Just two days after suddenly making demands for all customers identity documents, the company known as Hashflare has released an email hours ago titled “[IMPORTANT] End of Mining Service of SHA-256 Contracts”. According to the email, all current SHA-256 bitcoin mining contracts will be terminated today, July 20. Many on Twitter and Reddit are calling this an exit scam.
28 Days Later
According to the email that just went out, the company has been unable to make any bitcoin payments to its contract holders for the last 28 consecutive days due to the amount earned being allegedly less than the daily maintenance fee the company charges. This, they claim, what is causing all contracts to be terminated prematurely.
The email states that the company is within its rights to do this as the action is “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.”
Clause 5.5 of the terms of service reads:
The Mining process continues until said mining is profitable. This means the Mining process will stop if the Maintenance and Electricity Fees will become larger than the Payout. If mining remains unprofitable for 21 consecutive days the Service is permanently terminated
The terms seem to be unaltered, as an identical copy can be found on archive.org stretching back to at least last year.
Fire and Brimstone
The community reaction has so far been overwhelmingly negative. Some users who joined the service just recently and stand to suffer the most loses have claimed that they are trying to perform a chargeback with their banks. Others are stating that they considering filing law suits against the Estonia-based company, but it’s too soon to tell whether or not anyone will proceed with legal action.
Another subset of users are questioning the legitmacy of Hashflare’s claim that mining is no longer profitable. Users are posting screen shots of mining calculator sites like Coinwarz.com which suggests that currently mining is profitable, especially considering the uptick in price that bitcoin has seen in the last week. But profitability is apparently not enough, as the terms seem to be that mining hasn’t to be profitable enough to pay for their own maintenance fees
Other users had interesting comments to share, such as these:
Such a shame that you need to disable these brand new mining facilities after just 3 months of 'mining'…..???? pic.twitter.com/XHcIULR4mm
— Shitcoin minimalist (@bccponzi) July 20, 2018
Biggest Exit Scam ever! We will see us at court!
Difficulty dropped on 17.07.2018 by over 3%!!
BTC price increased!! So what i guess is, you terminate the contracts before mining will be fully profitable again in August when the SEC accepts ETF´s.
And there is another proof!
— BitcoinAktuell (@bitcoin_aktuell) July 20, 2018
From Bad to Worse
Today’s announcement comes several months after Hashflare suddenly changed all pre-existing bitcoin mining contracts from being “lifetime” to one-year. That sudden change in policy which the company again justified via its contractual terms caused support for the company to plummet. That change seems moot, however, as all bitcoin mining contracts still faced cancellation in much the same way that we saw today.
Unfortunately when they changed lifetime to 1 Year contracts, we were told to stop whinging. Many of us kept posting warnings, but were ignored.
— Danny Brewer (@chronicfathead) July 20, 2018
Another point to consider is that just two days prior to this, the company suddenly started requiring all users to submit ID data to identify themselves. Users who failed to do so were told they could potentially lose access to their accounts if they failed to comply. The timing of this sudden requirement seems coincidental, and some users are suggested this was done as a protective measure against impending lawsuits.
Redditor /u/urgodfather had a few things to say for those considering legal action.
There are plenty of users thinking class action lawsuit. If you decide to go this route, keep in mind that you will be exposed. Hashflare is going to air it all out. They aren’t going to keep your privacy in mind at all.
Closing the Book on Hashflare
With this announcement, it is our guess that the community has likely lost all trust in Hashflare. The companies main competitor, Genesis Mining, appears to still be paying out and has not made any statement so far on Hashflare’s actions. Previously when Hashflare changed their contracts from life time to one-year, Genesis Mining released a statement saying they would never take advantage of legal jargon to act against their customers best interests.
For those who currently have a balance on Hashflare, it appears that the previous withdrawal minimums of 0.02 BTC have been removed. However, the site is currently imposing a 0.01 BTC maximum daily withdrawal, which is around $75 at today’s prices.
For users that previously had lifetime contracts, they will only be losing about a months worth of potential mining income as that change occurred 11-months ago. But for those that joined just recently, they stand to lose as much as a year of mining profits. It’s also quite likely that cloud mining itself will take a hit and fewer users will be willing to invest in it as a result of the collapse of Hashflare.