Bitcoin Mining Pool BTC Guild To Close June 30, 2015; Risk Of Loss And New York BitLicense Cited

June 16, 2015 3:34 PM UTC

BTC Guild will shut down its mining servers on June 30, 2015 at 23:59 UTC, the company announced on its website. Users will be able to log in and retrieve their history and request withdrawals until Sept. 30, 2015. The notice marks the second time BTC Guild has announced its closing, “but this time the decision will not be reversed.” The reasons for the closure are the same as originally announced. The pool is closing because it will not be able to cover losses in the event of compromise.

Users will be able to continue mining until the servers turn off at the end of day June 30, 2015. Since PPLNS (Pay Per Last N Shares) is a “backwards paying system,” the last shares submitted are unlikely to receive any blocks unless one is found “at the last second.”

The minimum balance for a manual withdrawal is reduced to 0.0001. It will not require a transaction fee to request a withdrawal.

Offers to buy didn’t materialize

One reason BTC Guild cancelled the previous closure was there were offers to purchase the pool. The offers did not materialize. “The risk of users being cheated or stolen from as a result of transferring pool ownership is not something I am willing to accept,” the notice said.

Mining has become more centralized, causing BTC Guild to shrink in proportion to the network. BTC now is less than 3 percent of the network hash rate. “The costs of running the pool have not changed, and the amount of funds at risk in the event of a compromise is significantly higher than what the pool could ever recover from.”

When the pool was 20 to 3 percent of the network, the level of funds at risk was slightly higher, but the pool’s ability to recover from the loss was greater. “At 3 percent of the network, the pool may not be able to recover from such a loss.”

Also read: Bitcoin mining pool BTC Guild forced to sell due to uncertain bitcoin regulation and mining centralization

BitLicense looms

In addition, the New York Department of Financial Services (NYDFS) BitLicense regulations have finalized. The regulations have enough “grey area” that BTC Guild is at risk. The fact that BTC Guild is not in New York does not matter since it does business withNew York residents. NYDFS can attempt to claim jurisdiction to enforce regulations. Whether or not BTC Guild could win such a challenge does not matter since the cost of defense would outweigh future income.

BTC has also grown concerned about attempts to defraud pools. “It would only take a fraction (1 PH/s or less could do it) to cause significant harm to a competing pool, and that activity could be masked by proxies and multiple accounts to be impossible to catch.”

BTC Guild recommends the following pools: Bitminter, Eligius, Kano CK Pool and P2Pool.

BTC Guild has eight known blocks and six unknown blocks as of June 16, 2015, according to Blockchain.

Last modified: August 7, 2020 11:13 AM UTC

Lester Coleman is a media relations consultant for the payments and automated retailing industries.