Fraudulent hard drive scandal deepens at Seagate: Clues point at Chinese Chia mining farms

Seagate's Exos M HAMR-based hard drive.
(Image credit: Seagate)

A Heise investigation of used Seagate data center-grade hard drives that are being sold as new has suggested that the drives originated from Chinese cryptocurrency mining farms that used them to mine Chia several years ago. Notably, this finding does not disprove Seagate's assertion that the fraudulent HDDs were obtained from channels that did not buy from official distributors.

The investigation suggests the used HDDs originated in China, likely from cryptocurrency mining farms that previously mined Chia. During Chia's peak, HDD demand surged, leading to shortages and price hikes. However, the economic payoff for Chia mining declined over time, leading to many farms shutting down and flooding the market with second-hand drives. 

According to the report, these drives — many with 15,000 to 50,000 hours of prior use — had their internal records altered to appear unused. Seagate denies involvement; it has launched an investigation and now offers a tool to determine whether HDDs are shiny new or used (more on that later).

Over 200 reports of affected HDDs have surfaced worldwide, including cases in Europe, Australia, Thailand, and Japan. The fraudulent sales were first reported in January when it was discovered that supposedly new Seagate Exos datacenter-grade HDDs had been used for thousands of hours.

The HDDs' SMART parameters track drive usage, but those parameters were reset to conceal the actual wear. However, a deeper analysis using a query of the FARM (field-accessible reliability metrics) values reveals the true operational history of the drive, thus revealing if they have been used.

The affected retailers have responded differently to the scandal. Alternate claims neither the store nor its German suppliers knew the drives were not new, but it suggests customers contact the store if they discover their 'new' drives have been used. Galaxus has set up an online help page, while Proshop allows free returns and replacements. Some sellers state that warranty laws apply, while Wortmann has insisted on checking the HDDs before offering compensation.

Seagate has distanced itself from the issue, insisting it only distributes genuine new drives. It announced a full-scale investigation and has urged affected buyers to report fraud cases directly via fraud@seagate.com. The company believes the used drives were resold as new somewhere in the secondary market before reaching customers.

Buyers concerned about their purchases can verify the true HDD usage history. SMART parameters are sometimes unreliable, but the true operational time can be checked using FARM values. To do this, one has to use the Smartmontools application version 7.4 or higher (via command: smartctl -l farm /dev/sda) or Seagate's Seatools software.

Anton Shilov
Contributing Writer

Anton Shilov is a contributing writer at Tom’s Hardware. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

  • derekullo
    I tried to get into Chia, but couldn't find a way to make any money even with like 40 terabytes of plots.

    At least I still have 60 terabytes of external storage!
    Reply
  • P.Amini
    Again, China...
    Reply
  • Grobe
    derekullo said:
    I tried to get into Chia, but couldn't find a way to make any money even with like 40 terabytes of plots.
    Then try to sell the drives as new ones make sense to cover the losses.
    Reply
  • 1fikk
    The story is probably going deeper. I bought from an official seagate reseller in Germany and received 2 drives (3 if we're counting the one that was DOA) that where actually drives with SMART data wiped. Note the discrepancies in my poweron time due to the RMA of the first drive (done by the retailer).

    $ sudo smartctl --all /dev/sdc | grep Power_On_Hours
    9 Power_On_Hours 0x0032 099 099 000 Old_age Always - 1677
    $ sudo smartctl -l farm /dev/sdc | grep -i "Power on Hours"
    Power on Hours: 25958
    Spindle Power on Hours: 1347

    $ sudo smartctl --all /dev/sdd | grep Power_On_Hours
    9 Power_On_Hours 0x0032 099 099 000 Old_age Always - 1462
    $ sudo smartctl -l farm /dev/sdd | grep -i "Power on Hours"
    Power on Hours: 25840
    Spindle Power on Hours: 1132
    For people who don't want to do the maths, it seems to me that the drives have been on for ~60days (I bought them in december so makes sense) and yet show power on hours more like > 3yrs.

