Genesis Mining, the world’s largest cryptocurrency cloud mining provider, has recently revealed its bitcoin mining contracts are no longer profitable because of the bearish trend most cryptocurrencies have been enduring. As an alternative, it’s offering users a contract upgrade at a discount.
According to a recently published blog post, Genesis Mining has been paying attention to its users’ concerns regarding their mining rewards. The company noted, however, it is only able to influence the infrastructure it uses to mine, not bitcoin’s price or mining difficulty.
The bearish trend that saw bitcoin, the flagship cryptocurrency, drop from a near $20,000 all-time high in mid-December to about $6,500 at press time, coupled with a “heavily rising difficulty around April and May” saw rewards dwindle.
As 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 60-day grace period is mutually agreed upon by Genesis Mining and its users when contracts are sold. It starts whenever mining rewards go below what it costs Genesis Mining to maintain the infrastructure used in the user’s contracted hashrate. If after the period the market doesn’t recover, and the user’s mining power remains unprofitable, the contract is terminated.
To give users a chance of maintaining their contracts Genesis Mining lowered the price of its premium service Radiant. It essentially converts the contract from open-ended to 5 years with no termination, and reduces maintenance fees to $0.14 a day.
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
As CryptoGlobe covered the bearish trend also affected other cloud mining companies. Hashflare, one of Genesis Mining’s biggest competitors, terminated users’ active bitcoin mining contracts for the same reason last month.
Notably Genesis Mining managed to stay profitable for longer than Hashflare. The company, known partly for its BTC awareness campaign that targeted Warren Buffett, has earlier this year shown faith in EOS by becoming a block producer.
While some users may upgrade the service, others could get lucky if they don’t. According to bitcoin bull Max Keiser, the flagship cryptocurrency’s “price follows hashrate.” Its hashrate is, according to available data, at over 50 exahash, up from 5 in only 12 months.