HashFlare Review (Updated 2021) – Is It Legitimate or an Outright Scam?

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By: Ofir Beigel | Last updated: 01/12/21

HashFlare is a cloud mining service with a somewhat shaky history and a seedy reputation. In this post, I’m going to take a deep dive into the company and tell you what you need to know before signing up.

Summary of the HashFlare rating

HashFlare is a cloud mining company that used to deliver various mining contracts. It appears to have gone out of business recently. This test breaks the math to prove that cloud mining with HashFlare is not a smart investment.

That’s HashFlare in a nutshell. If you want a more detailed review, read on, I’ll cover:

  1. Cloud mining in brief
  2. Company overview
  3. HashFlare services
  4. Is HashFlare Profitable?
  5. Public opinion and ratings
  6. diploma

1. Cloud mining in brief

Cloud mining is the process of “remote mining”; Instead of buying, storing, configuring and cooling a Bitcoin miner (which costs a lot of money and takes time), you “rent” a miner and have someone operate it. You then share all the profits that the miner makes with the service provider.

My main criticism of cloud mining companies is that most of them are just ponzi schemes in disguise.

They take your money, but they don’t buy or run miners for you. They just keep paying you from new users who come on board until they suddenly disappear (as seen here, here, and here).

However, not all cloud mining companies are complete scams. Some are just bad investments.

Not that long ago, I checked out one of the most popular cloud mining platforms: Genesis Mining. I was trying to see if it would be a profitable investment instead of just buying and holding bitcoins (aka hodling).

The end result was that the company appeared legitimate (i.e. they were actually in the mining industry), but I doubted whether it would be a good investment considering the mere hodling alternative, a strategy that turns out to be profitable 99% of the time has proven.


2. Hashflare overview

HashFlare is a company owned by another company of crypto experts called HashCoins. While in the past you could actually see who the team members were on the About page, the company has since removed all personal information about who runs the company. Fortunately, the internet never forgets.

The website appears to have started its services around the beginning of 2015 and has grown immensely since then. The current rough estimate is that the website has around 150,000 visitors each month.

The company itself, Hashflare LP, was registered in the UK in late 2015. HashCoins or Hashcoins OÜ was founded in 2013 in Tallinn, Estonia.


3. HashFlare services

Important NOTE

The company continued to offer various mining contracts until July 2019, but today it appears that there are no more new contracts available for purchase.

This review was originally written in mid-2018. I will leave the information unchanged for your consideration.

Hashflare mining contracts

HashFlare lets you buy three different types of cloud mining power (also known as hashrate). Sha256 is mainly used for mining Bitcoin, Scrypt can be used for mining Litecoin, and ETHASH is used for mining Ethereum and Ethereum Classic.

For the purposes of this review, I will only focus on Bitcoin cloud mining, but the same process can be applied to any other mining algorithm.


4. Is HashFlare Profitable?

The most efficient miner for mining Bitcoin today is the Antminer S9 (true for mid-2018, today there is the Antminer S19). It produces ~ 13 th / s mining power.

Buying the equivalent of this at HashFlare would cost you $ 1,040 per year. Buying the actual miner would cost you ~ $ 853.

This actually makes sense because if you just bought the miner you’d have additional expenses for electricity, cooling, and storage. However, the actual miner doesn’t charge anything after a year, and HashFlare does.

Using a Bitcoin mining calculator, I found that 13 Th / s in a “vacuum environment” (i.e. no electricity bills, no mining pool fees, etc.) produces $ 222 every month.

Seems pretty profitable – I’ll probably break even within five to six months. However, I have not yet calculated the MEF (maintenance and electricity fees).

The MEF is linear and is $ 0.0035 per 10 GH / s SHA-256. This means that for 13 th / s it would cost $ 4.55 daily or $ 136.5 monthly. So every month we make $ 85.5.

