I don't understand how anyone can justify investing in cloud mining. You get zero residual on the purchase unlike hardware (no matter how small that residual resale value is, it still exists) and the $/GH/s is ridiculous. No matter what anyone says, investing in BTC be it mining or in coin is risky, and not a single person on this forum has accepted that without making their own assumptions. The problem is asserting one's assumptions as facts, and calling another's fallacy. Nobody knows what's going to happen, don't make it sound like gospel.
What I like about mining vs buying coin is the flexibility. Markets naturally self-adjust, so if BTC was to plummet, then a significant amount of miners using less efficient hardware and/or paying more for power will pull the plug, far sooner than those of us who secure electricity/hosting deals or have access to cheap power, driving the difficulty down. Now tell me this, if we are to measure ROI in BTC and BTC alone, what would happen if BTC plummeted to $100 US? I'd wager that the drop in difficulty would result in an S3 paying for itself in a real hurry, even if the exchange to fiat wasn't exactly favourable from an investment point of view. The problem I see is that many people have turned their assumption that BTC will significantly increase in value into fact. Miners can hypothetically make a return on investment if the exchange stays flat for the years to come, buy & holders cannot. Should I start a thread labelled "Buy and hold - Profit is Impossible"? (...aaaand putting on flamesuit)
I find it interesting that the buy & hold types on here try to discourage mining as much as possible, when it is a major driving force behind their investment. Leads me to believe that maybe the ones discouraging mining have a vested interest in mining themselves...
I completely agree that everyone should have balance, just like any other portfolio. Buy some coin, buy some hardware. Buying coin can be made more advantageous by deciding when to buy in, unlike hardware.
Agreed. I have yet to see a cloud mining contract that makes sense as an investment. Think about it. The owners of the asics doing the mining are only writing cloud contracts because they make more than just mining on their own.
You might find someone, like jjc326 pointed out, who has a razor thin margin. But you are still taking a big chance for very little potential upside.
At least with live mining YOU are in charge of your costs and you get to sell the equipment. You also can decide your own timing for getting out, depending what the market does.
But I also understand that not everyone can house a 10 Th/s mining farm in their house/office etc. I had to move mine to a datacenter. Maybe there is some justification for these folks to have a cloud contract if they were going to be buying the btc anyway. Not sure about that though.