have been greeted warmly by at least some Bitcoiners. Because Bitcoin is firmly classed as a commodity rather than a security, those of a “Bitcoin maximalist” mindset have sometimes seen the crackdown as both a tactical and moral win. The laser-eyed set isn’t shy about sharing Gary Gensler’s skepticism of more centralized tokens like Solana, Cardano and even good old Ethereum.
But that doesn’t mean bitcoin miners are completely free from SEC risk: in fact, it’s very easy to wrap commodity bitcoin in arrangements that are quite clearly securities contracts. In the wake of the recent split ruling in the SEC’s case against Ripple, this nuance may provide some timely insight into the relationship between a token in itself, and the agreements, transactions, and contracts surrounding it.
“The reputational shadow [of cloud mining] has been a stain on our entire industry,” says Kent Haliburton, President and COO of Sazmining, a hosted miner . “Because so many people have gotten hurt and hosed. We said, if you’re selling hashrate, how are you not selling a security? We wanted to stay totally clear from it.”
The flaw of the cloud mining model, both from regulatory and trust standpoints, is that selling hashrate amounts to a guarantee of a specific output over time, reliant on the seller’s management expertise. There are also ample chances for deception and mismanagement: many cloud miners, maliciously or through incompetence, sold more hashrate than their machines could actually generate, and wound up effectively running ponzi schemes as they used new buyer funds to keep up.
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