Bitcoin’s value this week dropped below $6,000. Now, considering the all-time high of the digital currency at near $20,000, many can’t help but ask if this is the end for the cryptocurrency. Though Bitcoin was able to reach $8,500 level in the past few weeks because of people’s anticipation on a possible Bitcoin ETF, it quickly went the opposite direction when the SEC postponed its decision on these applications.
Now, because of price drops, crypto miners are also affected. In fact, is Bitcoin mining still profitable considering the cost of equipment, not to mention the bill miners pay for their electricity? Now, a popular cloud-based crypto mining service, Genesis mining discontinued supporting lower tie Bitcoin contracts. It stated that the continued drop in the value of Bitcoin since January made mining operations less and less profitable through the months.
According to Genesis in its blog, “Unfortunately, Bitcoin went into a downward trend around January”. It also added that “This trend combined with the heavily rising difficulty around April and May reduced mining outputs even further”.
The announcement in its blog included that “as a result, some user contracts are now mining less than the daily maintenance fee required to be covered, and thus they entered the 60 days grace period, after which open-ended contracts will get terminated”.
This shouldn’t be a surprise since it is all written in Genesis Mining’s FAQ section. Once a contract returns less than the cost that Genesis covers in order to maintain its infrastructure, then the contract will enter a 60-day default.
HashRate Having Similar Problems
Genesis Mining isn’t the only one having this kind of problem. In fact, its competitor HashFlare has been experiencing similar problems. It also began terminating Bitcoin contracts. However, Litecoin, Dash, Ethereum, and Dash contracts weren’t affected by the price fluctuation.
A Premium Offer?
Does this mean that Genesis is already shutting down? In fact, it is the complete opposite. In fact, it is even providing a $105 discount offer for its existing customers after upgrading to Radiant, the company’s premium service.
But of course, there is a catch. Just like any other promo, it is sometimes just too good to be true. In order to enjoy the discount, you will have to sign up for five years. And this means that you will have no opportunity to terminate the contract.
This is a smart move on Genesis’ part. It makes sense that they are already dropping mining contracts that aren’t profitable at all. And also, securing a five-year membership via the premium account can bring some level of profitability on the part of the company.
Experts were saying that crypto mining equipment may be shut down if Bitcoin hits around $5,000. That’s when it can hurt mining operations considering the cost of equipment, the difficulty of the algorithms, not to mention the energy required to keep things running.
So far, Bitcoin has recovered a bit trading around $6,400. But it is true that if Bitcoin continues to fall down, there is a chance that more mining operations will choose to either pause or stop their operations completely.