A growing number of buyers have reported purchasing supposedly new Seagate data center-grade hard drives, only to discover that they had been previously used for thousands of hours.
A recent investigation by German news portal Heise has uncovered that used Seagate data center-grade hard drives, originating from cryptocurrency mining farms, are being sold as new.
The used HDDs have been identified in markets across Europe, Asia, and North America with some of them having 15,000 to 50,000 hours of prior use had their internal records altered to appear unused, the report said.
The report added that more than 200 of its readers contacted Heise and raised concerns about such hard drives.
While Seagate has denied direct involvement, the company has launched a formal investigation and is urging customers to verify their purchases through official channels, the report added.
“We have heard about this issue, and it is deeply concerning for us as authorized partners,” a New Delhi-based Seagate channel partner told NetworkWorld on condition of anonymity. “Customers trust us to provide genuine products, and incidents like this damage that trust. If counterfeit or tampered drives are slipping into the market, it hurts not just Seagate but also legitimate sellers like us.”
The cryptocurrency connection: how used HDDs entered the market
The affected hard drives reportedly stem from cryptocurrency mining farms, particularly those that mined Chia cryptocurrency. Unlike traditional cryptocurrency mining that relies on GPUs, Chia mining is storage-intensive, leading to a surge in HDD demand during its peak.
As Chia’s profitability declined, many mining operations shut down, offloading their heavily used HDDs into secondary markets. Some of these drives have had their internal usage logs reset to appear as new, deceiving customers, the report added.
The fraudulent sales first came to light in January when buyers began inspecting their newly purchased Seagate Exos data center-grade HDDs. SMART parameters, which track drive usage, had been reset to mask wear. However, deeper analysis using FARM (Field-Accessible Reliability Metrics) values exposed the true operational history of these drives.
More than 200 reports have surfaced globally, detailing instances where supposedly new Seagate Exos data center HDDs had been in operation for 15,000 to 50,000 hours. These drives have been sold via third-party marketplaces, including eBay, and have been reported in countries such as Germany, Switzerland, Austria, the UK, Japan, and the US, the report added.
A request for comment from Seagate on further actions remains unanswered.
Industry implications and next steps
The widespread nature of this fraudulent resale practice raises concerns about transparency in the secondary market. System integrators who resell HDDs may not always provide adequate warranties, leaving enterprise customers at risk.
For enterprise customers, deploying used HDDs unknowingly can lead to reliability issues, premature failures, and potential data loss. While Seagate has taken steps to address the situation, buyers must remain vigilant. Organizations should establish strict procurement policies to mitigate the risks posed by counterfeit hardware in their IT infrastructure.
“Our security team also regularly collaborates with local authorities to take necessary actions,” the report said quoting Seagate highlighting ongoing efforts to combat the issue.
Industry experts suggest that the problem highlights deeper issues in supply chain oversight, especially in secondary markets.
“Maintaining tight control over the supply chain remains a challenge for most companies, particularly in the secondary market, where the lines between primary and secondary sales often blur,” said Neil Shah, VP for research and partner at Counterpoint Research. “Higher product quality and longevity make hardware repurposing a lucrative market, sometimes mixing unauthorized resales within official channels.”
Some unauthorized resellers exploit this, mixing repurposed hardware into official sales channels, making it difficult for companies like Seagate and its authorized partners to track product movement.
Shah further noted that geopolitical factors have exacerbated the issue, adding, “This could open up new discussions on full end-to-end transparency, ensuring that every product, from manufacturing to resale, has a unique identifier — similar to an IMEI in smartphones — to prevent unauthorized resales.”
Seagate has urged anyone who suspects they have received a used drive marketed as new to report it directly through its ethics hotline or email. The investigation remains ongoing, and the company is working with resellers to take corrective action where necessary, the report added.
The lack of a robust verification mechanism in the supply chain presents a major challenge. Much of the process relies on self-certifications and industry standards, which enterprises trust during procurement.
However, “this is not a completely transparent system and has some opaqueness,” said Faisal Kawoosa, founder and lead analyst at Techarc.
Kawoosa suggested that an independent, third-party validation ecosystem could help address this issue. “This third party should not only certify products based on documentation and lab tests but also conduct its own forensic analysis.” However, he cautioned that such entities must remain insulated from external influence, as vendors often have strong ties with the existing verification and validation networks, making true neutrality difficult.
Source:: Network World