Topic: Mining Contracts - Legit or Bogus? A Brief Analysis - page 2. (Read 4371 times)
I get the impression that, while there may be a few legitimate mining contracts, the vast majority of mining contracts appear to be thinly veiled Ponzi Schemes. I'd be extremely wary of any promises that any mining contract makes. The future value of any given hash power is extremely difficult (nearly impossible) to predict with any accuracy.
So I've been looking into mining and it looks like (for me at least) mining contracts are more appealing than setting up a rig. However, I have some serious concerns. For example, pretty much none of the companies offering mining contracts are actually mining yet, so there's no guarantee that these "mining companies" aren't just some random fat kid in Australia soliciting unguaranteed funds. The other problem is that, even if these companies ARE legit, they won't start mining for a couple of months, at which point mining will be SIGNIFICANTLY more difficult. Thus, estimated "returns" and "profits" are highly skewed.
Here are some comparisons of 1-year mining contracts:
Bitcoinfrenzy: 2 GH/s mining power @ $99, roughly 5 BTC revenue
Cloudhashing: 2 GH/s mining power @ "under $150", roughly 2.6-5.2 BTC revenue
Minerlease: 2x (1 GH/s mining power) @ $250, roughly 10.8 BTC revenue
All of these contracts provide the same hashing power, but the revenue estimates vary greatly (WTF!) from 2.6 BTC all the way up to 10.8 BTC in one year!
So how does one judge these estimates? First of all, I ran some calculations on multiple common bitcoin profitability estimators.
Some of the calculators did not factor in the steady increase in difficulty, and those calculators all gave me the same yearly Bitcoin (revenue) estimate of 9.8 BTC. The ones that did incorporate some factor of increased difficulty give (revenue) estimates of roughly 2-5 BTC.
What does this mean?
1. Don't trust Minerlease!!! You will not get 10 BTC in a year from 2 GH/s of mining power. Even if you did, you could get the EXACT SAME CONTRACT for less than half the price at Bitcoinfrenzy.
2. Bitcoinfrenzy and Minerlease both take 7.5% off every (weekly) contract payment and Cloudhashing takes 10%. Thus, you won't even be getting the full revenue amount.
3. Since these estimates are all based on calculations done with today's difficulty, which is much lower than the difficulty that will exist when these mining companies actually start, these estimates are very inflated. Thus, your revenue will again be much lower.
These mining contracts seem very sketchy and at best just barely profitable (like most mining is anyways). Also there's no guarantee that these companies are even going to mine (or pay you back!). In fact, they could literally just be Ponzi schemes, especially since they only pay out small amounts each week.
The only benefit of mining contracts is that you don't have to worry about dealing with hardware physically. You DO still have to worry about uptime, hardware failure, difficulty increases, etc. because you only make what your (virtual) miner does!
One final word of caution is that most mining companies have clauses in their TOS that allow them to cancel their business (for various reasons, and in some cases, any reason at all) and owe you NOTHING. It's important to understand that if you invest in a mining company you are basically throwing your money down a well and hoping something spits money back up at you. This is different from mining with a rig because, fail or succeed, you can always sell the rig itself for some return.
Here are some comparisons of 1-year mining contracts:
Bitcoinfrenzy: 2 GH/s mining power @ $99, roughly 5 BTC revenue
Cloudhashing: 2 GH/s mining power @ "under $150", roughly 2.6-5.2 BTC revenue
Minerlease: 2x (1 GH/s mining power) @ $250, roughly 10.8 BTC revenue
All of these contracts provide the same hashing power, but the revenue estimates vary greatly (WTF!) from 2.6 BTC all the way up to 10.8 BTC in one year!
So how does one judge these estimates? First of all, I ran some calculations on multiple common bitcoin profitability estimators.
Some of the calculators did not factor in the steady increase in difficulty, and those calculators all gave me the same yearly Bitcoin (revenue) estimate of 9.8 BTC. The ones that did incorporate some factor of increased difficulty give (revenue) estimates of roughly 2-5 BTC.
What does this mean?
1. Don't trust Minerlease!!! You will not get 10 BTC in a year from 2 GH/s of mining power. Even if you did, you could get the EXACT SAME CONTRACT for less than half the price at Bitcoinfrenzy.
2. Bitcoinfrenzy and Minerlease both take 7.5% off every (weekly) contract payment and Cloudhashing takes 10%. Thus, you won't even be getting the full revenue amount.
3. Since these estimates are all based on calculations done with today's difficulty, which is much lower than the difficulty that will exist when these mining companies actually start, these estimates are very inflated. Thus, your revenue will again be much lower.
These mining contracts seem very sketchy and at best just barely profitable (like most mining is anyways). Also there's no guarantee that these companies are even going to mine (or pay you back!). In fact, they could literally just be Ponzi schemes, especially since they only pay out small amounts each week.
The only benefit of mining contracts is that you don't have to worry about dealing with hardware physically. You DO still have to worry about uptime, hardware failure, difficulty increases, etc. because you only make what your (virtual) miner does!
One final word of caution is that most mining companies have clauses in their TOS that allow them to cancel their business (for various reasons, and in some cases, any reason at all) and owe you NOTHING. It's important to understand that if you invest in a mining company you are basically throwing your money down a well and hoping something spits money back up at you. This is different from mining with a rig because, fail or succeed, you can always sell the rig itself for some return.
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