HashFlare was one of the most popular services offering Bitcoin cloud mining until they abruptly terminated all Bitcoin mining contracts on 20 July 2018. Apparently, there is a clause in their terms of service that if maintenance and electricity fees become higher than mining revenue then they have the right to permanently terminate mining contracts. HashFlare claims that as of 18 July 2018, Bitcoin mining had been unprofitable for 28 consecutive days and they began disabling SHA-256 mining hardware on that day. And now, they are claiming that all of their mining equipment is shutoff and obsolete for the time being.
This has caused intense outrage among users who have lost their contracts, one user claimed they purchased Bitcoin mining contracts 8 months ago and continually re-invested, and now they have received nothing in the end. Further, it is said that HashFlare was still selling Bitcoin mining contracts all the way up to the time they terminated all the existing contracts, during the 28 day period that mining was supposedly unprofitable, which raises suspicions of an exit scam.
HashFlare shutdown their service based on their maintenance fee of USD 0.0035 per 10 GH/s per day. A top of the line Bitcoin miner like the ASICminer 8 Nano Pro consumes USD 0.0017 of electricity per 10 GH/s per day and generated USD 0.0022 of profits per day. However, smaller and older Bitcoin miners like the Bitmain Antminer S9 consume USD 0.0033 of electricity per 10 GH/s per day, close to HashFlare’s maintenance fee, and when accounting for overhead costs like rent, staff, and initial purchase costs then perhaps HashFlare’s maintenance fee is quite fair. It depends on the mining equipment they use, which is undisclosed.
There are plenty of Bitmain Antminers that are unprofitable at current Bitcoin prices, which illustrates the hardship the Bitcoin mining industry has been experiencing during the crypto bear market of 2018. Bitcoin prices have declined from near USD 20,000 in December 2017 to less than USD 6,000 at points during June 2018. This has caused many of the less efficient Bitcoin mining rigs to consume more electricity than the Bitcoin they produce. Even with the recent Bitcoin rally from USD 6,200 to USD 7,500 this remains the case, and it would take a much larger rally to make some of the less efficient rigs profitable again. According to HashFlare’s terms of service, they would not be obligated to honor contracts if the Bitcoin market rises and their rigs become profitable again.
Regardless of mining profitability calculations which indicate that HashFlare might be telling the truth, one HashFlare user has issued a death threat “I would like to leave a message for the owner of the hashflare, you can even rob me, but my mission will be to send this thief to hell, you stole was man, not child, in less than 1 month the world press will disclose the death of the owner of hashflare”.
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