A few days after the launch of the Filecoin mainnet, many of the project’s miners went on strike.

In the following we will address the rationale and reasons for this strike.

Miners and the Unfair Economic Model of the Filecoin Project:

It used to be that the mining process is provided by blockchain projects to maintain and keep the network working in exchange for providing financial incentives to those who do so, meaning that the process as a whole is based on the principle of profitability.

But things don’t seem to be the case for the Filecoin project.

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A group of miners went on strike after they found the Filecoin project economic model unfair to which the developers had contributed and adopted.

According to the site “8btc.comFive of the biggest miners on the Filecoin blockchain have turned off their machines to protest the economic model set by the developers.

The new economic model requires miners to have a large amount of FIL (Filecoin Network Original Digital Currency) before they can start mining.

The report revealed that Zhihu Cloud, one of the top five miners of the Filecoin project, also joined the strike.

Zhihu Cloud operates more than 8000 IPFS mining machines.

But due to protests, Zhihu Cloud kept only 276 miners on Saturday.

The report added that the other four miners also generated less power on the grid.

The miners’ strike began a day after the network’s mainnet was launched.

According to the developers:

The Filecoin network represents a completely new way to store and retrieve peer-to-peer data as it is secured by cryptographic clues to uniquely verify that data is stored and repeated over time.

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With the help of the network, anyone can participate as a storage provider to monetize the open hard drive space and store valuable information.

Filecoin requires miners to hold a large amount of FIL coins as initial pledge collateral before they can start mining on the network.

Filecoin uses the stacked coins as a guarantee that the miners will provide the required services.

However, it also creates a situation where miners do not have enough FIL coins to start mining.

Miners can get FIL coins as rewards and share them or buy them from cryptocurrency exchanges.

Meaning that miners have to provide equipment and spend money in order to start mining and later get the reward that may be equal to what was spent.

The developers release the rewards within six months after building the block.

Also, buying from cryptocurrency exchanges can be costly for miners, thwarting the purpose of network mining.

Filecoin is trying to understand the situation and will release the rewards early:

After the big miners strike, the price of Filecoin fell after rising 120% to trade at $60 after the launch of the main network.

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Then the FIL price fell more than 50% and is now trading at $32 per coin.

The miners’ strike has resulted in developers releasing 25% of the rewards up front.

The miner will get this reward once he builds a block on the blockchain.

Miners are delighted with this latest development as IPSFMain CEO Xiaoming Shan stated that the latest revision and update made by the developers could make miners reach 80% of their mining capacity.

Filecoin’s economic model was criticized even before its main network was launched, with some miners suggesting that they should boycott the network.

Read also:

What is the Filecoin Project and its Digital Currency (FIL)? What is the importance of the project in the crypto market?

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