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Bitcoin cloud mining services provide hashing power in exchange for Bitcoin. Cex.io is perhaps the biggest and most popular Bitcoin cloud mining service. You can buy 1 GH/s of mining power for 0.0071 Bitcoin

Seems is like just one big scam to me, I kinda figured unless you buy more then 3 TH you really wont make profit the ones that are in the game are the ones who been mining and with half there profits they keep investiing into more hashing power, thats the only strategy is that I see thats how senior miners  been doing it for a while have done it. 

Unfortunately, cex.io charges 0.007 BTC per year per GH/s as a maintenance fee. That is about what 1 GH/s will mine in a year!

Profit/loss per 1 GH/s over the next year:

Mining revenue	+0.007
Cost	-0.0071
Maintenance fee	-0.007
Profit/loss	-0.0071

The article headline is very negative biased. In the article itself it discusses the ability to trade the GHS and that is an advantage CEX has over other cloud miners. Just sitting on cloud hashing won't yield a decent enough profit regardless of wjo the provider is, same as just sitting on cash in the bank won't. I've only just tried it out myself, but can see how the mining and trading combnination works very well. .https://bitcointalk.org/index.php?topic=317001.msg6726473#msg6726473  (http://.https://bitcointalk.org/index.php?topic=317001.msg6726473#msg6726473)

You are just relying on the greater fool theory.
If CEX GHs aren't profitable, then eventually you will run out of fools to trade yours to.

The profitability of GH/s purchased on cex.io is based on how much you pay for it.

If you pay a low enough price for GH/s on cex then over the long run you will earn more BTC then what you paid for them. If you pay too high of a price then you will incur a loss.

The problem is that the price has consistently been above what the GH/s are worth, and the price has not adjusted appropriately to the increases of difficulty. 

It is also possible to sell GH/s at a price that is above the "market" price on venues such as ebay and craigslist.

Unless someone can explain away this chart, It seems to me that I would rather have my BTC "stored" at CEX.io much like a savings account (you know, back when savings accounts paid interest to our grandparents).  

Ever since mid april the cost of a GHS at cex has slowly been going up.  Slowly, mind you.  But if you zoom all the way out, its a massive reversal over the steep downtrend.

https://bitcoinwisdom.com/markets/cexio/ghsbtc

In this specific moment of bitcoin history, while the value is under the trendline, I think that holding is the best option.
This way you don't have any cares about scams, trading losses, mining worries.

Yep. Too many horror stories about cloud mining scams are out there. CEX doesn't seem scammish but I am not comfortable with leaving any bit coin anywhere but in my wallet and especially not there in the form of ghash that can plummet at any time.

So, my follow up question is this: what's the indicator i am missing which puts GHS as bearish when even your long term graph seems to have bottomed out?

Hmm.  Ok.  I get what you are saying... and can read the numbers clearly... but something in me still doesn't agree...

Take this example for 1GHS:

Buy on 4/29/2014	-0.006313
Revenue	(I am too lazy to do the mining math but even at a 50% fee, revenue is still positive)
Sell on 6/3/2014	0.0072
------------------------	-----------
Profit	0.000887 + mining gains (however small)

In this case, the buyer makes BTC.  To me, it seems like your argument was offering the standard don't "buy high and sell low." But again, perhaps I am missing something.  This is why it looks like to me, the market has consolidated and has accounted for future increase in difficulty, etc.  At .0072/GHS/BTC * 670$/BTC is $4.82/GHS. On ebay, the cheapest ASIC i saw was $400 for 180GHS ($2.2/GHS), but that is invalid because of economies of scale. The average was ~$5-8/GHS for 2-4GHS ASICs. Which is to say, CEX.io is cheaper then actually buying an ASIC miner for small fries, and it offers them liquidity, which physical ASICs can't--e.g. it becomes a high volatility savings vehicle for diversifying.

I imagine that unless there is a massive run up in BTC price soon, it will quickly become unfeasible for companies to make ASIC miners as electricity cost make them not worth buying, limiting supply, and stabilizing the price--actually I am pretty sure this has already happened--as cex.io no longer offers futures contracts. Again, it seems like CEX.io has consolidated and bottomed out to me. And no, to me, it looks like the graph has bottomed not because it has dropped so much, but because the rate at which it dropped was decreasing, indicating that is was nearing a limit/equilibrium.

