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Last week, TerraHash began accepting pre-orders for ASIC mining gear using Avalon ASIC chips, including complete kits with hashing speeds as high as 180 GH/s. TerraHash provides boards and assembly for Avalon ASIC chips running at 282 MH/s each. Additionally, TerraHash pre-ordered 20,000 chips – over 5.6 TH/s – for resale in their boards. Just one day after opening for orders, PayPal froze their account, presumably due to anti-fraud systems triggered by the influx of funds.
As a result, only bitcoin, wire transfers and eventually credit cards were accepted for the remaining pre-orders, which sold out three days after initially opening. Concerns began to arise during this period as customers did not receive expected payment confirmation with order delivery details after funds were sent to TerrHash.
Those concerns were somewhat alleviated when TerraHash customer service team sent an update yesterday to all pre-order participants explaining the delay. The culprit was a familiar one: PayPal had maintained the freeze on the TerraHash account, complicating the high-demand pre-order queuing process. From the email:
PayPal has still not released the hold on our funds. We are still talking to them and trying to get the hold lifted. If something does not work out, we might have to refund all the PayPal orders.
The company’s goal is to offer early customers who used PayPal a chance to pay for their order with alternative methods so they don’t lose their order completely, should a PayPal refund be required – an unfortunate turn of events for those who want to put their ordered equipment to work in an increasingly difficult network. As explained by TerraHash customer support:
In case of a PayPal mass refund, certainly a lot of customers will fail to repay and hold their spot, resulting in many orders moving up the queue. So please give us another 2-3 days to resolve the issue with PayPal and decide the next step.
PayPal seems determined to prove that bitcoin is the better transaction medium. Although it does provide a pseudo-escrow service, completely withholding funds has proven to be beneficial to neither the merchant or the customer. TerraHash provided a 10% discount for paying with bitcoin, which a significant portion of their customer base elected to take advantage of. According to blockchain.info their aggregation account has received over 2,750 BTC, or $280,000 at current exchange rates.