Interview with CEX.io’s Jeffrey Smith on Why They Paused Mining and the Future of the Industry

In a less than graceful tweet, Jeffrey Smith, the CIO of CEX.io, announced that the company would be pausing mining for its users.
Instantly, the internet erupted. Accusations were thrown around, of course, and many wondered out loud if this was the beginning of the end for cloud mining companies like CEX. Their more thorough blog post – which included, among other things, that users are able to turn their hashes back on – received less attention.
Of course, accusations continue, and there really isn’t anyone who can prove anything either way. Smith tells me that CEX has no hardware of their own, and everything traded on their exchange occurs through third-party hardware companies that have chosen to remain nameless. That isn’t so much of a revelation as much as it is a fact that went unnoticed by many. The knowledge likely won’t quiet those who are complaining about a perceived lack of transparency. The website’s cloud mining page says nothing about hardware being held by third parties.
Really, nothing has changed for end users. If you own GHS, you can simply turn it back on and continue using the hashing power as you were before. People may feel as though CEX is looking to profit off those who don’t bother to turn their GHS back on, but for the individual who is fearful that CEX is trying to get one up on them, the solution is to simply to turn it back on.
Sometimes the simplest solution is the correct one. If CEX is using third-party hardware on off-site facilities, then a low enough Bitcoin price would cause mining to be unprofitable for them without the user maintenance fee. Those fees turn off when the miners do.
We spoke to Smith about why they decided to pause mining and what the future of mining looks like. He, along with the CEX, team obviously have a lot of things on their plate, which may be the reason why our final interview question did not receive an answer. The conversation is still interesting, if incomplete – covering how this industry is going to evolve in the future, and whether it can survive the current price crash.
‘We do not want the majority of users to have unprofitable mining, so we pause it for everyone, just to be safe.’
CoinTelegraph: Users can turn their GHS back on, so what would be the drawbacks from a consumer perspective in doing so?
Jeffrey Smith: Mining strongly depends on luck, so if a user decided to turn his miner back on, he may get negative profit, but there are also chances he will receive profit. But we do not want the majority of users to have unprofitable mining, so we pause it for everyone, just to be safe.

This post was published at Coin Telegraph on 2015-01-14.