Is this the beginning of the end for Poolin? Or are mining pools just solving some minor problems? The Beijing-based company recently announced that “pool wallets are currently facing some liquidity issues due to the recent increase in withdrawal demand.” After that, everything went haywire, with Poolin losing 30% to 40% of its computing power , but their clients may be exaggerating. Then again, they probably aren’t.
Let’s take a deep dive into this by reading Poolin’s original words.
What exactly did Pullin’s announcement say?
Although Press release Looking optimistic, it doesn’t inspire confidence. Poolin announced a withdrawal freeze in small print, while offering preferential deals to all miners hosting funds. If we’ve ever seen one, it’s a bad sign. The announcement starts like this:
“Although the Poolin mining pool service is not affected much, for the goal of stable liquidity and stable operation, we have brought the following zero-fee promotions and settlement adjustments.”
The promotion runs from September 8th to December 7th, with the exception of promotions with balances over 1 BTC or 5 ETH. Those will have a zero-fee promotion for the entire year. However, the trouble started later. Buried in the text, it says:
“Payments of BTC and ETH balances in the current pool will be suspended. We will take a snapshot of the remaining BTC and ETH balances in the pool on September 6 to calculate the balance.”
17.6k BTC currently in known coins #bitcoin wallet.
One has to wonder how much money is currently owed to customers? https://t.co/L677tM1lR2 pic.twitter.com/t8qivf2kW5
— Dylan LeClair 🟠 (@DylanLeClair_) September 5, 2022
The mining pool has also suspended exchanges and encouraged its users to simply withdraw their coins in the same currency they were mining. Something inconsequential would have been overlooked were it not for everything else Poolin announced mixed with current market conditions.
BTC price chart for 09/06/2022 on BinanceUS | Source: BTC/USD on TradingView.com
Possible reasons for alleged bankruptcy
Poolin’s press release was vague, giving no reason other than “some liquidity issues,” but their instructions were clear. “Withdrawals from pool accounts will be suspended. Resume timing and schedule will be released within two weeks,” the company wrote. And it also promised that “coins mined every day after September 6 will be distributed normally every day”.
Poolin began to dabble in DeFi yield farming as early as February 2021. What could go wrong?https://t.co/ZgvtNfdMSJ@officialpoolin
(Ht Chet)— Cory Swan.com (@coryklippsten) September 5, 2022
According to analyst Dylan LeClair, there are currently “17.6k BTC in known Poolin Bitcoin wallets.” How could a profitable mining pool with huge wallets get into such a situation? This is all speculation, but the obvious theory is that they are Chinese, and the country banned bitcoin mining long ago.despite the policy not yet fully successful While Poolin moved his farm to Texas, China may have found a way to stop the pool somehow.
Another possible reason is related to this announced change: “BTC payment method from FPPS to PPLNS” Under FPPS, miners are paid regardless of whether the pool gets a block or not. Maybe Poolin had some bad luck and couldn’t find a block, that’s why it changed to PPLNS, it only pays off if they do.
A third possible reason is that they have deals with BlockFi and Three Arrows Capital. Perhaps the demise of these companies ultimately affected Poolin’s business.Or, as suggested by Swan’s Cory Klippsten in the tweet abovewent horribly wrong when trying DeFi Yield Farming.
Purin’s high-yield farming experiment
According to a Klippsten-related article, the company created “a token backed by Bitcoin mining power to create DeFi yield farming incentives.” Its description sounds overly complicated and experimental:
“Users officially have 1TH/s computing power on Biyin when they earn pBTC35A tokens. The contract also comes with 35W of energy usage per Terahash at a price of $0.0583/kWh. These costs are automatically deducted from the revenue Deducting it, it brings users about 568 Satoshi profit per day.”
However, let’s face it, it’s far-fetched to think that a failed crypto idea would damage the health of what was once the world’s fourth-largest mining pool. However, we may be wrong or not seeing something.
What or who do you think is the reason for Poolin’s acknowledgment of the lack of liquidity?
Featured Image by Alto Crew on Unsplash | Charts by TradingView
