Topic: CEX.IO was one of only a few legitimate cloud mining sites (Read 2114 times)

And AMHash is now no more.

I admit I was surprised to see them collapse. I considered them to be one of the more reputable ones up there.


Agreed.

Interestingly, in the very, very early days of Bitcoin mining and markets (i.e. early 2009), there was one miner called NewLibertyStandard who mined bitcoins and then sold them on his website via email. His prices dictated the market at the time and it was based solely on electricity costs:


They have contracts with different hardware providers. What they did was disable mining by default. You can choose to switch it back on manually if you want to but I see no reason why anyone would since maintenance fees would eat up all your profit.

The manufacturers are already self-mining. The only extra cost involved is from the website used to sell hashing power. Also, a cloud mining service needs far less customer support than shipping miners all around the world.

what about cex now?
bitcoin prize drop to 250 dolar
so will they start mining again?
i think they will..

The third party would need to make it's profit from somewhere. There needs to be a difference between the amount that is sent to the manufacturers and the amount they receive from customers.

There will also be additional costs like paying someone to monitor and adjust the miners, someone to handle customer service, someone to handle potential customer's questions, someone to handle payouts. Plus management to manage these people.

The cloud mining contract is the sale, not the provision of miners.

There are really not any "extras" that people need to pay for. Yes people would need to pay for PSU's however they have residual value and can be easily resold after they are no longer using their miners. AM may have had higher overall revenue from the sale of their contracts however this does not mean they make more on a per unit basis (which is the only way to measure on an apple-to-apples basis).
If the manufacturer is providing the hardware at cost then it would be contrary to your above point because they would not be making any money off of the sale.

Check the numbers and you'll see that I'm right. For example, AM made more money from the sale of AMHash contacts than they did from the sale of Prismas while at the same time, customers saved money because they didn't have to pay for shipping or extras.

Also, the manufacturer doesn't have to partner with anyone, but if they do, if would make sense to provide the hardware at cost.

I would dispute this. The manufacturer is going to have to partner with some third party that is not going to want to pay the "retail" price (eg want to get a discount) and the lower sales price is likely going to be less then the difference between the retail price and the cost of selling/shipping retail amounts of miners to retail customers.

For the customer on the other hand, the cloud mining company is going to be able to command a higher price from customers because of less hassle of setting up and maintaining the mining equipment

Cloud mining allows manufacturers to sell hashing power without having to deal with shipping to places all around the world and various customer issues. All they have to do is set up farms for self-mining and sell hashing power, selling miners as requested during the process. Once all ASIC had been used, they could just used miners while waiting for more chips as long as they had enough unsold hashing power. If they were just selling miners, that hashing power is basically just sitting on the shelf doing nothing until it gets sold.

From the customer's point of view, the shipping costs involved with buying a miner can be pretty expensive and you often need to supply your own PSU which can cost up to $300. The extra initial expenses cost as much as the miners on some occasions. Then there's the cost of electricity to factor in. Most people don't have cheap electricity and the cloud mining services have maintenance fees which are cheaper.

The following manufacturers all provide cloud mining now, either directly or in partnership:

ASICMiner - AMHash
BitFury - Bit-x
Bitmain - Hashnest
KnC Miner - KNC Cloud
Spondoolies - Genesis Mining

The next gen ASICs should be out in a couple of months from ASICMiner, BitFury and Spondoolies all promising 0.2 J/GH and AM actually showing a 0.1961 J/Gh ASIC. That should allow those manufacturers to offer more profitable services.

Cloud mining is simply more profitable for both customer and manufacturer so it's inevitable really and ideally, you should be able to buy and sell your hashing power on the market, so people can get in and out whenever they want without any hassle.

TBH it's quite problematic and painful to buy and sell physical miners, at least for me it is. A lot of work and trouble (I bought and sold quite a few 65nm, 55nm and 28nm stuff). Some buyers are complete wackos and you're in danger of being fucked when you try to sell the hardware. I just don't have the time and energy to do that anymore. And it takes a long long long time to break even just by mining. Or maybe you never even break even.

Some people see that legit cloud mining doesn't make them enough money. They kind of expect cloud mining farms to be charities which give them craploads of passive income. If that doesn't happen, they join ponzis to get more profits.

Then the ponzis collapse and even cloud mining services are being shut down. All that is left is physical mining. And people don't want to do that anymore. Well, then they are shit out of luck. No more free money created out of thin air by the Chinese.

And after all this people seem to be so disappointed. Their lifelong dreams of getting lots of free money just from sitting on their asses are crushed.

If you can get legitimate cloud mining contracts for cheaper than the cost of a physical miner, then you'd also make a profit from cloud mining too.

You could currently buy 1700 Gh/s of AMHash off Havelock for less than 0.00097499 BTC/Gh, so less than 1.657483 BTC for 1700 Gh.
AMHash charges 0.001551 USD/Gh/day for maintenance. For 1700 Gh, that's 2.6367 USD.

An SP20 is currently selling for 479 USD. At 235 USD/BTC, that's 2.03829787 BTC. You also need to pay for shipping and a PSU.
The SP20 does 1700 Gh/s (customers say about 1500-1600) and consumes 1200 W.
That gives 0.00119900 BTC/Gh and 28.8 kWh used daily.
With an electricity cost of 0.1 USD/kWh, that gives a daily running cost of 2.88 USD.

