Although presented as a service for “prospective Bitcoin miners don’t have the space or power requirements to operate their own Bitcoin mining hardware” by CEO Ravi Iyengar, the WSJ took a decidedly more skeptical stance on the announcement.
As the price of bitcoin has tumbled, it has become increasingly difficult to profitably mine bitcoin, a problem for the miners and the companies catering to them. … In September 2013, the entire mining network reached the 1 petahash/second rate, a multiple of 40 times higher than in January 2013. Now CoinTerra will be selling 1 petahash contracts. It’s gotten so big, it’s harder to mine profitably on anything but a very large scale. CoinTerra itself saw sales drop 30% in April. Thus the move into cloud mining.
CoinTerra isn’t exactly a fringe player in the mining world. The company estimates that as much as 15% of the bitcoin network runs on their mining hardware, and shipped the 5,000th unit of its popular TerraMiner rig in April. The move may actually prove more profitable in the long term for CoinTerra, as a 1.6 TH/s TerraMiner currently retails for around $3500, while a one-year mining contract for their lower-overhead 2 TH/s plan runs around $8,000.