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Hashflare Announces Bitcoin Contract Shutdown due to Unustained Mining Profitability

Hashflare Announces Bitcoin Contract Shutdown due to Unsustained Mining Profitability

Reading Time: 2 minutes by on July 24, 2018 Altcoins, Bitcoin, Business, Mining, News
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Hashflare, a popular cloud mining service, has recently announced the total shutdown of its service and cancellation of all Bitcoin mining contracts according to a Facebook post from July 20, 2018.

Concerns with Profitability

Contracts for mining other cryptocurrencies such as litecoin (LTC), ether (ETH), and dash (DASH) are supported, but there is no word yet on whether those contracts will be canceled as well. The announcement was made through an email as well as Hashflare’s facebook page, claiming the move was made in accordance to their terms of service.

The reasoning behind this sudden move was due precisely to profitability, with the mining platform reporting payouts to be less than maintenance fees for the 28 consecutive days. This triggered clause 5.5 in their TOS, which states:

“The Mining process continues until said mining is profitable. This means the Mining process will stop if the Maintenance and Electricity Fees will become larger than the Payout. If mining remains unprofitable for 21 consecutive days the Service is permanently terminated (Hashrate type specific).”

User Criticisms

The clause also allowed Hashflare to restart if profitability suddenly increased during this period, such as through a sudden drop in difficulty or rise in bitcoin’s price. As the pioneer cryptocurrency is currently going on a bull run, increasing in price over 30 percent this month, it has led many users to believe that Hashflare may not be telling the whole story.

Miners were not refunded for the remaining portion of their contracts, which typically involved users pre-paying for a year of mining. The initial cost covered hardware, while daily service fees covered maintenance and electricity. This daily service fee was deducted from their earnings automatically with no further user interaction required.

What piqued user suspicion was that before the cancellation announcement, strict withdrawal limitations were implemented, especially for customers who had not verified their identity yet. This led to many users having payouts stuck in the system and unable to be withdrawn.

Some users were able to receive some recourse through disputing through their credit card companies, while others are already seeking legal options to potentially recover investments.

Despite all of this, there seems to be a potential silver lining. Near the end of the Facebook post, Hashflare says that they expect the market to bounce back, and “will be able to offer [their] users new advantageous solutions.”

This may be in the form of new bitcoin or altcoin contracts in general. For the time being, however, the majority of users have already said goodbye to their money.

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