The SP20 can also be underclocked to 1176 Gh/s using 639W.
That gives 0.00173325 BTC/Gh and 1.54 USD daily running cost or 0.001310 USD/Gh/day.

You are more likely to profit from legitimate cloud mining than you are from mining bitcoins at home or even if you get you miner hosted.

At least with physical miners, it's possible to make a profit. People have made profits when they did their own research and the company delivered the hardware on time. It's rare but it happens. Trading aside, literally nobody has made a profit with CEX.IO in BTC terms. Their contracts have been unprofitable from the very beginning. And the only cloud mining sites that were profitable so far eventually turned out to be ponzis.

Purchasing cloud mining is no different than buying a physical miner in that regard. You don't buy an obsolete, power hungry miner for above value and expect to make a profit either.

I agree completely. It wasn't really obvious from looking at those sites that they were ponzis because a lot of work had been done to make them seem legitimate. I'm sure some people had suspicions that the mining wasn't really backed by actual hashpower but looking back, it's the unusually high rate of return that really gave it away. People flocked to them in droves because they paid more than what the legitimate competition paid.

For example in this thread:



This is the kind of mentality that allows ponzis to thrive. If you want to try cloud mining, either accept that you're playing a part in a ponzi scheme and take your profits before the whole thing falls apart or choose a legitimate service and lose any hope of making a profit at all. That's the reason why CEX.IO was so overpriced. Unlike most of its competitors, it was a legitimate mining firm backed by actual hashpower. And because of this, nobody who sat on their miners actually made a profit from buying CEX.IO mining contracts except for those who bought them just before the November 2013 bubble.


I'm not that familiar with Hashie since I never mined with them. What I understand is that AMHash allowed Hashie to sell its contracts as a reseller and directed people who wanted to buy AMHash contracts to Hashie. When Hashie went down, AMHash got all of the people who held AMHash contracts on Hashie and migrated them over to AMHash.

Could you explain this part? If I were to start a ponzi i wouldn't want it to be obvious. Sites like PB, Hashie, Lunamine and other succeeded because they weren't obvious.
If hashie had close relations to AMhash shouldn't AMhash share responsibility for the losses?
News sites in the crypto world base a lot of articles on tips, I doubt they thoroughly research every company, they just interview people and if those people are liars the lies get passed along.

And the story repeats itself again...

Several minutes ago, I was going through the remainder of my bookmarks when I found a referral link to another once-promising cloud mining site - Cryptomine.io, that someone had posted here on these forums. I clicked it and... Nope. Nothing. So I searched its name on Google and yup, it was another ponzi.

Just like all the others. One by one like dominos they all fall down.


Well that sucks. It seems they were forced to suspend operations because the cost of maintenance exceeded the profits from mining due to the falling BTC price. ZeusHash was recently forced to do the same and AMHash shut down some of their less efficient miners as well. It looks like there will be more downsizing of mining farms to come as long as the BTC price continues to fall further.


This is true.


Saying that CEX.IO was the only legitimate cloud mining operation was a bit of an exaggeration on my part. But it does seem that the majority of the industry is filled with scams nowadays. People always gravitate towards the ponzis because they have much higher payouts. These ponzis then become successful and their success drives the creation of further ponzis. I still can't say for certain whether PB Mining is/was a ponzi or not but up until their recent meltdown, their rates were very, very attractive compared to CEX.IO's rates which were terribly overpriced.

Gavin Andresen said something of a similar effect too:

http://cointelegraph.com/news/112329/gavin-andresens-fractional-reserve-mining-cloud-miners-respond


And finally, I don't think PB Mining, Hashprofit, or Hashie.co were obvious ponzis. Hashprofit was a gold sponsor of the Bitcoin Conference in Saint Petersburg and Hashie.co had a close relationship with AMHash (which as you said, is owned by ASICMiner and is therefore likely to be legitimate). If it was so obvious that these sites were ponzis then news sites such as CoinTelegraph would have steered clear away them. Cryptory, on the other hand, was an obvious ponzi disguised as a cloud mining firm and they were rightfully ignored because of it:



EDIT: I changed the thread title to a more accurate one and also because they have suspended their cloud mining operations (at least for the time being).

If people would bother to do some actual research they would quickly find out that there are a few ASIC manufacturers providing cloud mining services. Instead, most people waste their money by throwing it at obvious ponzis that refuse to provide any evidence of legitimacy despite. And that's after being warned my multiple people not to do so. And then they start crying when they get ripped off.

It's as simple as this. If a company/service/whatever refuses to provide any evidence of legitimacy, don't give them your money.

Also, compared to AMHash (ASICMiner) and Hashnest (Bitmain), CEX.IO was insanely overpriced and less legitimate.

One point to the OP: The Ghash pool is not just their own miners, anybody can mine there. I have done so myself. I do not know what percentage of the pool is their miners and what is other peoples. I bet nobody except them know.

and we are, , invester dont know what should we do?
sell gh? or waiting?
can they start again mining?
we can only wait..

According to their twitter and blog, CEX.IO is temporarily suspending cloud mining:

http://blog.cex.io/cryptonews/cex-io-temporarily-suspends-cloud-mining-services/