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Hashflare, One of the Largest Cloud Bitcoin Mining Companies, Abruptly Disables SHA-256 Mining Contracts, Leaving Customers Furious (twitter.com)
Hashflare, one of the largest bitcoin mining companies, said on Friday it is disabling its SHA-256 hardware and also discontinuing support for mining services on the active SHA-256 contracts. The move comes as Hashflare continues to struggle with generating revenues, the company said, putting the blame on market fluctuations. In an email to active customers, the company added: For over a month our users encountered a situation when the payouts were lower than the maintenance fees, resulting in zero accruals to the balance. As of 18.07.2018, the payouts were lower than maintenance for 28 consecutive days. BTC mining continues being unprofitable, in light of which we would like to inform you that on 18.07.2018 (July 18) we were forced to start disabling SHA hardware and today, on 20.07.2018 (July 20), stop the mining service of active SHA-256 contracts in accordance with clause 5.5 of our Terms of Service, which are required to be accepted when creating a purchase and are the basis of concluding the contract. We expect that the cryptocurrency market situation will stabilize in the nearest future and we will be able to offer our users new advantageous solutions. Customers are understandably furious.
One of the many big problems with bitcoin and cryptocurrency in general is that the bitcoin whales own so much of the available coins that it enables collusion between a very small number of people to result in massive changes in the price of bitcoin. This makes the bitcoin market ripe for "pump and dump" securities fraud.
Without a doubt, at least one of the bitcoin whales works for Hashflare, and was aware of the planned timing of the most recent "pump," which happened 3 days ago. Hashflare's customers bought and paid for 1 year contracts ahead of time. Hashflare used that up-front money to buy all the ASICs and GPUs to set up their mining data center. Now in theory, the contract is established obligating Hashflare to transfer all of the mined bitcoins to their contract holder's wallets for the next year. But now that the most recent pump was pretty successful... they would rather keep those coins for themselves and reap the profits that rightfully belong to the people who took the risk of buying their contracts up-front. Never-mind that they wouldn't have all that mining hardware if it wasn't for the investors that bought their contracts. This is blatant securities fraud, these guys should go to jail for it.