Cryptocurrency companies active in the world of cloud mining always face an uphill struggle. It is evident things are not looking all that great as of right now. HashFlare, one of the bigger cloud mining providers as of right now, has confirmed that it will not resume Bitcoin mining for the time being.
HashFlare Calls It Quits, for Now
The profitability of Bitcoin mining extends to both regular companies and cloud mining providers. Whenever this profitability drops below a certain threshold, something needs to change. As long as the Bitcoin price does not recover any of its lost value, cloud mining will be unprofitable.
HashFlare acknowledges that things are not headed in the right direction. The company has struggled to meet investors’ expectations as the threshold for payments has been lower than the maintenance fees for the mining equipment. This has been the case for 28 days in a row, and it’s forced the company to make a very unpopular decision.
As of this week, HashFlare has halted all SHA-256 mining hardware and the associated contracts. This means anyone who has invested in this particular cloud mining company will not be getting their money back in the near future. Although the contracts have been suspended for now, they may be resumed in the future. HashFlare says it’s hopeful the cryptocurrency market stabilizes in the coming weeks.
This decision comes at a very peculiar time. The Bitcoin price has seen a remarkable uptrend over the past week, and that momentum is not necessarily being taken into account by HashFlare at this stage. Deciding to end Bitcoin cloud mining payouts shortly after a bull run will rub a lot of people the wrong way, for obvious reasons.
Reaction to the decision by HashFlare has been anything but positive. Since there are no plans to refund clients at this stage, and no desire by the company to reallocate their contracts to other cryptocurrencies, HashFlare has a lot to answer for. It could have certainly handled its business a lot better in this regard, as it decided not to pursue alternative options in case something like this happened.
This further confirms how fragile the cryptocurrency cloud mining industry really is. It’s heavily dependent on the goodwill of service providers, as well as the price of the Bitcoin or altcoins being mined. There is never a good reason to buy cloud mining contracts over buying cryptocurrency directly, and this development is another reminder of that.