But... I guess that is the ultimate trump card isn't it? We are all in this game because we think BTC will go "TO DA MOON." in which case, "To Da Moon" will be followed by massive and very temporary GHS mark ups and then more massive ASIC creation and steep GHS mark downs.

My two sats at least.

Anyway, thanks for your thoughts!

Hmm.  Ok.  I get what you are saying... and can read the numbers clearly... but something in me still doesn't agree...

Take this example for 1GHS:

Buy on 4/29/2014	-0.006313
Revenue	(I am too lazy to do the mining math but even at a 50% fee, revenue is still positive)
Sell on 6/3/2014	0.0072
------------------------	-----------
Profit	0.000887 + mining gains (however small)

In this case, the buyer makes BTC.  To me, it seems like your argument was offering the standard don't "buy high and sell low." But again, perhaps I am missing something.  This is why it looks like to me, the market has consolidated and has accounted for future increase in difficulty, etc.  At .0072/GHS/BTC * 670$/BTC is $4.82/GHS. On ebay, the cheapest ASIC i saw was $400 for 180GHS ($2.2/GHS), but that is invalid because of economies of scale. The average was ~$5-8/GHS for 2-4GHS ASICs. Which is to say, CEX.io is cheaper then actually buying an ASIC miner for small fries, and it offers them liquidity, which physical ASICs can't--e.g. it becomes a high volatility savings vehicle for diversifying.

I imagine that unless there is a massive run up in BTC price soon, it will quickly become unfeasible for companies to make ASIC miners as electricity cost make them not worth buying, limiting supply, and stabilizing the price--actually I am pretty sure this has already happened--as cex.io no longer offers futures contracts. Again, it seems like CEX.io has consolidated and bottomed out to me. And no, to me, it looks like the graph has bottomed not because it has dropped so much, but because the rate at which it dropped was decreasing, indicating that is was nearing a limit/equilibrium.

But... I guess that is the ultimate trump card isn't it? We are all in this game because we think BTC will go "TO DA MOON." in which case, "To Da Moon" will be followed by massive and very temporary GHS mark ups and then more massive ASIC creation and steep GHS mark downs.

My two sats at least.

Anyway, thanks for your thoughts!

it's true. it's a terrible investment. i can see why people get duped into it, since they don't want to buy/build/operate their own rigs. but they must not do the math....

it's true. it's a terrible investment. i can see why people get duped into it, since they don't want to buy/build/operate their own rigs. but they must not do the math....

Some people just want to try it out before committing larger capital for ASIC miner.

Yes this is so true. Everyone most me smart and do their own calculations when they choose to invest in something like mining.


That's the stupidest thing I've heard.

Avoiding cloud mining altogether works for me. I don't have to trust anyone but myself. 

That's so stupid. There are plenty of trustworthy cloud mining operations going.

I recently fell into the trap of investing there. I got eaten up in maintenance fees. Stuff like this is really working against Bitcoin. There have been a ton of big scams. I'm thinking pirate, Gox, BFL etc.

That's so stupid. There are plenty of trustworthy cloud mining operations going.

you are right
I've tried mining cloud over there and I felt no benefit at all because too many fees

The way I see it, if a cloud mining service can make more money mining then what they're charging, then they'd just mine.  Having me pay them to mine for me seems like I'm losing out.

The main point of them providing cloud mining service is for them to profit not the customer :)

If they can sell their GH for BTC and buy more GH for those BTC they might make more money than if they just mine them self.

Please provide an example of how that might work. I think you will discover that it only works if the customer loses money.

If it cost them .01 BTC to make/buy 10 GH/s worth of mining equipment but can sell that equipment on cex.io for .07 BTC then they just made .06 BTC, they then use that .07 BTC to build/buy 70 GH/s and sell that for .49 BTC, and so on and so forth. The only difference is that the amounts are much greater (I am not sure about the profit margins though).

New people to the bit coin world are particularly susceptible. I know I made the same mistake when I got in. Luckily my math inclined wife helped me break down the numbers and realize they were not a good deal.

I'd rather invest in a HYIP (very risky, but don't gamble more than what your willing to lose) at the of the day i will get my share. Cloud mining is not profitable and most professional bitcoiners know this.

