Bitcoin Forum

Hello, I wrote this to settle some wannabe cloud miners questions.

http://omarbessa.com/a-cloud-mining-analysis.php

"What should you think before buying Cloud-Mining? You might wonder if it is profitable at all. There are cloud mining haters, and there are cloud mining enthusiasts; you might be wondering in whom to trust, the answer is: none of them!

Trust Math & Science![...]"

I added a polynomial model of bitcoin difficulty and cloud mining returns. Let me know if it was helpful!

Read.

Decent writeup :)

Thanks Vortex20000! That's good to read. :)

Thanks for the article. I was hoping it would at least compare regular mining to cloud mining to assist with making an informed unbiased decision, but instead it was just a math formula comparing apples to nothing.

Your statement "The wisest choice would be not to cloud mine at all," eludes that the positive horizontal asymptote is something unique to cloud mining. Can you demonstrate how regular mining compares? With rising cost of power, or even with just the cost of power, regular mining you actually start to lose money at some point, which isn't something that happens with all cloud mining contracts, not including the initial cost of the mining contract or the cost of the ASIC for simplicity sake.

I am neither pro nor con cloud mining, excluding centralisation concerns. I am currently doing both as an experiment, and appreciate the work you have done, and wouldn't mine adding what you did to my research as I think it adds value, but the conclusion just doesn't make sense without comparing it to something, or at least the statement I mentioned doesn't make sense. Once you compared the two, your conclusion would need to be (based on your view above) that the wisest choice would not to mine at all. Bitcoin uses PoW and mining is essential regardless of how it is done.

Hello CliveK, I haven't got any hard data on bitcoin mining off the cloud. But every mining operation should have a similar math formula, I do not agree that the positive horizontal asymptote is unique to cloud mining as the difficulty rises are exponential for everyone, and electricity costs are more or less a constant.

According to some heavy duty miners—over 100 BTC mined—I've talked with, these returns are about 1/30th of what you could get mining by yourself, all costs included. Perhaps I'm assuming that people have read the previous PBMining article before this one, where I said just that. Thirty times the profit from cloud mining sounds like an excellent investment, but I haven't got any data to back up that claim.

The big problem—and I say that in the previous article too—is that I cannot prove if this company I tested is really mining at all. As far as I know it could be a HYIP.

Based on that:

1) The continuity of the operation does not depend on you.
2) It is hard to enforce your legal rights as owner of the contract.
3) The returns are very likely to be much lower than mining by yourself.
4) It is very easy to manage a mining operation.

I feel it is safe to say that one shouldn't cloud mine at all. Since there's other investments that will pay undoubtedly more, in the same time-frame.

Thanks for your feedback. I'll see about revising the phrasing in the article, and linking the previous one.

nice article.

some interesting points being made there +1

Thanks, SecureExchange, doing the best I can. ^^

Thanks for the information much appreciated.

Thanks for reading CryptoMad.

great article
really interesting

Thanks djnocide!

thx OmarBessa  i read your article and im with pbmining too, i was asking to myselft teh same as you write in this article and i can stress everything from your article.

ty man, i think ppl should know all those things.

okae, thanks for reading it, yes we're all on the same boat with pb it seems. :\

yes is so bad i know, i really understand your frustation, believe me.... but all we can do is to learn from it and go on... ;)

very interesting read

Thanks BitCoinPokerBro! Glad to hear that!

That was an excellent read

Thanks elgimpo!

Thanks for the information buddy Much appreciated

Great info thanks, I'm currently with GAW and LTCGear, havent tried Genesis yet.

I think the only one that will ROI at the mo is LTCGear as they are doing 57% off, GAW might ROI but it will take a while.

You're welcome cryptost, if you've got info on your earnings on both cloud mining providers, I could use them to update this function or create new ones.

LTC gear have just finished multiplication giving me a nice 560 additional shares, they do this every month and a half to keep the system profitable.
ROI target on LTCGear now for me is around a month, GAW I have it as around 3 months though a lot changes over there quick and we are having a big update on Primes this week apparently.

GAW rate at the mo is 0.00060396 Per MH Before rates which are currently 0.08USD Per MH
LTC Gear is 0.02303218 LTC / 7 days / 1 ASIC Share, with the offer in my sig you get 1600 as standard, as I signed up before the multiplier I now have an additional 560 shares.

