Earlier this year, the leading Bitcoin Crypto Exchange and Cloud Mining service provider Cex.io had suspended Bitcoin cloud mining services citing a drastic plunge in the cryptocurrency’s price and an increase in network difficulty.
“Mining with using User’s Gigahashes can be stopped by CEX.IO if the amount of the Maintenance Cost exceeds rewards for each mined block or if the mining is economically inexpedient.”
Other cloud mining companies are also feeling the pinch of the falling price of Bitcoin. Founded in 2013, CloudHashing has put its ambitious expansion plans on hold in the wake of the digital currency devaluing against the dollar. Ravi Iyengar, CEO of Cointerra sums it all up when he says that,
“Pretty much all the mining companies are struggling. The mining industry is somewhere no one would have predicted six months ago. The model we all relied upon has collapsed.”
But even in these extremely competitive times, there are some companies willing to stand tall. They expect the smaller players to bail out en masse and increase their market share to profit immensely when the tide is in their favor.
Bitcoin Cloud Services – While other companies were busy contemplating ways to cut down on their expenses, Bitcoin Cloud Services rewarded its customers with lucrative discounts for a week. The company announced the “1st Year Anniversary Discounts” this month.
CloudHashing – Even though the most trusted cloud mining company is taking a step back in increasing its market presence, it has no plans to shut down its shop. The company’s website is still offering hashing power to those interested in mining the cryptocurrency.
Hashop.io – Comparatively a small player in the Bitcoin cloud mining business, Hashop is still welcoming customers who wish to become miners.
What if Bitcoin price continues to fall?
If Bitcoin price continues to fall or fails to advance in the coming months, an increased number of cloud mining businesses will take a hard beating. The profit margins have already become insignificant and ceased to exist for many in the industry.
A report in January revealed that roughly 30,000 miners have given up on mining the cryptocurrency, but it could also be because at around the same time, Cex.io had suspended its operations.
Harvard Associate Professor Benjamin Edelman had earlier said that, “Miners are pulling out and dumping Bitcoin to make up for lost revenue, which itself changes the value. Those that do continue mining will contribute to the problem because they will have to immediately sell any Bitcoins they mine.”
So, are there solutions to this acute problem? Well, they are conditional at best. One is to provide these services when the electricity costs are extremely low, as it eats away a major portion of profits. But there are no clues as to when is that happening. Second is to put the operations on hold until Bitcoin recoups the losses; this is what is actually happening in crude oil sector as well.
The Bitcoin industry needs a surge in price for its survival. And I cannot stress it enough that the sooner it happens, the better!