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This is an interesting moment to reflect on the wacky nature of IPO vs ICO valuations. Backblaze and Filecoin are, roughly speaking, in the same business (prov

This is an interesting moment to reflect on the wacky nature of IPO vs ICO valuations. Backblaze and Filecoin are, roughly speaking, in the same business (providing bulk file storage). Backblaze is looking to raise ~$100 million at a valuation of about $0.7 billion. Filecoin raised $250 million in their ICO, and the coin has a current "market cap" of about $7 billion. Backblaze owns about 1.8 EiB of storage, Filecoin has about 13 EiB "pledged", so if you consider those measurements comparable the $ of valuation per EiB is similar. Businesses generally get valued more on what they bring in than what they own however, and Backblaze takes in ~$65 million/year revenue (~$175K/day). I'm not entirely clear what would be analogous to revenue for Filecoin, but they "mine" ~330K coins per day, which at current prices is about $21 million (or $7.8 billion per year?). Now here's where it gets crazy... based on the current average reward if Backblaze dedicated all of their storage to Filecoin mining they could (theoretically) generate about $2.5 million a day (or $900 million/year, about 13x what they bring in now). Backblaze did look into farming Chia at some point[1], don't know if they've done similar experiments with Filecoin, but it definitely seems like there is a profound disconnect between these two worlds (which could be the result of some other factor, like the USD value of Bitcoin). [1] https://www.backblaze.com/blog/chia-analysis-to-farm-or-not-to-farm/ https://www.backblaze.com/blog/chia-analysis-to-farm-or-not-...

