CEX.io Suspends Bitcoin Cloud Mining Services

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NEW YORK (InsideBitcoins) — London-based CEX.io, a cloud mining and exchange platform, announced today that it will be suspending its cloud mining services. Due to the fall in the price of bitcoin and the continued costs of energy, the company argued that it currently wasn’t profitable to continue providing the service.

“Suspension of CEX.IO cloud mining service is only a forced temporary measure, the result of cloud mining costs exceeding mining profit.”

Jeffrey Smith, the Chief Information Officer of CEX.io, said on Twitter: “Taking into account the bitcoin price drop, and the increase of difficulty, we will pause cloud mining after the next difficulty increase.” Smith told Inside Bitcoins that the price of bitcoin would need to be near $320 for the cloud mining operation to be profitable, though that figure could change in the future.

As more bitcoin are mined, it becomes increasingly difficult for additional bitcoin to be mined. With every 2016 blocks of bitcoin that are mined, the difficulty increases. When that occurs, it requires more computing power to mine the same size bitcoin block.

When few were mining—and few were transacting— bitcoin mining was much simpler. The average computer could mine bitcoin, which fueled the enthusiasm of early adopters. But now mining operations are facing the challenges of the increasing cost of mining (electricity and difficulty), the amount of bitcoin returned (halving), and the sagging price of bitcoin (revenue for mining) – all of which have made profitability extremely difficult.

“Suspension of CEX.IO cloud mining service is only a forced temporary measure, the result of cloud mining costs exceeding mining profit,” Smith said in a release on CEX.io’s website. “Currently all cloud mining/maintenance costs are directed to the Hardware provider, hence, we are open for negotiations with additional mining hardware providers, who can offer favourable terms. And, as soon as we get an opportunity to upgrade mining hardware, or come to more efficient terms with energy suppliers, cloud mining process will be automatically resumed.”

Smith did say that the company would be implementing an “unpause button,” allowing individual clients to continue mining if they wanted.

Over the past four days, GHash.IO, the mining operation for CEX, accounted for 12% of the total hashrate. By pausing their operations, other competitors could gain more of the available mined bitcoins, alleviating the same problem for other suppliers.

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