Popular cloud based cryptocurrency mining service, Genesis Mining, is calling it time on lower tier Bitcoin mining contracts after claiming they’ve become a pointless endeavor.
In a Genesis Mining blog post (spotted by Cryptovibes), the cloud mining firm stated that it will no longer continue to support its lower tier Bitcoin contracts. With the continued drop in the value of cryptocurrencies since January, mining has become a lot less profitable.
“Unfortunately, Bitcoin went into a downward trend around January,” Genesis wrote on its blog. “This trend combined with the heavily rising difficulty around April and May reduced mining outputs even further.”
The announcement stated that, “[a]s a result, some user contracts are now mining less than the daily maintenance fee requires to be covered, and thus they entered the 60 days grace period, after which open-ended contracts will get terminated.”
The 💜 of EU tech
The latest rumblings from the EU tech scene, a story from our wise ol' founder Boris, and some questionable AI art. It's free, every week, in your inbox. Sign up now!
To anyone that has read the Genesis Mining’s FAQ section on its website, it won’t come as a surprise. When entering a cloud mining contract the client agrees to the fact that if the contract returns less than it costs Genesis to maintain the required infrastructure, the contract will enter a 60 day default.
If the market does not pick up during those 60 days to make the contract profitable again, the contract will come to an end.
It was reported around a month ago that one of Gensis Mining’s main competitors, HashFlare, was experiencing similar problems, and subsequently began terminating unprofitable Bitcoin contracts, Litecoin, Ether and Dash were unaffected. However, at the time it was reported that Genesis remained profitable. It seems this is no longer the case.
This doesn’t mean that Genesis Mining is shutting down, though. Rather, it has taken the opportunity to offer a $105 discount to existing customers after upgrading to its premium service, known as Radiant. Here’s what Genesis Mining had to say about this on Twitter.
1/3 Thank you everyone for your feedback! Our business model is to produce and deploy the latest hardware, then rent its hashpower and keep it running as long as the BTC price and difficulty enables. Your hashpower is bound to a set of hardware/infrastructure.
— Genesis Mining (@GenesisMining) August 16, 2018
2/3 Our latest #GMRadiant tech has enabled us to significantly cut down the maintenance fees. When you're asking us to upgrade you for free, technically you're asking us to connect you to the new set of miners we built out and unplug your current hardware. This isn't sustainable.
— Genesis Mining (@GenesisMining) August 16, 2018
3/3 With this offer we want our old customers to get a fair price for new capacities, but we also understand if this is not feasible for everyone. We really hope the Bitcoin price will recover, and with it, your open ended BTC contracts. Thank you.
— Genesis Mining (@GenesisMining) August 16, 2018
There is a catch though, you’ll have to sign up for five years, with no opportunity to terminate the contract in that period.
Given the decrease in profitability and the increased difficulty of mining in recent months, it makes logical sense for Genesis to default unprofitable contracts – like they always said they would. If they’re able to secure more five-year long memberships to their premium offering, it will deliver some level of financial stability in a market that cannot be controlled.
But will its updated business model last? That is yet to be seen.
Get the TNW newsletter
Get the most important tech news in your inbox each week.