Category Archives: Genesis Mining

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Genesis Terminating Bitcoin Mining Contracts

Genesis Mining, which is one of the biggest crypto cloud mining services with 2 million customers, says that Bitcoin mining has become unprofitable. It says that its Bitcoin mining contracts aren’t even making enough money to cover maintenance fees. As such, it is terminating all open-ended contracts, meaning contracts that don’t have a term, within the next 60 days.

The drop in Bitcoin price is one of the main reasons Genesis Mining contracts are no longer profitable, considering that Bitcoin has dropped from USD 20,000 to USD 6,000 since December 2017. However, the price of Bitcoin is far higher than it was one year ago, and the main factor making mining unprofitable is the increase in Bitcoin mining difficulty. Miners purchased tremendous amounts of equipment as Bitcoin’s price rose and the effect on Bitcoin’s hash rate lagged the market. Bitcoin difficulty has been rising all year, due to increased mining hash rate throughout 2018 despite the drop in Bitcoin price. Hash rate exceeded 50 exahash/s recently, the all-time high and currently, Bitcoin mining difficulty is near 6 trillion. When Bitcoin price hit its all-time high in December 2017 mining difficulty was less than 2 trillion.

Genesis Mining is saying that customers have the option of purchasing 5-year Bitcoin mining contracts that can’t be terminated. They are offering an upgrade to the long-term contracts for USD 180 per TH/s for 5 years, which is reduced from USD 285 for customers that don’t have the open contracts. The maintenance fee is USD 0.14 per day, which is apparently reduced from the fees for contracts with open terms. Apparently, the down payment for the contracts is being used to reduce the fee. 1 TH/s at the current difficulty produces USD 0.27 per day, so that’s USD 0.13 of profit per day.

This comes out to 1,385 days for Genesis Mining customers to break even at the reduced rate, and 2,192 days at the normal rate for 5-year contracts. For normal contracts, this means the break-even time is six years, longer than the length of the contract.

It appears to be an illustration of how cloud mining Bitcoin is a risky venture at best. Most experienced miners recommend buying your own equipment and working with a group of people to buy Bitcoin mining equipment at wholesale prices.

Of course, Bitcoin has strong long-term potential, so even if mining with Genesis is unprofitable in the current conditions, it could end up being very profitable to save the small amount of Bitcoin these contracts produce if Bitcoin hits USD 100,000 or USD 1 million like some experts expect.

 

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South Carolina Startups Get Green Light After Operation “Cryptosweep”

The Office of the Attorney General of South Carolina has given the go-ahead for two startups to resume business in the southern US state.

The Securities Division has removed cease-and-desist orders previously served against ShipChain and Genesis Mining for being accused of being in violation of state law as part of “Operation Cryptosweep” launched by the North American Securities Administrators Association earlier this year, as reported by Bitcoin News. The Statement by the Attorney General’s Office stated at the time:

“It is in the public interest, for the protection of investors, and consistent with the purposes of the Act that Respondent be ordered to cease and desist from engaging in the above-enumerated practices, which constitute violations of the Act, and pay an appropriate civil penalty for its wrongdoing.”

Shipping platform ShipChain refuted the accusation that its token sale wasn’t conducted in compliance with securities laws and that it was “not aware” that SHIP tokens were even offered to South Carolina residents as the sale was conducted out of state before being registered there.

The company launched in 2017 in California, reportedly raised USD 30 million in a private token sale in January. It was set up to deal with logistic issues which currently blight the industry to the tune of USD 50 billion annually on lost or stolen cargo.

The other company, Genesis Mining had been accused by the South Carolina Attorney General’s Office Securities Division of selling unlicensed securities and although the order to cease and desist has been dropped, no further details were given. The Icelandic company, founded in 2013, is the largest crypto mining consumer of power in Iceland and one of the largest companies offering Bitcoin mining services.

US States continue to legislate for cryptocurrency and blockchain activity in order to regulate for a rapidly growing fintech impact as more companies choose to do business in the country.

Nebraska, Florida, Arizona, Nevada, and Vermont, along with Maine, Hawaii, Illinois, and North Dakota are some of the many US states notably either in the process of presenting bills, enacting legislation or actively utilizing blockchain in state legislation.

 

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