    Seagate support is impossible to contact, the retailer seems mostly helpful so far, I obviously await their new response since reading this article...
    Reply
  • tomcat23
    In Romania aswell, they are sold throug an emag partner
    https://www.emag.ro/hdd-3-5-sata-iii-seagate-enterprise-12tb-7200-rpm-st12000nm0127/pd/D39H5CYBM/.
    Reply
  • mac_angel
    I kinda think 'rule of thumb' applies here where, "If it seems like too good of a deal, it probably is". I've seen some great deals on Seagate HDD on Amazon, but from sketchy named stores. This was last year, and a couple of years ago when I was looking to buy a bunch of 20TB drives. They were listed as "new", but I had already seen the fake USB and SD cards in the media that just made sense to avoid.
    People buying from reputable stores/outlets though, you gotta kinda wonder where THEY are getting their supply, because I really, really doubt it's from Seagate. A lot of companies are doing really sleazy things, sure, but that ones way too easy to get caught on.
    Reply
  • Pierce2623
    1fikk said:
    The story is probably going deeper. I bought from an official seagate reseller in Germany and received 2 drives (3 if we're counting the one that was DOA) that where actually drives with SMART data wiped. Note the discrepancies in my poweron time due to the RMA of the first drive (done by the retailer).

    $ sudo smartctl --all /dev/sdc | grep Power_On_Hours
    9 Power_On_Hours 0x0032 099 099 000 Old_age Always - 1677
    $ sudo smartctl -l farm /dev/sdc | grep -i "Power on Hours"
    Power on Hours: 25958
    Spindle Power on Hours: 1347

    $ sudo smartctl --all /dev/sdd | grep Power_On_Hours
    9 Power_On_Hours 0x0032 099 099 000 Old_age Always - 1462
    $ sudo smartctl -l farm /dev/sdd | grep -i "Power on Hours"
    Power on Hours: 25840
    Spindle Power on Hours: 1132
    For people who don't want to do the maths, it seems to me that the drives have been on for ~60days (I bought them in december so makes sense) and yet show power on hours more like > 3yrs.

    Seagate support is impossible to contact, the retailer seems mostly helpful so far, I obviously await their new response since reading this article...
    Unfortunately you seem to be forgetting that being an official Seagate reseller absolutely doesn’t mean that they turned down that friendly Chinese crypto farm that called with a deal on unusually cheap “new” Seagate drives. If they’re an official reseller and they believed they were actually new they probably just tried to sneakily add those “new” drives into the already existing distribution pool. It looks like the worst thing Seagate has done is try to hide the fact that they sold direct to crypto farms at inflated prices during the short HDD shortage Chia apparently caused from the public. You know how all these companies refused to admit they were selling direct to crypto farms when the damn crypto farms were posting pictures pallets of a single model of GPU they just received from (insert whichever AIB you want here)
    Reply
  • Dr3ams
    If you go to Alternate's website you'll see that they are now selling these drives as refurbished. The only drives they are selling as refurbished are from Seagate.

    Alternate refurbished Seagate HDDs
    Reply
  • Notton
    It sounds like what amazon suffered over the years with a rogue distributor mixing counterfeits in with real batches.
    Reply
  • LaminarFlow
    I am a victim of this. Around this past Black Friday I saw on NewEgg marketplace, a "very highly rated" 3rd party seller was selling 14 TB EXO X16 drives for $150, with 5 years warranty. I triple checked the fine prints that no where it said it was refurbished, so I ordered 4.

    They have been sitting in the box as I have been busy with other stuff over the past few months. After reading this article I opened one up, checked the serial number on Seagate Warranty Checker, and was told it was "part of a large volume order" that Seagate won't provide any warranty. Ran smartctl, and saw discrepancy in power up hours. The normal one says 0, the FARM powerup hour is over 7000.

    I'm now trying to contact NewEgg and the actual seller to arrange for return/refund. Don't like my chance. Hopefully I won't have to resort to credit card charge back.
    Reply