Bitfinex to Begin Selling Bitcoin Cloudmining Contracts

September 16, 2014 16:54 UTC

Bitfinex recently announced that they will begin selling mining contracts. BitFinex is a popular Bitcoin trading platform currently with the fourth-largest 24-hour trade volume out of all the Bitcoin exchanges.

The mining contracts went live at 9 AM EDT 9/15/14. You can read Bitfinex’s announcement of the contracts on their website. Bitfinex considers the mining contracts to be “live beta”, meaning they’ll continue to update and improve the product.

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Bitfinex Cloud Mining

As Bitcoin mining evolves, it’s becoming harder for the average joe to compete with the big-time miners. Cloud mining is becoming an increasingly-popular option for miners looking to turn a quick profit. A great example of this is GAW Miners’ hashlet: the ‘hashlet’ cloud-miner sold so well that GAW Miners upped it’s price, and it still continued to be a popular product. The Return on Interest (ROI) on a GAW Miner hashlet is supposed to be less than six months. Meanwhile, most miners that the average consumer can buy today will never turn a profit.

Details that stand out

Here’s a summary of the most important details from the announcement:

  • 100 TH/s (terahashes per second) will be sold.
  • The contracts have a three-month expiration, so the contracts only last for three months.
  • All hosting and electricity costs are included in the buying price. There is a 3% pool fee. The pool Bitfinex is using has ~3,500 TH/s, and, according to Bitfinex, “[s]tatistics regarding this pool will be posted regularly along with blockchain transaction id’s will be posted and frequently updated.”

Moving forward

The value of the mining contracts over time will almost certainly go down due to difficulty changes in the Bitcoin network. One terahash today will not be as valuable as one terahash tomorrow. Bitfinex has stated that the 100 terahashes they’re offering is just a testing ground for their new mining contracts, and that as they “gain experience in administering this product, assess demand, and incorporate feedback from [their] traders, [they] will introduce larger and longer dated tranches.” A tranche is a portion of something, meaning they’ll be selling more mining contracts in the future.

‘Cloud mining’

It isn’t unlikely that more exchanges will try to compete with Bitfinex and begin selling their own mining contracts– another large exchange, Cryptsy, already sells a mining contract and has been doing so for quite some time. Bitfinex is known as one of the first Bitcoin exchanges to start offering contracts to users for things other than simple buys and sells. Other exchanges have followed Bitfinex’s lead in some things while blazing their own trail in others. Exchanges are always trying to innovate and stay one step ahead of each other, as they all offer similar features and want to be used by traders. Despite this, each Bitcoin exchange is playing to their strengths: From each corner of the world, Bitcoin innovation is being led by the liquidity providers. Bitcoin cloud mining is becoming increasingly popular, and exchanges that have built up loyal followings are seen as very preferable to the increasing number of ponzi scheme cloud mining offerings.

The author is not affiliated with nor endorsing Bitfinex. Neither Jonathan Saewitz nor CryptoCoinsNews is responsible for anything that may happen due to this tutorial, including, but not limited to, the loss of digital currency. Images from Shutterstock.

Last modified: September 16, 2014 17:34 UTC

@SuperCryptoGuy

I am a teenager in high school who is very interested in digital currencies. I enjoy researching Bitcoin and other digital currencies, but my favorite crypto is Dogecoin. Please feel free to email me at jonathansaewitz@gmail.com.