New people to the bit coin world are particularly susceptible. I know I made the same mistake when I got in. Luckily my math inclined wife helped me break down the numbers and realize they were not a good deal.

It goes like this:
First they buy hardware and mine for temselves while its profitable. Once it gets to barely profitable they offer it to market on ridiculous price. They sell their hardware for GOOD money so they earn twice. For that money they buy mor hardware and cicrle starts again.
In adiditon to that, they dont need to care about hardware economics asthey take BTC for electirc bill, and they will keep it going on as long as you are willing to pay the bill. They take some extra too so they profit on that too.
It's win / win / win situation for them.

Suppose they can use the equipment to mine 0.08 BTC instead. Then why sell it 0.07 BTC? They make less money. And if they sell it for 0.07 BTC because it can only mine 0.06 BTC, then the customer loses.

Example: They buy 1GH of mining power for 1BTC.
Instead of waiting for the 1GH to generate 1BTC they sell it for 1.2BTC.
Then they use that 1.2BTC to buy another 1.2GH of mining power.
They sell that 1.2GH for 1.5BTC.
That 1.5BTC they buy another 1.5GH.
Now they got 0.5BTC and 1.5GH of mining power. They sell that 1.5GH, buy more GH and it goes on. Hope you understand me.

Example: They buy 1GH of mining power for 1BTC.
Instead of waiting for the 1GH to generate 1BTC they sell it for 1.2BTC.
Then they use that 1.2BTC to buy another 1.2GH of mining power.
They sell that 1.2GH for 1.5BTC.
That 1.5BTC they buy another 1.5GH.
Now they got 0.5BTC and 1.5GH of mining power. They sell that 1.5GH, buy more GH and it goes on. Hope you understand me.

I understand you, but you are ignoring the people they sell the GH/s to. Show me how the customers make money in your scenario and I'll show you why cex.io is losing money.

Say they buy it for 1GH/1BTC and sell it for 1.2BTC/1GH. It's simple

Well, they can't buy it for 1 BTC if cex.io is selling it for 1.2 BTC in your example.

Anyway, I don't know how to make the point any clearer: If 1 GH/s can mine X BTC, then it doesn't make sense for cex.io to sell it for less than X, and it doesn't make sense for a customer to buy it for more than X.

I haven't been paying to the whole "cloud hashing" thing, but it seems to me a great cover for an old-fashioned Ponzi scheme.

1. Take investors BTC, "buy" gigahashes of mining.
2. Pay them back for a while using new investor's BTC.
3. Once you've got enough investors, take the BTC and run.
  (maybe claim "oops, sorry, got hacked")

I'm not saying CEX.IO is a tarted-up Ponzi scheme. I have no idea.

I'm just asking how everybody who is giving them money knows that they aren't a Ponzi. Or aren't selling the same hardware twice or three times, operating a kind of 'fractional reserve' system (that will eventually fall apart).

Excuse me in advance if this has been discussed and I'm just missing something (e.g. a variation on Greg Maxwell's exchange auditing scheme might work: e.g. "they publish all the blocks found and an auditable merkle tree of all customers and how much hashing power each has").

I haven't been paying to the whole "cloud hashing" thing, but it seems to me a great cover for an old-fashioned Ponzi scheme.

1. Take investors BTC, "buy" gigahashes of mining.
2. Pay them back for a while using new investor's BTC.
3. Once you've got enough investors, take the BTC and run.
  (maybe claim "oops, sorry, got hacked")

I'm not saying CEX.IO is a tarted-up Ponzi scheme. I have no idea.

I'm just asking how everybody who is giving them money knows that they aren't a Ponzi. Or aren't selling the same hardware twice or three times, operating a kind of 'fractional reserve' system (that will eventually fall apart).

Excuse me in advance if this has been discussed and I'm just missing something (e.g. a variation on Greg Maxwell's exchange auditing scheme might work: e.g. "they publish all the blocks found and an auditable merkle tree of all customers and how much hashing power each has").

I haven't been paying to the whole "cloud hashing" thing, but it seems to me a great cover for an old-fashioned Ponzi scheme.