A simple calculation of HashFlare winnings would be something like this:

$ 85.5 * $ 12 – $ 1,040 = $ -14 per year

Wait what Do I actually lose money every year?

It depends on.

Payments to HashFlare are made in USD, but payouts are made in BTC. In the example above, I treated the Bitcoin exchange rate as constant. If this is actually the case, then I am losing money.

However, if the BTC price goes up we could say I paid less, but the payouts were worth more. Or could we?

Hashflare profitability when BTC goes up

When the price goes up, more and more people start mining Bitcoin. This means that it will be harder to make a profit and it will even reduce income.

So while I am making more dollars (since every BTC payout is worth more), I am making less BTC overall. There’s a strong correlation between price and mining difficulty so I’m assuming they cancel each other out.

Hashflare profitability when BTC goes down

The funny thing is that even if the price of Bitcoin goes down, the difficulty can still increase. As you can see in the graph below, there have only been a handful of cases where the difficulty of the network has gone down, and some of those cases weren’t even price related (e.g. cash when it came out).

Bitcoin difficulty

But here’s the really interesting part that isn’t unique to HashFlare and can be found in almost every cloud mining company. If you look at the Terms of Use, you will find the following:

5.2. The contract period for HashFlare.io Cloud Machines is unlimited by default, unless otherwise stated. The contract is in effect for as long as it is profitable, until it expires or until it is terminated (see Section 13), whichever comes first.

13.1. Without limiting other rights we have, we may suspend or terminate access to your account, website and / or service, cancel your account balance and / or have the ability to withdraw funds if you breach these Terms of Service.

This basically means that if the price drops to the point where you are no longer making any money at all, your contract will be terminated. Bitcoin has seen 80% price drops in the past and that could seriously affect profitability.

HashFlare is not a good investment

In light of the above, HashFlare doesn’t seem like a very smart investment no matter what happens to the price of Bitcoin. In fact, in July 2018, HashFlare announced that it was discontinuing its mining services and hardware for current SHA-256 contracts due to difficulties in generating revenue.

The alternative, Hodling, makes a lot more sense in my opinion. In this case, you make a profit when Bitcoin goes up and when it goes down, you still have your coins. Nobody can “cancel” your bitcoins like your cloud mining contract can be.


5. Public opinion and ratings

While making up my mind about HashFlare, I make a habit of checking additional reviews online. However, since HashFlare has a referral program (meaning you get paid for every customer you bring on board), reviews should be viewed with caution.

It seems like there have been a multitude of negative reviews about the company. Additionally, the reviews site TrustPilot states that their customized software discovered a large number of fake positive reviews on HashFlare and has since removed them.

Most of the negative reviews complain about profitability, and some complain that the website is a full Ponzi scheme, including the use of fake customer reviews as shown below, and virtually no customer support.

Hashflare fake review

(Source: ScamBitcoin.com)


6. Conclusion – is HashFlare legitimate?

If I had to give a short answer, I would say that while the company is legitimate, it is not a good investment. There is a fine line on the internet between what constitutes a total scam and what is considered a bad investment.

I’m not so deterred by the bad reviews, but by the simple math that just makes it impossible to actually profit from HashFlare.

Maybe a different coin / algorithm will get better results – you can use the same process I did for Bitcoin for all of the other crypto HashFlare offers and see for yourself.

In the past I have heard someone make a very amusing statement that sums up this review perfectly:

“Cloud miners are basically taking your money today so they can slowly give less of it back to you tomorrow.”

Personally, I wouldn’t invest my money in HashFlare, but ultimately, I encourage you to do your own due diligence. Remember that this post should not be construed as investment advice, just my own research on another investment option in the crypto universe.

Do you have experience with HashFlare? I’d love to hear about it in the comments section below.

HashFlare

Hashflare logo

advantages

  • Easy to use website
  • Reduces the effort of actual mining

disadvantage

  • Doesn’t seem profitable
  • Numerous allegations against the company
  • Slow to no support


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