data is uniquely stored and replicated over time," the developers said when announcing the mainnet launch. Anyone can run a storage node and earn money from unused disk space. But the upfront capital requirement shuts out most would-be participants.
The strike hammered FIL's price. The token surged 120% on launch day, reaching $60, then lost more than half its value in the next 24 hours, settling at $30. The developers moved to contain the damage by releasing 25% of mining rewards upfront instead of spreading them across six months.
That concession satisfied at least some operators. Xiaoming Zhan, CEO at IPSFMain, told colleagues the change could let miners reach 80% of their intended operating capacity. But miners have complained about Filecoin's collateral model for months, with some suggesting they'd fork the network if the economics didn't improve.
