NiceHash Stops Victims’ Repayment After $80 Million Hack

NiceHash is a marketplace for renting mining hash power and announced that it will be suspending its plans to repay the customers who lost their funds in the 2017 hack attack. The attack caused huge losses to the company of more than 4700 bitcoins or $80 million at that time.

Following our blockchain news today, NiceHash wrote:

 “Unfortunately, NiceHash will not be able to fulfill its promise to fully reimburse all users and achieve the 100% reimbursement status or the Repayment program in the foreseeable future. We are deeply sorry we are not able to completely fulfill our promises given at the start of the Repayment program.”

NiceHash has withdrawn all of the funds from the revenue to compensate the users but it reached the limit of what it can afford to repay it. The company says that the ‘’current state of the Repayment program is at 100,04 percent of the original loss value in the accounting books.’’ The company’s announcement also suggests that the company is struggling which is why they ended the repayment program so they can stay in business and maintain cash flow. The plans of the company to resume the repayment program in 2020 are still there but it is unlikely that the users are reassured.

Nicehash has been controversial since its start and in the 2017 attack, it only gained criticism because the founder was involved in the creation of malware. NiceHash even coordinated a 51 percent attack against Vertcoin which only caused bad press for the company. The company is still very popular and much like other cloud mining services, NiceHash allows the users to rent mining hash power remotely without having to buy hardware. It also offers a decentralized marketplace of providers which means that the company cannot disadvantage the customers by simply manipulating the prices or hash rates.

It is still not enough to stop the funds from being stolen and the company still holds the user funds centrally which makes it even more vulnerable to larger thefts and gives it direct control over the user balances. Mining solo, by contrast, allows the users to conduct direct mining rewards to one’s own wallet address which is a safe option but not always profitable.