1. Take investors BTC, "buy" gigahashes of mining.
2. Pay them back for a while using new investor's BTC.
3. Once you've got enough investors, take the BTC and run.
  (maybe claim "oops, sorry, got hacked")

I'm not saying CEX.IO is a tarted-up Ponzi scheme. I have no idea.

I'm just asking how everybody who is giving them money knows that they aren't a Ponzi. Or aren't selling the same hardware twice or three times, operating a kind of 'fractional reserve' system (that will eventually fall apart).

Excuse me in advance if this has been discussed and I'm just missing something (e.g. a variation on Greg Maxwell's exchange auditing scheme might work: e.g. "they publish all the blocks found and an auditable merkle tree of all customers and how much hashing power each has").

Well, I'd say that stealing the BTC would be profitable right now; they've got about 600 BTC active in trading, I'm expecting more like 1,200 BTC in wallets.

I too have no idea, but they've been around a long time, and I decently confident they're at least somewhat legitimate.

I guess we'll see.

Mining is only profitable for hardware sellers - always.

I find that very hard to believe. Right now, they are charging about 8.3 BTC for 1 TH/s, and 1 TH/s is likely to mine less than 6 BTC. I assume your deal was equally as bad.

Can you show us your numbers (in BTC)?

In November and December I bought 266GH for $8000. That was 10.12BTC at the time. Right now I've got 11.5BTC payed out from them. And they still pay me. 30% was a bit more than the reality I'm about 15% profit. Sorry about that mistake.

Right now they would maybe not go break even and there is better deals available. PBmining was they cheapest/GH when I last checked.

PBMining is the cheapest, but there are certain people who aren't trusting it yet.

I don't like how PBMining locks you in to a 4-5 year contract, even at the low GH/s price. I prefer to keep trading and the like as much as possible.

Plus PBMining hasn't shown any pictures of their mining locations to my knowledge, so that's another downer.

At November 21 I bought 166.5GH for 7.18029726 or $5000
At December 2 I bough another 99.9Gh for 2.92682927 or $3000

The price at that point was $1000 for 30GH however I emailed them and got an extra 3,3GH for each $1000 since I bought more than $3000.

Totally paid 10.08BTC and so far total return is 11.54BTC
That's 15% profit.
Last payout was 0.28BTC and that was for three weeks so yeah will probably end up at 20-30% profit in the end I guess.

Mining is only profitable for hardware sellers - always.

Like most large companies, they simply take all the profits and leave their customers with bupkus. It is almost as though their attitude is that you should just send them your money and they give you back absolutely nothing in return.

Like most large companies, they simply take all the profits and leave their customers with bupkus. It is almost as though their attitude is that you should just send them your money and they give you back absolutely nothing in return.

Anyway, I don't know how to make the point any clearer: If 1 GH/s can mine X BTC, then it doesn't make sense for cex.io to sell it for less than X, and it doesn't make sense for a customer to buy it for more than X.

Keep in mind that cex.io is an exchange. You are not buying shares from cex.io, you are buying them from other customers. cex.io shares are money-losers simply because people are willing to buy them at a loss. The price remains high because cex.io is dominated by mathematically-challenged customers.

cex is the original owner of all of the GH/s on their site.

The only people who make money on cex.io are the ones who got in very early and the traders riding the price downwards while extracting value from price swings.  Everyone else loses.

Actually, the ones that got in very early lost the most because cex.io shares are less over-priced now than they used to be. The only people that make money on cex.io shares are cex.io and some of the traders. Most of the traders and all of the miners lose.

PBmining is likely some kind of ponzi sceme. I would not at all recommend "investing" with them

I don't think pbmining is a ponzi do you have anything to support your claim, cex.io probably best fits that title the only people making money are its owners.

A few minutes with a calculator will show anyone why Cex.io can never be profitable when used just for mining.  The price of a gigahash falls faster than the bitcoins that gigahash can generate during the same time, even if you end up selling the investment plus keeping the generated bitcoins.  And then there are the fees.

The only people who make money on cex.io are the ones who got in very early and the traders riding the price downwards while extracting value from price swings.  Everyone else loses.

