Following a decline in cryptocurrency prices this year, Genesis Mining, an Iceland-based cloud mining service, has now taken an unprecedented step to compel some of its customers to upgrade their contracts on Bitcoin mining.
Bitcoin price a problem for Genesis
The cryptocurrency market hasn’t been rosy this year, no doubt. Considering the boom at the end of last year which saw Bitcoin trade at an all-time high of $20,000, the last 2 quarters of this year has seen a bit of a correction for crypto. Since then, miners have been on constant struggle to stay afloat as the combination of regulatory pressure and low prices kept pressing the market to a corner. In consideration of this development, Genesis Mining is now requiring some of its customers with open ended contracts to upgrade their mining contracts for more expensive options.
This move is informed by the fact that most of the open-ended customers that mine well below the maintenance fee are now becoming a liability to the service. Genesis argues that following the downward spiral for Bitcoin in January coupled with a heavy decline in crypto in the last few months, there has been a significant reduction in mining outputs.
In a statement delivered on August 16, Genesis clarifies that they are only going to work with customers who will upgrade their current BTC mining contracts to premium versions with five-year terms. In the announcement, genesis noted:
“[…]as a hashpower hosting service, we can only influence one out of the three main factors that determine mining rewards, and that is the infrastructure[…]The market price of Bitcoin and the mining difficulty are factors we cannot control.”
Genesis going through tough times
Genesis Mining is not new to controversies and challenges in its line of work. It is only in March this year that the company got a cease and desist order from the state of South Carolina after being accused of selling “unlicensed securities”. As such, the state of California demanded that they not only leaves the state but also pay a civil penalty for their misdoings. Going forward the company hopes to avoid such scenarios.
Admittedly, mining is getting more energy-intensive and subsequently complicated by the day. As such, crypto firms are now repositioning their operations to help them stay afloat. With this latest move therefore, Genesis hopes to streamline its services not only to maintain profitability but also work within their set regulations in their areas of operation.