Cloud Miner Hashflare Revokes Mining Contracts Unilaterally
Cryptocurrency cloud mining service provider Hashflare has terminated all active Bitcoin mining contracts, citing lack of profits in the venture. Hashflare has also revealed that they have started dismantling the SHA hardware used for mining cryptocurrencies. Rumors run high this is a typical exit scam, considering the firm’s month long silence.
The problem started a month back, precisely on June 22, when Hashflare stated their “website will be undergoing maintenance and may be unavailable tomorrow.”
However, no further updates were provided for almost a month. Yesterday, the miner said they have switched off their mining equipment. Furthermore, Hashflare tried to explain the reason for shutting down its operations as follows:
“BTC mining continues being unprofitable, in light of which we would like to inform you that on 18.07.2018 we were forced to start disabling SHA hardware and today, on 20.07.2018, stop the mining service of active SHA-256 contracts.”
HashFlare was selling its mining power to users. The money received from clients is used by Hashflare to perform the necessary configuration, selects the most profitable and reliable pools, and maintains uptime. In return, clients are paid a specific amount as described in the contract. The team page in the Hashflare’s website is already missing. The company seems to have been registered in London.
The registration document indicates that the company was established in 2015. However, none of the directors’ name is shown in the registration documents. Most of the filings are signed by a person named Naomie Pearl Jno Paul. The latest document, filed in April, states the company’s name has been changed from HashCoin to Hashflare.
It seems the CEO is Sergei Potapenko, who established Polybius in February last year. Bitcoin Wiki indicates that Potapenko founded Hashflare in 2013. The team page might have been taken from the website, but a Google search still gives a copy of the page. The website looks much similar to that of Hashcoin, which claims to be an Asics manufacturer.
Hashflare had mentioned that their mining facilities are in Tallin, Estonia. The miner generally communicates in both English and Russian. Furthermore, the company had officially mentioned in their blog that they have more than a million users. This means, millions of dollars in the form of fees may be at stake.
HashFlare has stated that the amount generated for mining contract payments were less than service fees. So, according to the company there were no accruals to the clients’ balances. For 28 days in a row, the payouts were lower than maintenance costs. All these factors led to the discontinuation of the mining contract.
The company has also announced that users should comply with new AML/KYC requirements. A copy of the detailed clarification provided by Hashflare for the shutdown is provided underneath:
“As you know, the last few months have been a difficult time for the cryptocurrency market, which has also affected the operation of our service.
We have made every possible effort in order to resolve the problem that has arisen – for instance, we have considered a variety of technical solutions, which would have allowed us to lower expenses related to maintenance and electricity.
However, due to the general instability of the market, the actions we have taken could not significantly influence the current situation. For over a month our users encountered a situation when the payouts were lower than the maintenance fees, resulting in zero accruals to the balance. As of 18.07.2018, the payouts were lower than maintenance for 28 consecutive days.
BTC mining continues being unprofitable, in light of which we would like to inform you that on 18.07.2018 we were forced to start disabling SHA hardware and today, on 20.07.2018, stop the mining service of active SHA-256 contracts in accordance with clause 5.5 of our Terms of Service, which are required to be accepted when creating a purchase and are the basis of concluding the contract.
We expect that the cryptocurrency market situation will stabilize in the nearest future and we will be able to offer our users new advantageous solutions.”