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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.
Our pyramid is built, it is no longer in our best interest to take your money. But don't worry, we are scouting the land to start a new pyramid.
The complaining customer are wrong. If fees exceed revenue the miners should be shut down.
Now the mistaken customers may be thinking they are willing to accumulate and hold until prices recover but they need to do some basic arithmetic. If they take the money they would spend on fees and just buy coins on the open market they will end up accumulating and holding *more* coins than if they continued mining. Their risk is the same, their potential payoff of their gamble (holding) larger.
Nothing is stopping them from accumulating and holding. They just seem mistakenly fixated on doing so in the less "productive" manner.
Want to buy my supply of delicious vintage radium water? Good time to buy as its price will surely rise. /s
If it costs more to mine the BitCoin then mining will stop until the price of BitCoin rises. Once BitCoin rises to a certain level it will start mining again. Free market at work. In fact, it might be a good time to buy BitCoin now, since it price will rise.
The problem here is that at some tipping point, lack of mining operations will increase transaction times which will make BitCoin unattractive because of it lacks liquidity, taking too long to verify transactions. This could cause it's value to plummet further and mining operators to flee to more profitable work. Transaction times for BitCoin have been pretty long of late, making active investment in BitCoin *really* difficult to do quickly. Waiting an hour to see if your trade is confirmed, or paying extra fees makes it all that harder to turn profits and discourages investors.
So, this problem may just spell the end of BitCoin should we reach some tipping point...
I don't think we are at that point yet, but I'm also not sure your flashing the buy signal is advised either. Admittedly, I've never been a fan of BitCoin specifically (or crypto in general); I think it's way too volatile to make it into an "investment", BUT if you want to gamble some cash, BitCoin might be better odds than a Vegas craps table.
"File to fit, pound to insert, paint to match" - Aircraft Maintenance 101
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.
Wait, so "institutional operators" basically control the space now? What happened to that decentralization thing that was supposed to be the entire purpose of bitcoin?
Decentralization ended with ASIC mining hardware displacing CPUs and GPUs. We are far removed from the point in time where ordinary users with ordinary computers were in control. For years control is centralized in *one* particular authoritarian country that is not known for a hands off approach to things. Something around 60-70% (IIRC) of the hash rate occurs in its border and is dependent upon cheap government supplied power. We've also had mining pools approach the 51% attack hazard. Something that was assumed to be "impossible" as the network grows.
The theoretical foundation of Bitcoin no longer matches reality, the risk of blockchain manipulation by government or cartel is now quite plausible.
OK editors, using little endian date formatting in the summary now? That makes me furious! News for Nerds demands ISO 8601!