Genesis Mining Retains Profitability as Hashflare Cancels Contracts

Cloud mining remains risky and profitability requires detailed planning, but for now, Genesis Mining and Minergate keep paying out rewards from their contracts.

Genesis Mining, one of the most popular cloud mining services, retains its profitability in the wake of Hashflare canceling all contracts. Users of Genesis Mining still report getting payouts, while profitability was lower than maintenance costs for Hashflare, resulting in loss-making contracts.

However, the Hashflare event turned out to be positive publicity for Genesis Mining.

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For now, Genesis Mining claims it has enough hardware to ensure profitability even amid rising mining activity and somewhat lower Bitcoin market prices. However, cloud mining looks increasingly risky, especially for Bitcoin. While some altcoins may offer easy profitability and their networks suffer from a dearth of ASIC machines, there is no shortage of mining for Bitcoin.

Over the past few days, the Bitcoin hashrate increased significantly, surpassing 46.8 million TH/s. This amounts to growth of nearly 50% since the lows on June 16, when just 30 million Th/s of mining power was directed at the Bitcoin network.

This record hashing power also increased the difficulty, lowering potential rewards for those who were left behind with fewer machines. In 2018, new mining facilities are constantly coming online, and there has been talk of secret hashing power going online on demand.

After a temporary crash in Bitcoin mining power during the Sichuan floods at the end of June, Bitcoin’s network lost some hashrate but recovered quickly to new record levels. In the past three months alone, Bitcoin’s hashrate has roughly tripled.

Some believe even Genesis Mining Bitcoin contracts would have to be discontinued at this hashrate as there is a very thin margin for payouts. Critics of cloud mining warn that buying a contract happens in advance and is usually quite expensive. At the same time, for Bitcoin and altcoins alike, hashing power and market prices fluctuate, and a contract does not provide any security. Even as Genesis Mining keeps adding hardware, older contracts may become unprofitable.

Minergate is seen as an alternative to small-scale mining although critics warn the mining software may be inefficient, redirecting some of the hashing power to third parties. Additionally, using consumer hardware is ill-advised even for CryptoNote mining.