Wrong i'm afraid, take a look at GHS price charts, been upwards since begin of May, interestingly it seems to have disconnected from it's inverse relationship to difficulty.. Take a look at the Futures contracts CEX.IO made available (FHA & FHM) again profitable opportunities.
If you ONLY buy cloud hashing sit back and expect a profit, then the only outcome you'll get is disapointment.
Trading GHS and mining combined can be profitable if you educate yourself and treat your trading as a business in terms of your approach.

i think soo... but it's reasonable than mining with hardware when you have not much money.. :)

Ok I'm gonna say that I "fell" for this too, but I did the math, and I'm making money...

I have honestly tried my hardest to find places where I lose my money, but the math says I am going up, consistently. Now I do also trade the hashes, but still. I've been holding a few hashes recently as the price is on an up trend, and I'm getting really nice ROIs.

Someone explain why it is such a bad investment though? I read the thread, but am I THAT different from everyone else in their experiences?

I checked everything; I'm making money. So I don't see what the problem is.

Ok I'm gonna say that I "fell" for this too, but I did the math, and I'm making money...

I have honestly tried my hardest to find places where I lose my money, but the math says I am going up, consistently. Now I do also trade the hashes, but still. I've been holding a few hashes recently as the price is on an up trend, and I'm getting really nice ROIs.

Someone explain why it is such a bad investment though? I read the thread, but am I THAT different from everyone else in their experiences?

I checked everything; I'm making money. So I don't see what the problem is.

I don't think pbmining is a ponzi do you have anything to support your claim, cex.io probably best fits that title the only people making money are its owners.

Really?  I guess I was just lucky then.  I made a couple hundred bucks profit on cex.io.  I just bought GHS when the price was right, and sold it right when there was a price spike.  Also made some nice mining profit along the way. 

It was kind of unstable though, and I found myself constantly checking the site...  Not a good LONG term investment. :-/

The safest way to gain some money is investing all you can in bitcoins, not in mining hardware or cloud mining.
Cloud mining is easier but in order to have some profit from it, you have to be very lucky choosing the right coin to instamine.

"not a profitable investment"

That depends on WHEN you trade and to WHO for WHAT price.

Some people defensively made a profit there, buying the Ghz cheap and selling them expensive and in the mean time making profit from the BTC they mine. Right now it might not me a good time to buy Ghz there, but if one were holding Ghz it might be a good to sell them to some fool who pays overprice for it.

In the end someone will make a profit and someone will make a lose. Not to strange.

... But now the price is neither decreasing nor increasing. It makes the investment in Cex.io non-profitable. If they increase the price of GHs, then the persons who already invested will get profit and if they decrease the price, new persons can buy and sell it when the price increases.

The price is decreasing. One month ago, it was around 7.4 mBTC and now it is at 4.7 mBTC. That's a 36% decrease. The price drops relentlessly as the difficulty increases. Hoping for the price to increase is risky and foolish. It is like trying to float upstream in a river. Some people get lucky because they happen to pick the right time, but most people lose money as the price continues to drop.

In theory the price of CEX's Ghs should always decrease because the GHs will have paid out some BTC from found blocks.

The price is decreasing. One month ago, it was around 7.4 mBTC and now it is at 4.7 mBTC. That's a 36% decrease. The price drops relentlessly as the difficulty increases. Hoping for the price to increase is risky and foolish. It is like trying to float upstream in a river. Some people get lucky because they happen to pick the right time, but most people lose money as the price continues to drop.

The price is decreasing. One month ago, it was around 7.4 mBTC and now it is at 4.7 mBTC. That's a 36% decrease. The price drops relentlessly as the difficulty increases. Hoping for the price to increase is risky and foolish. It is like trying to float upstream in a river. Some people get lucky because they happen to pick the right time, but most people lose money as the price continues to drop.

Cex.io was always a bad investment. Only affiliates won from it.

Now it is profitable. I made some through mining and trading. Just give it a try. Buy at much lower price and sell it at higher price. Will take a few hours to execute the order. Need to be patient. :)

Wow, if only everyone else had thought of that!
It is a bad investment, because over time each unit will lose value.
There is no rational expectation that you will be able to make money trading units.

It has been profitable for some months but it's not easy to predict when there will be the next (small) uptrend.

Now it is profitable. I made some through mining and trading. Just give it a try. Buy at much lower price and sell it at higher price. Will take a few hours to execute the order. Need to be patient. :)

  ~~MZ~~