Topic: Cloud Mining Explained (Read 236 times)

a very long explanation for cloud mining, I will make it shorter

cloud mining=scam

why would someone offer a mining service if they can make more money mining alone? it's like asking someone to share your profit. the only reason I see is someone is incapable of buying mining equipment he is using investors money to buy mining equipment or do some Ponzi scheme

I completely agree with you that there is a lot of scam and fraud in cloud mining.
This article is descriptive in nature and should not be treated as an investment advice.
We do not encourage engaging in cloud mining.
The article aims to give a simple explanation of what cloud mining is.

What do you mean by changing the terms? If you are refering to the part where they say that after 21 unprofitable days they can terminate the contracts, I am quite sure that it was in there months ago, on the other hand changing the lifetime contracts to 1 year ones was an ugly move. The withdrawal limits were high (now it is 0.01 BTC?), that's true, but at the end of  the contract everyone can withdraw the funds (even under the limit). Don't get me wrong, I am not trying to defend them but facts are facts. This whole company is a well disguised ponzi scheme, I could be smarter to avoid them in the first place...

You see all these Telegram groups and you start wondering “maybe I can check it out”. You run it for few days on your machine and when you want to get the tiny amount you made paid out, they usually say “you have to purhase min this service to qualify for withdrawal”. That is first sign of scam for me and I think it is very dangerous as I imagine there are lot of ppl that fall for this

But I thought there might be genuine companies doing this. But I am so glad I stumbled upon this thread. I was researching cloud mining as one of my options to make some extra btc (as it is perfect for tight budget,that I am on). Thanks to everybody on this thread I got confirmed once again, that if something sounds too good to be truth, that it most likely is.

Cloud mining was my first investment and it was a huge mistake in 2015.
There were some mining sites which were ponzi schemes for sure.
So think twice and please consider other investment options.

If you search Cloud Mining in Google right now you will see a lot of fake websites (both advertisements and top search results) who really do not have any equipment for the purposes of mining in short they are dangerous investments that is scam waiting to happen. The legit ones on the other hand don't have a very attractive ROI and you can really be better of in trading rather than relying on this cloud mining contracts. If you really don't have a big capital to begin with you won't really earn a considerable amount from it.

Before the whole HashFlare closure, they changed their terms and withdrawal limits repeatedly. So ToS don't mean shit when they can just change it to adapt to their liking. HashFlare made it impossible for a good amount of their users to meet the withdrawal threshold, and they undoubtedly used those holdings and earnings to pay their top "miners".

This is exactly what a ponzi is, along with every other cloud mining company out there. Don't trust cloud mining sites.

I used genesis mining back in the days when ETH was down below $10 but as time moves on I wouldn't use cloud mining anymore. get ya own mining rig setup and start all over on your own!

I don't think that they can end the contracts just like that, they have to state the possibilities clearly in their ToS. In my opinion Genesis Mining has the equipment, but HahsFlare does not. They knew that the mining difficulty will go up like crazy and that this way they only have to pay back around half of the initial investment made by the people, so they sold non-existent hashpower in the hopes of easy money.

TL;DR

Cloud mining is a way for companies to profit from you by locking you into a contract to pay for their equipment, hosting facility, employees, benefits, electricity, and provide them with profits.  Once it is no longer profitable for them to fulfill your contract, they end it.  Basically, it's a way for you to pay for someone else to make money mining while you accept all the risk and own none of the equipment. 

I do not advise to engage in cloud mining! Don't waste your money and time. Better buy ASIC or rig. Sorry my English.

To those who are interested in cloud mining:

If you want to make profit, buy your own hardware. The chances of you profiting via Cloud mining contracts are very slim. Might as well buy bitcoin and hold it instead.

Do not invest in cloud mining! The only legit provider is Genesis mining, whose contracts MIGHT get you ROI (Return of Investment). It could be quite appealing to get a new stream of passive income, but on the other hand probably you would be better buying BTC and hodling it. There are so many thing that could go wrong with your contracts: the company can scam you (huge percentage of cloud mining services are obvious scams), with the constant increase of the mining difficulty your contracts can be easily terminated if unprofitable for x days (this was the case with Hashflare) and if not terminated, there is still a chance that your mining earnings will be way less than your original investment was.

Cloud mining, as an alternative to traditional mining, lets you use shared processing power from remote data centers. There are generally three cloud mining options you can choose from:

• Leasing a physical mining farm from a provider;
• Creating a general-purpose Virtual Private Server, which you can then configure to be your mining farm by installing necessary software;
• Buying a cloud mining contract, which is the easiest and most popular thing among cloud-mining investors.

What is a cloud mining contract?

By purchasing a cloud mining contract you essentially rent a portion of the mining company’s hashrate, which is usually measured in gigahashes per second (GH/s; one billion hashes per second). During the period of the contract, you will be receiving a percentage of the company’s profits from mining. Your percentage is based on how large of a portion of the company’s total hashrate you own.

What should I know?

Prices for cloud mining contracts vary depending on cryptocurrencies and, of course, on their providers. Bitcoin contracts are usually the cheapest at only about $0.6 for a 10 GH/s year contract. Scrypt-based cryptocurrency (such as Litecoin) contracts cost considerably higher with around $2 for a 1 MH/s year deal (one million megahashes per second).

The total bitcoin hashrate is, at time of writing, 44 million TH/s (terahashes, trillion hashes). This means that a 10 GH/s bitcoin contract is not even close to making any reasonable profit. You might have to invest into cloud mining contracts as much as you would spend on a complete mining rig, and still expect lower returns because cloud mining is offered as a service, which usually entails costs for the provider.

Cloud mining is also a good investment if electricity costs are high in your country. Owning a mining contract lets you bypass this problem, as all the hardware maintenance costs reside on the provider’s shoulders.

How to choose a provider?

On the other hand, cloud mining implies certain risks, as you, as a customer of a cloud mining service, do not have access to the information about the actual profits of the company. For the same reason, you cannot calculate the profitability of a mining contract for a certain amount of hash power. This is why you should be most careful about choosing your cloud mining provider: pick an already established company with a good history and read their user feedback on forums. Some of the widely known and reliable cloud mining companies include Hashflare and Genesis Mining, though you should only act at your own risk.

For more beginner-friendly explanations, visit https://finrazor.com/news/category/essential.

If you still have questions, feel free to ask them