Storj Node – Rent Out Your Disk Space and Earn Money
In the media, we often hear about Bitcoin miners who consume an unnecessarily large amount of electricity with their computing machines and thus pose a risk to the earth and its climate. Especially after the introduction of Proof of Stake for newer cryptocurrencies, I am also rather skeptical about the Proof of Work approach. Nevertheless, building passive income in cryptocurrency has always interested me. If you browse the coinmarketcap.com website, you will come across many projects in which each individual can participate, generate real value, and earn money in the process. One of these projects is Storj, in which you can participate by running a so-called Storj node.
Storj (pronounced like «storage») is the decentralized answer to all cloud storage providers like Amazon S3. Of course, these providers are also decentralized to a certain extent, in that their data centers are geographically distributed. The goal of Storj, however, is for individuals around the globe to make their free storage available, which companies and individuals can then use for a fee.
How does Storj work?
In order for private storage providers to be able to build up passive income at all, they need customers who want to use the disk space provided by their Storj nodes. If you decide to use Storj as a storage solution, you can create an account on storj.io (click here to go to the website). If you then save an image, for example, Storj proceeds as follows.
- Storj’s algorithm encrypts the image before uploading. Only the person who uploads the file can decrypt and view the file after uploading. The encryption and decryption happens automatically.
- The image is divided into 80 parts.
- These 80 parts are distributed around the globe to the available Storj nodes. A node consist of storage devices such as your personal external hard drive.
- If someone now downloads a file, the algorithm only needs 29 of these parts. In this way, Storj provides the necessary redundancy to make the storage solution fail-safe.
- If a node of a storage provider suddenly goes down, the network automatically repairs the missing data by restoring the necessary redundancy on some of the remaining nodes.
In contrast to the big cloud storage providers, Storj shows certain advantages. On the one hand, I would argue that the encryption and the distribution of the data to 80 different nodes each offers even greater protection against failure and misuse. On the other hand, the provider is cheaper, because Storj itself does not have to provide any hardware infrastructure, but is only responsible for the software.
Admittedly, the project is still relatively young and the long-term success of Storj remains to be seen. Especially since there are other projects with similar approaches (e.g. filecoin.io, folderlabs.io). However, I am personally confident about the possibilities and technology offered by this specific decentralized storage solution.
Earn money by running your own Storj Node
First of all, building passive income with Storj is a long-term project. If you decide to provide a storage node to the network, the financial income is calculated not on the basis of the data that is uploaded, but on the data that is used by being downloaded.
The following parameters are relevant for the calculation.
|Storage||$1.50 per TB||Example: if you have 6 TB stored on your node, but only 3 TB are used for a whole month, you will get paid $4.50 for it ($1.50 * 3 = $4.50)|
|Download||$20 per TB||For each TB downloaded from the node, the operator receives $20.|
Example: If a file of 10 GB is downloaded 100 times, the operator receives $20, because 10 GB * 100 = 1TB.
|Download for reparation||$10 per TB||The data uploaded to a node is divided into download data and reparation data. If a node fails and your personal node has corresponding reparation data for recovery, you will receive $10 per TB for using this data from your Storj node.|
Example: A random node exits. You have part of a reparation file on your node that was present on the node that exited. The Storj network takes this reparation file and copies it to another node to restore the 80 parts.
Storj withholds a portion of the money earned at the end of each month and pays it only when the operator gracefully deregisters the node from the network instead of simply removing it. The blockchain thus ensures a facilitated recovery of data for the network.
The financial income is paid out once a month in the form of Storj’s own digital currency STORJ. The operator can of course hold the STORJ received, or trade it on an exchange such as Coinbase or Binance against U.S. Dollars, stablecoins or other cryptocurrencies.
My current income running a Storj node
My node has been in use since the end of April 2021. The financial success is still limited. Since Storj only pays operators for downloads, the disk has to fill up a bit first. In the 4.5 months that my Storj node has been active on the network, the network has added 0.73 TB of data to my storage.
You can see that the data traffic has leveled off at about 20 GB per day. Of this, about 10 GB are incoming files (uploads). This means that the hard disk fills up more and more over time, which in turn results in higher revenues.
Looking at the current financial revenues, it is obvious that not much has really happened so far. However, considering that the first month’s earnings were 1 cent every three days and the Storj node is now generating revenue of 15 cents per day, it’s clear that the revenue curve is rising. Nevertheless, it will probably be another year or two before I can cover the initial costs as well as the electricity costs.
In my opinion, it makes the most sense to participate in the project out of pure interest, since a profit can only be realized over a longer period of time, if at all. However, for purely psychological reasons, it is nice to see how the passive income grows over time.
On my page Storj monthly overview I summarize the income and the change of the disk space usage monthly. It’s worth visiting if you’re interested in the development of my node.
Equipment for operating a node
Initially, I set up my Storj node with a Raspberry Pi minicomputer and an external hard drive. Then, when I noticed that filling the disk was taking much longer than expected, I decided to go against Storj’s recommendation and get a Synology NAS with backup and pull the data off my Raspberry Pi. Currently I have 3 x 3 TB hard drives running, giving me a total disk capacity of 9 TB. Of these 9 TB, 3 TB are used for backups and 3 TB for my private files. This results in a storage capacity of 3 TB for Storj at this time, which I can easily expand with a fourth or larger hard disk when needed. Since I have only had good experiences with the Synology DS920+ model, I can highly recommend it.
I paid about €800 for the NAS and the 3 hard drives. If that’s a bit too much for you to start with, you can also start with a Synology DS220j with two hard drives. This will cost you about a third of the €800, but you are limited in the expansion of the disk space.
Data on your Storj node «saves» your income in the long term
My experience is that the data on the hard drive has more value than the short-term payoff. In fact, the incoming data gives me a long-term revenue stream by being downloaded over and over again.
If I didn’t have a backup solution and the hard drive suddenly corrupted, I would be quite upset, depending on how long I used the hard drive. Storj recommends that you don’t back up the data yourself because the network itself provides the backup copies in the form of redundancy of the 80 parts per file. However, I don’t think anyone would want to start all over again after two years of regular passive income.