Top Bitcoin Mining Pool Freezes Withdrawals Due To Liquidity Issues CryptoBlog
First, lending platforms. Then the exchanges. Could mining pools be the next to go insolvent?
This is what worries Bitcoiners after Poolin – a Beijing-based Bitcoin mining pool that is responsible for 10% of the Bitcoin network’s overall hash rate – announced a freeze on user withdrawals on Monday.
Mining pools are groups of miners who band together around a network node to mine as much Bitcoin as possible. The miners then share the loot, but only if the pool operator has the will and the means to distribute it.
poolin said it was “facing liquidity problems” due to the growing demand for withdrawals and announced a number of measures in order to stabilize its operations. These included suspending withdrawals from his pool account and temporarily suspending his BTC and ETH balance payments.
“Coins mined daily after September 6 will normally be paid per day,” the pool operators later clarified, adding that coins other than the top two cryptocurrencies were unaffected.
Many crypto companies offering lending and trading services have either frozen withdrawals or insolvent in June and July as the crypto market crashed. Miners have also faced turmoil as some of the biggest players in the industry have been forced to sale the vast majority of their parts.
Conversely, mining pools seemed mostly sheltered from issued liquidity until this month. To compensate, Poolin has now introduced a no-fee offering for all of its BTC and ETH miners, as well as “other coins that can take ETH hashrate after it transitions to proof-of-stake.”
The offer lasts from September 8 to December 7 for normal users, but can extend up to a year for customers holding more than 1 BTC or 5 ETH in their pool accounts.
Fees are usually how mining pools generate consistent revenue. However, low or no fees may incentivize miners from other pools to redirect the hash rate to another pool. This leads to more coins mined and therefore more liquidity.
poolin announcement today that he was disabling his Pool account and Poolin wallet as payment withdrawal options for miners. The pool account now only supports withdrawing and storing current assets, while new assets cannot be deposited there.
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