Filecoin founder Juan Benet called the reports of a ‘miner strike’ “nonsense.”
“There is no strike,” said Benet, who took to Twitter to clarify all that is going on since the launch of Filecoin.
Last week, after years of first coming into the market and being under development all this time, Filecoin officially launched its mainnet.
With the launch's technical success, FIL tokens from the presale started to vest, and miners started offering their storage services on the network.
However, the problems soon followed as to provide storage services, Filecoin miners have to buy and stake FIL tokens. But obviously with over a 100% jump in FIL's price, which took its market cap at one point to $200 billion, following the launch proved to be a problem.
Currently, it is trading just under $35.
Moreover, with the mining rewards having a vesting period of over 180 days, 6 months, it means miners have to account for significant overhead before they can even expect to start offering their services profitably.
Now, being forced to buy a large number of FIL tokens at very high valuations after reportedly spending $240 million in just purchasing the hardware leads to negative or flat changes in power growth across the larger miners.
Filecoin is a decentralized cloud storage provider where FIL token is used as a payment mechanism between the miners and storage capacity buyers.
The project raised $200 million in an ICO in 2017 to become one of the latest ICOs in history.
Everything is “Just Fine”
Within days of its launch came the reports that some of the largest Filecoin miners have shut down a significant part of their machines.
Zhihu Cloud that has more than 8,000 InterPlanetary File System (IPFS) mining machines had only 276 of them running on the weekend while the other four mining companies generated even less storage mining power. ST Cloud CEO Chuhang Lai said,
“All the miners have been off since the mainnet went live, this is not some sort of protest but we have to shut them down because we really don’t have the tokens as collateral to mine.”
In response to these rising concerns, miners have complained about the mining economic model for a long time now and even suggested forking the project; Filecoin decided to release 25% of token rewards in advance once a block is built on the blockchain. Benet tweeted on Monday,
“Miners are proving their storage just fine. There’s been no power loss out of the ordinary in the network. Miners are following the protocol, and making a TON of money doing so.”
What’s really happening is that “miners growing slower than before launch” because fee costs real money now, and the network is no longer subsidizing their pledge, he said. Some of the miners are also following the company's request to “slow down the growth rate to match their token flow or pause until they can afford to grow steadily.”
While the network already has a huge capacity and “don’t need much more yet,” until it is actually used and starts running out, adding capacity is also “very hard right now,” and R&D is going on to make it easier and cheaper, said Benet.