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Why Cloud Mining Platform HashFlare Shuts Down Services?

Why Cloud Mining Platform HashFlare Shuts Down Services?

HashFlare, a cloud mining platform for digital currency, has dropped a bombshell to the crypto currency sector. The company indicated that it is not only stopping its mining services but also closing down its hardware on existing SHA-256 contracts. This is undoubtedly a significant development in the sector as the reason cited by it is difficulties in generating revenue for itself. This could be used as a tool by pessimists to launch a fresh tirade against the sector.

Market Fluctuations

In 2013, HashFlare was established for mining digital coin in cloud platform. This is a system where user engages in acquiring a part of the hardware’s mining power while a cloud mining service provider will not only host but also owns them. It is the responsibility of the service provider to configure the hardware apart from maintaining uptime. Aside from this, it is their responsible for opting the most reliable and efficient pools. The decision comes at a time when the crypto market is trying to recover some of the lost ground.

The company’s difficulties in generating revenue are quite understandable due to the intense requirement of energy. As a result, the company has only struggled to make a profit, cointelegraph reported. On top of this, market fluctuations are impacting the overall sentiments among different sections engaged in the digital currency sector. The company said that in more than a month, the contract payments outnumbered the service fees. This means there is no balance to users. The mining firm also indicated that for the 28 straight days payments were weaker than costs for maintenance.

Made Every Effort

In a statement, the company said that it took every possible measure to solve the issues surrounded them. “For instance, we have considered a variety of technical solutions, which would have allowed us to lower expenses related to maintenance and electricity… As BTC mining continues to be unprofitable, we inform that on July 18, 2018, we had to start disabling SHA equipment, and today, on July 20, 2018, withhold the mining service for active SHA-256 contracts.”

Significantly, it was only a few days back that HashFlare wanted its users to go through the process of identity verification. This was to make sure that users comply with anti-money laundering and know your customer (KYC) standards. The company claimed that those users would become eligible for higher withdrawal limits for daily and monthly basis.

Weak Demand For GPUs

For some experts, the latest announcement will not surprise since there were enough indications to this effect. For instance, Taiwan Semiconductor Manufacturing Co. slashed its revenue forecast for the second time this year citing reduced demand from miners of virtual currencies. The company is one of the suppliers of GPU that is needed to mine crypto coins.

Apart from the Taiwan-based firm, other American firms like AMD or Nvidia could also see a similar trend. The market sentiment is week in the virtual currency sector due to high volatility in prices of most of digital currencies. The demand for GPUs was higher when the price hit the roof top last year and is now struggling currently.

About the author

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Brad Garcia

Op-ed/ Arts & Culture writer from Toronto. Favouring voices overlooked. (VICE, Exclaim, Toronto Observer, and more)

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