Cloud-mining company Hashflare has announced Friday, July 20, it has terminated all active bitcoin mining contracts because they are no longer profitable.
The announcement was both posted on HashFlare’s Facebook page and sent to users via email.
The company stated:
As you know, the last few months have been a difficult time for the cryptocurrency market, which has also affected the operation of our service.
We have made every possible effort in order to resolve the problem that has arisen – for instance, we have considered a variety of technical solutions, which would have allowed us to lower expenses related to maintenance and electricity. However, due to the general instability of the market, the actions we have taken could not significantly influence the current situation.
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 we were forced to start disabling SHA hardware and today, on 20.07.2018, 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.
We will continue to inform you about any changes. Stay tuned for updates!
Notably, just yesterday the company told users they must undergo the process of identity verification.
— HashFlare (@hashflare) 19 July 2018
As Cryptoglobe notes, with Hashflare recently raising the threshold for small withdrawals to 0.05 BTC and 0.1 ETH – the announcement might not be surprising to many who have paid close attention to the rapidly rising total Bitcoin hashrate and are sceptical of their cloud mining model.
Indeed, mining profitability has moved on substantially from its early heyday where it seemed that almost anyone with a GPU could make a reasonable profit.
With more and more miners getting in on the act, the total Bitcoin hashrate has risen dramatically in 2018 – currently standing at 44.3 EHash/s.
The problem also lies in the fact that while the total hashrate has almost tripled since January – the price of BTC during this period has fallen by more than half its December peak – resulting in a serious drop in profitability:
With Bitcoin enjoying somewhat of a mini bull-run earlier this week to break the significant $7,000 level, most of those that continue to mine – even without the additional maintenance costs of cloud-mining contracts – will do so largely with the expectation of a substantial rise in Bitcoin prices.