Seagate Chia-gate: Used Hard Drives May Have Been Resold as New

An investigation by German news outlet Heise has revealed a growing number of complaints from customers claiming their brand-new Seagate hard drives are actually used.

Several customers have complained about receiving used Seagate hard drives despite purchasing them brand-new. An investigation by German news outlet Heise has uncovered a growing number of these complaints, leading to suspicions that the drives may have been recycled from Chia mining farms in China.

However, Seagate has reportedly denied any involvement in reselling used drives through its authorized distributors. The company has stated that these drives are being resold through unofficial markets.

To understand the backdrop of this situation, it's important to note that Chia farming, introduced by the Chia Network in 2021, was a form of cryptocurrency mining that heavily utilized hard drive storage. The concept was simple: the more storage you had, the more rewards you got.

This idea took off, especially in China, where demand for hard drives (HDDs) and solid-state drives (SSDs) surged, leading to supply shortages for manufacturers like Seagate. Among HDDs and SSDs, Chia's process was particularly harsh on SSDs, which wore out quickly. Hence, HDDs became the preferred choice for long-term farming.

According to Bram Cohen, the co-founder of Chia Network, Chia mining "puts very little" wear on hard drives. However, others, including manufacturers like Western Digital, have argued that any form of cryptocurrency mining can degrade drive performance and lifespan.

Moreover, Chia farming is no longer as lucrative as it was during its glory days. Its cryptocurrency, XCH, is now trading at around $13, far below its 2021 prime when it peaked at $1,645.

Interestingly, complaints about used drives are no longer limited to Germany. Heise has received tips from Thailand, Australia, and Japan, indicating that customers in these regions are also facing similar issues.

In other news, Japanese blockchain gaming company Gumi has announced a 1 billion yen ($6.5 million) investment in Bitcoin, aiming to enhance its node operation business through staking the asset.

The Tokyo-listed firm said in a Feb. 4 statement that its board approved the move as part of a strategy to allocate surplus funds into Bitcoin. Gumi plans to stake its holdings via Babylon, generating additional revenue from staking rewards, validator incentives and potential Bitcoin appreciation.

Gumi has been actively involved in blockchain gaming, having partnered with Sui Network in August 2024 to develop the blockchain game Brave Frontier Versus. The company also has its own gaming ecosystem cryptocurrency called Oshi.

Following the Bitcoin investment announcement, Gumi's stock price surged over 40%, while Oshi Token saw little impact.

Gumi's move is reminiscent of Metaplanet, the Tokyo-based firm dubbed the "MicroStrategy of Asia" for its aggressive Bitcoin accumulation, a strategy that led its stock to soar.

Bitcoin and blockchain seem to be particularly attractive to gaming firms in Asia.

Game developer Nexon has the second-largest Bitcoin holding among listed firms in Japan thanks to the 1,717 it bought in 2021. Meanwhile, Japanese gaming giant and PlayStation creator Sony recently launched its own Ethereum layer-2 network.

Beyond Japan, the Bitcoin corporate playbook is gaining traction across Asia. In December, India's publicly traded Jetking Infotrain adopted Bitcoin as a reserve asset, revealing it holds 12 BTC.

Finally, we have a roundup of some key developments in South Korea's crypto regulatory landscape.

After months of deliberation, the Financial Services Commission (FSC) has unveiled a roadmap to ease corporate crypto trading restrictions.

According to the plan, in the first half of 2025, law enforcement agencies, charity organizations, universities, and cryptocurrency exchanges will be permitted to open real-name bank accounts to sell their crypto assets.

These bank accounts are linked to the legal identity of South Korean residents and are a mandatory requirement to apply for fiat-to-crypto accounts at licensed exchanges. Up to now, institutions and corporations have been faced with a de facto ban from opening such accounts due to Anti-Money Laundering restrictions.

South Korea's crypto economy has long been propped up by retail investors because of the absence of corporate access.

In the second half of the year, the FSC will launch a pilot permitting select institutions to open real-name accounts. The program will be open to 3,500 publicly listed firms and professional investors.

In October, the FSC formed a crypto committee to explore lifting restrictions on corporate accounts and crypto-based exchange-traded funds (ETFs).

While ETFs remain prohibited under the Capital Markets Act, the domestic finance industry association has been lobbying for their approval, arguing that they would offer a safer investment vehicle for elderly investors, whose interest in crypto is rising.