Genesis Mining has a problem

For those of you unfamiliar with Genesis Mining, it is a cloud mining company which offers various different types of mining contracts. It is probably most famous for its open-ended BTC contracts.

Genesis used to pay handsome returns. Unfortunately some of the contracts have now become unprofitable, as happened with HashFlare not too long ago.

As mining returns have dropped, Genesis contracts have become increasingly unattractive. I have Genesis contracts which are well over a year old. At one stage I thought of adding to them, but when I saw how the price of mining per THz had actually climbed over time, I was instantly put off. As technology develops it makes sense that prices should drop, not climb!

Genesis tries to prevent an Exodus by creating new Laws to keep Numbers of customers mining

Yeah I know: it's not my catchiest blog post title ever, but I enjoy a little word-play now and then!

The Genesis contracts, and here I am referring specifically to the open-ended BTC contracts, come with a clause that deactivates them after 60 days of unprofitably. Genesis usually deduct a "mining fee" from all BTC mined on these contracts. The fee covers the costs of running and maintaining the hardware, including electricity costs. If the costs of running the hardware exceed the amount mined for over 60 days, then the contract is terminated. By that stage it would have already stopped paying the contract holder long before, as all funds would be going directly into the maintenance fee.

This is a fair practise and was clearly stated in the terms and conditions when signing up, I have no problem with it. In fact, I was highly annoyed when HashFlare customers started to complain under similar circumstances. Don't they read their contracts? Or is it that people feel so entitled these days that they are happy to take plenty of BTC when the BTC price rises and the contracts pay out handsomely, but are then unable to accept that their contracts are unsustainable to run when BTC prices drop? Either way, that's not too important. The important thing is that cloud mining is under threat. Let's see what Genesis have done about it.

New ideas

Genesis is probably the most well known of the cloud mining companies, and one of the few that is not a scam! I remember how I struggled to find legitimate companies when I first decided to do a bit of cloud mining, I could literally only find two at the time! Of those two, I chose Genesis because it had cheaper mining fees. (That certainly changed later.)

But sadly, as I said above, my contract has become unprofitable and is in jeopardy. Oh well, such is life. I can't stop it shutting down now. Or can I?.....

Not too long ago Genesis released their "Radiant" contracts. Some existing customers also got the opportunity to "upgrade" (debatable) their contracts to Radiant ones at a discounted price. The way I understand Radiant contracts is that they have less fees but are no longer open-ended, they terminated after 5 years. Considering that you buy a contract in THz e.g. a 10 THz mining contract and that the THz amount does not change, the five year termination is perhaps not a bad thing. BTC difficulty climbs fast, even during a bear market, that 10 THz mines you less and less BTC all the time. 5 years down the line it becomes relatively worthless anyway, despite the rising BTC price. I can't really say much more about the Radiant contracts. I went to go and look at the upgrade option, but for some reason my BTC contract did not qualify for an upgrade.

How BTC difficulty has continued to climb in the bear market:
From https://www.blockchain.com/charts/difficulty

Now Genesis are trying something else. Their new idea is to try to keep the existing mining contracts running, even though the mining costs exceed the outputs. The way that they are doing this is by asking clients to pay the mining fees upfront and in advance. You get the option of paying for 180, 270, 365 or 720 days of mining fees, which will then keep your contract going for that amount of time i.e. it won't just terminate after 60 days of sustained unprofitably, it will keep going and perhaps become profitable again.

I took a look at what it would cost me to keep my mine going a little longer. It's a lot! Let me put it this way, using my payout figures from Genesis, it would cost me over 38% of everything I have made on that contract in the last 15 months or so to keep it going for another year. With the price of BTC very low now, it would take a long time to make that money back, if ever. There is no guarantee of return to profitability and mining difficulty continues to climb.

So no thank you Genesis. I appreciate the offer, but I think that you're just trying to offset your own overheads and keep a large customer base; I don't think that this will benefit me as a customer.

Conclusion

For a crypto company, Genesis really isn't a bad company. I have certainly had issues with them, some of which took half a year or more to resolve, but they are basically honest and do what they promise. I think this new scheme of theirs is a good idea on their part, but as an individual I can't see this benefiting me in the long run. Of course anyone in a similar position must do their own calculations based on what they think will happen, but I consider extending my Genesis contract this way to be unprofitable and I am not going to do it. Frankly I am disappointed at the cost of extending it; even the shortest 180 day option is totally unaffordable to me. But this was never part of my original contract and it is not being forced upon me, it is an offer which I have chosen to decline.

I hope that when Genesis Mining contracts are officially terminated that there is not a HashFlare customer-like outcry. We all knew that this was a possibility and Genesis have played by the rules. The company is not responsible for the state of the crypto market.

Yours in mined crypto,
Bit Brain

Acknowledgement: All screenshots from genesis-mining.com unless otherwise stated.

Bit Brain recommends:

Crypto Exchanges:

---

Published on

by Bit Brain

---