deleted 5y ago
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snarf21 5y ago
Pyramid schemes shouldn't be compared to real companies.
chinathrow 5y ago
Happy Backblaze customer here (for a Windows Laptop I admin, for the rest I happily use rsync.net). I couldn't care less about any company doing ICOs or anything else crypto related when it comes to backup services. I want a backup company doing one thing: backups, safe, reliable, paid by me.
simonebrunozzi 5y ago
This is a brilliant comment, and despite it doesn't answer or address every question or concerns, it points our brain to an interesting direction of thought.
dannyw 5y ago
Note: the 13 EiB pledged are real storage capacity: miners must provide a cryptographic proof every day, that they are storing this much space; or it doesn't count. I still think crypto valuations are excessively, tulip-y high, but valuation/byte is pretty similar. The cryptographic system that enables people to prove storage is called 'Proof of spacetime'; which sounds cringey, but it's pretty clever (begins at page 10): https://filecoin.io/filecoin.pdf https://filecoin.io/filecoin.pdf Note that if you went to Backblaze and wanted to store 2 EB, it's unlikely they'll be able to serve you immediately (they probably can't get enough HDDs from their channels that quickly). However, you CAN store 2 EB on Filecoin the same way you can auto-scale on AWS.
- KaseKun 5y ago
  People have said "tulips and crypto" when bitcoin was at $800, $5000, $20000, and now at $50000. I wonder when (if) it will stop? I also wonder if crypto valuations are a reflection of truly "free market" economics. Where there is little-to-no barrier to entry as a creator or an investor, and there is complete impossibility of counterfeiting assets.
  - dannyw 5y ago
    No, it's not. Have you tried crypto projects? Scams and rug pulls are rampart. It's a wild west, and really not a good way if you are trying to invest in anything that's not Bitcoin or Ethereum.
  - deepsun 5y ago
    Side-thought: User A "invested" $100 dollars into Bitcoin, thereby raising its price a little. Then, they accidentally lost the key (broken hard-drive, stolen laptop, forgot password etc). But Bitcoin price is still raised a little.
  - michaelt 5y ago
    If someone thought bitcoins were overpriced tulips at $500, why would they change their mind when they reach $50,000?
biztos 5y ago
I wonder, how should content risk (for lack of a better term) be factored in? As a storage service you don't know what you're storing, generally. Maybe you're storing proof of extrajudicial assassinations, or hilarious Winnie the Pooh memes, just to name two things that can get a person locked up forever. At this point it's all equal, neither Backblaze nor Filecoin has any idea about it. But if The Government discovers you're storing this stuff, suddenly you have a big problem. They will "stop at nothing" to make you give them all the metadata and delete the goods. If you're Backblaze and you're on NASDAQ and you have a relationship with regulators, etc. etc., you can throw up your hands and do whatever they tell you. You'll be fine. If you're a decentralized crypto-storage conglomerate, you probably can't actually do anything. At which point, The Government's best hand may be to declare everything you do illegal and everybody doing it a terrorist. And then all your miners/storers/whatever flee (or are captured) and the system shuts down, at least anywhere The Government can reach. Thus it seems like Filecoin has a built-in risk to its longevity that is completely separate from its financials, whereas Backblaze really just has to make more than it spends.
Synaesthesia 5y ago
Yeah well, the market is well known to do irrational things, people are speculating highly on all things crypto.
shoto_io 5y ago
I think the key question here is: are the two companies really in the same space? If I’m a blackblaze customer, how likely am I to switch to filecoin. Is that even an option?
Taek 5y ago
> I'm not entirely clear what would be analogous to revenue for Filecoin, but they "mine" ~330K coins per day, which at current prices is about $21 million This is actually analogous to an expense. That $21 million per day is not revenue that is flowing to the shareholders (or in this case, the Filecoin holders), but rather new shares that are being printed and distributed to the people offering storage to the network. Filecoin's annual expenses to maintain that 13 EiB are roughly $7.5 billion per year, and those expenses manifest as inflation of the total coin supply. > Now here's where it gets crazy... based on the current average reward if Backblaze dedicated all of their storage to Filecoin mining they could (theoretically) generate about $2.5 million a day (or $900 million/year, about 13x what they bring in now). They can't because Filecoin mining requires pairing storage with massive GPUs and servers that have 128 GB of RAM. To move all of their storage over to Filecoin mining, Backblaze would have to make a massive infrastructure investment that is otherwise completely out of the scope of what their business does (as none of their existing products leverage such hefty compute).
megous 5y ago
Filecoin doesn't make sense to me: https://file.app/ https://file.app/ says it's 0.0000394/GiB/year So for 4TiB HDD used for 4 years: 0.0000394 * 4000 * 4 = USD 0.6. Wut? I guess I'm missing something. :)
- Taek 5y ago
  The storage on the network is being subsidized to the tune of $20 million per month, which means there's a massive oversupply of storage and nobody buying it, hence very cheap prices.
  - pradn 5y ago
    Who is doing the subsidizing?
    - Taek 5y ago
      The people buying and holding the tokens
    - deleted 5y ago
      [deleted]
- howdydoo 5y ago
  As it turns out, unreliable storage is not as valuable as reliable storage.

deleted 5y ago

[deleted]

snarf21 5y ago

Pyramid schemes shouldn't be compared to real companies.

chinathrow 5y ago

Happy Backblaze customer here (for a Windows Laptop I admin, for the rest I happily use rsync.net). I couldn't care less about any company doing ICOs or anything else crypto related when it comes to backup services. I want a backup company doing one thing: backups, safe, reliable, paid by me.

simonebrunozzi 5y ago

This is a brilliant comment, and despite it doesn't answer or address every question or concerns, it points our brain to an interesting direction of thought.

dannyw 5y ago

Note: the 13 EiB pledged are real storage capacity: miners must provide a cryptographic proof every day, that they are storing this much space; or it doesn't count. I still think crypto valuations are excessively, tulip-y high, but valuation/byte is pretty similar. The cryptographic system that enables people to prove storage is called 'Proof of spacetime'; which sounds cringey, but it's pretty clever (begins at page 10): https://filecoin.io/filecoin.pdf https://filecoin.io/filecoin.pdf Note that if you went to Backblaze and wanted to store 2 EB, it's unlikely they'll be able to serve you immediately (they probably can't get enough HDDs from their channels that quickly). However, you CAN store 2 EB on Filecoin the same way you can auto-scale on AWS.