The standard works out around 36LTC a week with no fees for first year at the moment at a price of $850, if paid in BTC, the coupon gives you 49% off for a short period and then an additional 8% for using BTC.

I will update here on 26th when the next payment arrives.

cryptost, thanks for the update!

There's a problem with single data points, even if they are averages. I can't infer functions from them. While it is always useful and good to have more data available, what I would need to create a model is preferably a spreadsheet with the following:

* BTC earnings in a (preferably) constant period. A measure every week is what I used for the article in the model.
* The amount of hashing power for that same period.

If you would like to contribute, the best way would be with a spreadsheet with at least three months data. Lesser amounts of time can work too, but the model's accuracy will suffer. The difficulty swings in unexpected ways.

Thanks again for your data!

Great article! Also read the other article about cloud mining, at the bottom of the page there is a link.

Thanks btckold24. I'm right now writing a new one. That should be even better than the previous two, and it has a calculator. ;)

Very good article, thx.

My CEX/Ghash profits are being eaten alive by maintenance fees. Crazy how we pay other people to mine for us and then you actually pay, so that they can mine for themselves.

Anyways... If all I gain is experience, it was money well spend.  ;)

Positively for you, the fees have come down at Ghash.io so perhaps you will be making something now :)

cex.io fees has reduced to average 35% at the moment, some fees even below 10%.. they make decent decrease in fees.

well that article doesn't mean anything if you are going to GM cause you have BTC auto there...

Informative article. I was thinking about starting cloud mining. Your post help me to take a decision.

Be diverse if you are starting in cloud mining, any one of them can go in any direction on any given day.
Spread out your risk.

Using cex.io calculators:
As of now the maintenance+electricity fee is 0.105$/GH.month (https://cex.io/maintenance (https://cex.io/maintenance))
The profit in the first month is 0.0004BTC, @400$/BTC it gives 0.16$/GH.month (https://mining.cex.io/calc (https://mining.cex.io/calc))
Subsequent months have lower profits due to increased difficulty.

That is not a sub 10% fee.

I agree that it is wise to spread your risk, I have Gaw Hashlets and Ltcgear shares I also have 2 Antminers at home, I would do more hardware mining if the electricity was not so expensive!

Wow, thanks a ton.  That was an absolutely fantastic read that definitely cleared up a few preconceived misconceptions I'd had previously

How are the GAW's Hashlets? I see people recommend them a lot. They are talking about 40% ROI from Hashlets. Are they really that good?

I bought my Prime hashlets whilst they were $16.00 and also some at $20.00 and $25.00 so I have already done well as the price has gone up to $50. Soon when they sort out all of the bugs they are having currently they will open up the Prime buy back scheme. Josh intends to pay 80% of the current selling price. So anyone that bought them in the early days will ROI instantly! As for now Zen's are your best purchase IMO and you will ROI with them as the pool pays well.

A good reasoned article.

Good Article A+

good read for sure

Good news, good news. I am gonna invest some more in that stuff and see what happens. If ROI is there I am there as well!

There's no money to be made in cloudmining, you can barely squeeze by mining yourself. However, with cloudmining, you are just investing in someone else's infrastructure with a small dividend over time that decreases with each payout due to difficulty. 

There's a reason why cloudmining companies don't put a profitability calculator next to the "buy now" button. :D

It does depend where you mine, there are some good ones out there.

As you said there are still some good options out there. People who are saying that Cloud mining is not profitable are just not entirely convinced about it yet. And cloud mining contract is really cheap and affordable for anyone.

I did make my ROI on hashlets if i sell them on the market, but i managed to get it more because the market was new and i made some good deals. Buying cheap and extremly cheap from sellers making mistakes. I bought 6 Zen Hashlets for $13,33 in total, while 1 Zen Hashlet sells instantly on the market for $19,95 including 5% fee. So i can sell them for $ 19 each

I bought some legendairy for below $ 80 dollar and they sold for $99.75 (+4.5 fee for the buyer, so i get earned 95 for them)

I invested a total of 0.5 BTC in GAW and have 0.3 BTC in my account already AND i have 1 legend, some Zen's, some Waffle's and 100 GH genesis

So i can almost withdraw my 100% ROI, but i'm addicted to zencloud now :)

Newbies should be thankful for articles like that.

Do the math and find out yourself, cloud mining often leads to a loss, either by the cost of purchase being redicilously high, or just them plain stopping the service.