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If your archiving attribute is set to "0" for a given tag, a primary record will still be initialized in the archive during an archive shift. Generally, a primary record is always initialized for every point created on the server regardless of the tag configuration. However, obviously when the archiving attribute is set to "0" == "OFF", then no incoming data will be archived while this is the case, however, the primary record is still initialized so that if archiving is re-enabled, the archives will be ready to store data for the point.
The answer to your question, Whenever the Archive shift happens primary record will get initialized for all the points if you turn Archiving off in the tag configuration. Hence archiving off will not save your archive space. I recommend you to increase the hard drive space to accommodate more data.
Oh, ok, that's a shame, I would have thought it would be quite easy to only add a primary record whenever a tag's Archiving was set to on but I can understand that might require changes to the data retrieval as well. It's just slightly annoying that we have to use up around 1GB in every archive going forward in order to maintain access to a couple of months of historical data. In our current scenario, the data is not that important so can be lost after the initial collection and analysis but I can imagine scenarios where this behaviour would be a problem.
However, My original question has been answered, so thank you for the quick and informative response.
In addition to my answer above I like to add a few points, if you make your Archiving off it will definitely save some space in terms of data, but whenever the archive shift happens for primary record creation it will consume some space, so when considering your tag count of 1.2 million, for Primary record itself it takes more space.