KaseKun 5y ago
People have said "tulips and crypto" when bitcoin was at $800, $5000, $20000, and now at $50000. I wonder when (if) it will stop? I also wonder if crypto valuations are a reflection of truly "free market" economics. Where there is little-to-no barrier to entry as a creator or an investor, and there is complete impossibility of counterfeiting assets.
- dannyw 5y ago
  No, it's not. Have you tried crypto projects? Scams and rug pulls are rampart. It's a wild west, and really not a good way if you are trying to invest in anything that's not Bitcoin or Ethereum.
- deepsun 5y ago
  Side-thought: User A "invested" $100 dollars into Bitcoin, thereby raising its price a little. Then, they accidentally lost the key (broken hard-drive, stolen laptop, forgot password etc). But Bitcoin price is still raised a little.
- michaelt 5y ago
  If someone thought bitcoins were overpriced tulips at $500, why would they change their mind when they reach $50,000?

biztos 5y ago

I wonder, how should content risk (for lack of a better term) be factored in? As a storage service you don't know what you're storing, generally. Maybe you're storing proof of extrajudicial assassinations, or hilarious Winnie the Pooh memes, just to name two things that can get a person locked up forever. At this point it's all equal, neither Backblaze nor Filecoin has any idea about it. But if The Government discovers you're storing this stuff, suddenly you have a big problem. They will "stop at nothing" to make you give them all the metadata and delete the goods. If you're Backblaze and you're on NASDAQ and you have a relationship with regulators, etc. etc., you can throw up your hands and do whatever they tell you. You'll be fine. If you're a decentralized crypto-storage conglomerate, you probably can't actually do anything. At which point, The Government's best hand may be to declare everything you do illegal and everybody doing it a terrorist. And then all your miners/storers/whatever flee (or are captured) and the system shuts down, at least anywhere The Government can reach. Thus it seems like Filecoin has a built-in risk to its longevity that is completely separate from its financials, whereas Backblaze really just has to make more than it spends.

Synaesthesia 5y ago

Yeah well, the market is well known to do irrational things, people are speculating highly on all things crypto.

shoto_io 5y ago

I think the key question here is: are the two companies really in the same space? If I’m a blackblaze customer, how likely am I to switch to filecoin. Is that even an option?

Taek 5y ago

> I'm not entirely clear what would be analogous to revenue for Filecoin, but they "mine" ~330K coins per day, which at current prices is about $21 million This is actually analogous to an expense. That $21 million per day is not revenue that is flowing to the shareholders (or in this case, the Filecoin holders), but rather new shares that are being printed and distributed to the people offering storage to the network. Filecoin's annual expenses to maintain that 13 EiB are roughly $7.5 billion per year, and those expenses manifest as inflation of the total coin supply. > Now here's where it gets crazy... based on the current average reward if Backblaze dedicated all of their storage to Filecoin mining they could (theoretically) generate about $2.5 million a day (or $900 million/year, about 13x what they bring in now). They can't because Filecoin mining requires pairing storage with massive GPUs and servers that have 128 GB of RAM. To move all of their storage over to Filecoin mining, Backblaze would have to make a massive infrastructure investment that is otherwise completely out of the scope of what their business does (as none of their existing products leverage such hefty compute).

megous 5y ago

Filecoin doesn't make sense to me: https://file.app/ https://file.app/ says it's 0.0000394/GiB/year So for 4TiB HDD used for 4 years: 0.0000394 * 4000 * 4 = USD 0.6. Wut? I guess I'm missing something. :)

Taek 5y ago
The storage on the network is being subsidized to the tune of $20 million per month, which means there's a massive oversupply of storage and nobody buying it, hence very cheap prices.
- pradn 5y ago
  Who is doing the subsidizing?
  - Taek 5y ago
    The people buying and holding the tokens
  - deleted 5y ago
    [deleted]
howdydoo 5y ago
As it turns out, unreliable storage is not as valuable as reliable storage.