It turns out that a fungus called Geotrichum candidum can bore holes into the polycarbonate with its spores and spread throughout the aluminum layer of a compact disc. This renders the disc useless and its encoded data unrecoverable. The condition is apparently rare, with cases happening in Belize and other tropical areas.
Geotrichum candidum is a common fungus that can live on plants and animals, including humans. It's not dangerous unless you are immunity-compromised, although it can cause some discomfort if it infects the human respiratory tract.
The fungus bores through the edges of the compact disk like worms, filling up the data pits and spreading further along the aluminum layer. It is believed that high temperatures and high humidity allowed the fungus to burrow into the CD.
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