A cloud-based mining service Hashflare suddenly stopped Bitcoin mining contracts. An official statement was released claiming that SHA-256 based mining contracts and mining contracts will be shut down.
Hashflare said:
“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”
They state that mining profits were lower than their maintenance cost and they couldn’t compensate new users for the last couple of months. They have tried different solutions but in the end, they say, the bear market and instability were the main reasons they weren’t making a profit from customers.
It looks like their terms of service come into play: “if mining remains unprofitable for 21 consecutive days the Service is permanently terminated”
Strangely enough, the company didn’t mention what they will do with customers’ funds after terminating their services. This would spark a lot of negative emotions and the community will be outraged by the sudden closure or “Exit scam”. Actually, they were still selling contracts even after 21 days of not getting any profit.
Hashflare on July 19th announced that their customers will have to perform a KYC/AML.
“We are always attentive to existing international standards and regulations and the current update is aimed at ensuring compliance with KYC/AML standards. In order to provide our services we are periodically required to identify users on our platform.”
According to Coindesk, Bitcoin mining difficulty increased by about 117% compared to November of last year. It is estimated that the next difficulty increase would add 10.80%.
Cloud-based mining services are not as successful as hardware mining pools. In some cases, even the hardware mining pools are put under the radar for their massive energy consumption by the ASIC miners. Coindesk states that Bitmain affiliate mining pools already own more than 51% of the hashing power which would allow them to execute a 51% attack and possibly double spend Bitcoin. A better alternative to mining would be the Proof-of-Stake (PoS) which would ultimately prevent 51% attacks on the network. The Proof-of-Stake still needs to be tested and Proof-of-Work raises concerns over the concentration of wealth.
Mining is the key element in the cryptocurrency ecosystem but there is a need for improvement. New consensus algorithms should be researched to facilitate mainstream adoption.
Sources: Coindesk
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