ZeusHash, the cloud mining service operated by mining hardware company ZeusMiner, has announced that it may be forced to shut down its bitcoin cloud mining operations.
The news comes weeks after ZeusHash announced that it would suspend its scrypt cloud mining offering due to unprofitability. In a message dated 15th January, the service said that bitcoin cloud mining contracts would be frozen after 10 days of unprofitability, in accordance with its terms of service.
The company also advised customers against purchasing additional mining contracts, stating that “it’s not the best time for investment”.
CEO Terry Li told CoinDesk that the risk of unprofitability means that the company may have no alternative but to power down their mining operations, noting:
“I don't know if there are many platforms [that are going to] be left on the play field. I'm sure that suppliers like us backed up by real hashing power would be running out of juice pretty soon. All contracts will be frozen within [a] short time if price keeps dropping.”
ZeusHash is not the only cloud mining operator to experience problems as a result of the recent drop in the price of bitcoin. On 12th January, UK-based mining pool and crypto exchange operator CEX.io announced it would suspend its cloud mining service owing to third-party issues, and companies like Bitmain – which operates the HashNest service – have powered down less efficient models amid current conditions.
Zeus points to shifting mining climate
Like other cloud mining operators, ZeusHash suggested that shifting winds in the cryptocurrency market have left it in a vulnerable position. Li also cited “speculators” that are less supportive of new technology and more interested, he said, in generating profits.
“In merely one year, you can see the crypto community is filled with speculators rather than people supporting the underlying technology and methodology,” Li told CoinDesk.
“This is sad. On one end the technology supports decentralisation, but on the other it's centralised by people building faster chips and larger farms.”
In its statement, the company left the door open to a possible path forward, citing negotiations with third parties on cost-reduction measures. As it stands, ZeusHash customers are seeing the majority of their payouts reduced by high maintenance fees.
The full statement from ZeusHash can be found below:
Dear ZeusHash customers,
As Bitcoin price witnessed significant and continuous dropping lately, the daily payouts of GHS will not be able to cover maintenance fees (now at $0.0023 per GHS per day) very soon. As you can see the payouts today have already been eaten up by 98%+ of maintenance fees.
According to our Terms, “in case the daily mining return is lower than the maintenance fee for at least 10 days in a row”, we’ll have to cease the operation of our mining farms and freeze all GHS contracts, which is a forced measure when there’s no mining profitability.
We’d like to warn you not to purchase more GHS as it’s not the best time for investment. And we are working on different plans for your profits when the conditions for freezing GHS contracts are met. The final solution will be released then.
As a dedicated cloud mining platform, ZeusHash will continue its efforts to seek for better solutions to deliver more cost-efficient cloud mining contracts. Negotiations with our partners are going on smoothly and it won’t be long before the new contracts are available.
CoinDesk will continue monitoring this story and provide updates as they become available.
Image via Shutterstock, ZeusHash