Why mining contracts cost you more than you can earn from them

[gpucoolingmethod]

Like any other purchase it's up to the buyer to find the best price with the best service.  The going price per GH for excellent cloud mining services is .011-.017 which allows you to break even within 60-90 days assuming difficulty increases.  All cloud mining sites are not built the same.  I have made some excellent investments and some very poor investments as well.  My signature has a few profitable sites.  Good luck

Ive checked out your first site but there is no info what the %rate is or how the investment works

UPDATE the 3rd option actually give me 70 usd profit according to this http://www.bitcoinx.com/profit/

so WHY dont they mine it themselves? they would get 70 usd more per gh/s contratc in 5 years

Sites like PB have multiple reasons for selling hashing power.  CASH is #1.  Also the nature of Bitcoin is to build a community, the more people involved the stronger the currency and eventually the higher the price.

they would get nore cash if they mined it themselves.

The original reason Ive asked this thread is either they lose money by renting profitable contracts or you lose money for unprofitable contracts.So mining contracts shouldn't exis.But they do. What is the explanation?

[supersajin]

Like any other purchase it's up to the buyer to find the best price with the best service.  The going price per GH for excellent cloud mining services is .011-.017 which allows you to break even within 60-90 days assuming difficulty increases.  All cloud mining sites are not built the same.  I have made some excellent investments and some very poor investments as well.  My signature has a few profitable sites.  Good luck

Ive checked out your first site but there is no info what the %rate is or how the investment works

UPDATE the 3rd option actually give me 70 usd profit according to this http://www.bitcoinx.com/profit/

so WHY dont they mine it themselves? they would get 70 usd more per gh/s contratc in 5 years

Sites like PB have multiple reasons for selling hashing power.  CASH is #1.  Also the nature of Bitcoin is to build a community, the more people involved the stronger the currency and eventually the higher the price.

they would get nore cash if they mined it themselves.

The original reason Ive asked this thread is either they lose money by renting profitable contracts or you lose money for unprofitable contracts.So mining contracts shouldn't exis.But they do. What is the explanation?

Your premise is incorrect.  You can easily make money cloud hashing if you buy at low hashing rates $7-12 per GH. Or pay $12-15 with the ability to sell your hashing power.

[tjkurtisss]

think about it!
if you have money making machine why in the hell do you want to sell it or rent it for the less of the money that you can earn by your self!
so logically you would rent your miner for more money than you could earn by mining with it.
it is still hard to believe that there is so much stupid people in the world that still paying for that cloud mining contracts.

That's actually is not so hard to believe that there is still big amount of people who use cloud mining

[Xer0]

what about this contract?
http://www.ebay.de/itm/1TH-s-1000GH-s-BITCOIN-MINING-CONTRACT-1-YEAR-COINTERRA-TERRAMINER-IV-MAY-2014-/271406780949?pt=LH_DefaultDomain_0&hash=item3f311ad215

even at worst-case 30% +diff without decline and not rising btc price,
and mining start in may, it seems to still roi:
http://btcinvest.net/de/bitcoin-mining-profit-calculator.php?diff=3129573175&dcosts=999&diff_mincrease=30&blpbtc=25&dhsmhs=1000000&diff_mincreasedecrease=0.1&btcusd=577&dpowcon=30&btcusd_mincrease=0&pcost=0&calcweeks=30&dleadtime=6&action=calc

[whitemage]

examp-le
1.82$ earned by first week.bitcoinfrenzy.com 2GH 99$ 25% reinvestment.Calc shows only 0.002686 btc first month.So 0,0020145 btc to you 0,0006715 btc for reinvestement on first week.

What am  I missing here? Or do they really sell unprofitable contracts?

Also isnt it better to just mine them themselves with all that gh/s combined? 4gh/s is more than twice as good as 2gh/s right?



there are more examples.

If it is more profitable to just mine themselves, they won't sell hash right?

[gpucoolingmethod]

examp-le
1.82$ earned by first week.bitcoinfrenzy.com 2GH 99$ 25% reinvestment.Calc shows only 0.002686 btc first month.So 0,0020145 btc to you 0,0006715 btc for reinvestement on first week.

What am  I missing here? Or do they really sell unprofitable contracts?

Also isnt it better to just mine them themselves with all that gh/s combined? 4gh/s is more than twice as good as 2gh/s right?



there are more examples.

If it is more profitable to just mine themselves, they won't sell hash right?

easier examp-le.Company can use their gh/s to make 100BTC profit or it can rent ALL that gh/s.If it sells ALL their contracts (100 BTC worth) for less than 100 BTC altogether it loses money.To profit it has to rent for more than 100BTC from ALL the people buying contracts making ALL these people mine less money (less than 100BTC) than they paid for (fiat).

The only way to profit for these people is to hoard their bitcoins so they will be more valuable.

[cloverme]

examp-le
1.82$ earned by first week.bitcoinfrenzy.com 2GH 99$ 25% reinvestment.Calc shows only 0.002686 btc first month.So 0,0020145 btc to you 0,0006715 btc for reinvestement on first week.

What am  I missing here? Or do they really sell unprofitable contracts?

Also isnt it better to just mine them themselves with all that gh/s combined? 4gh/s is more than twice as good as 2gh/s right?

there are more examples.

It depends, I run a contract mining site and in the long run it is profitable. I think you have to look at it more in generating BTC versus generating BTC to convert back into fiat. I know, I know, you buy in with fiat to start mining. I think have to go into mining with 2 things in mind, A) high risk and B) you're in it for the long term.

I don't think anyone starts out selling a unprofitable contract. If the price of BTC falls too far, yeah it might be unprofitable depending on if BTC is falling against the dollar. If you're looking at converting BTC into fiat right away, just buy coins and don't mine, buy low and sell high.

Mining on your own causes all sorts of issues, using too much power, generating too much heat, unreliable power and spotty internet can cost you a lot of BTC. Some people aren't tech savvy either, they just want to mine with no hassles.

Just my opinion, I don't think contracts are for everyone.

[ngc1952tau]

easier examp-le.Company can use their gh/s to make 100BTC profit or it can rent ALL that gh/s.If it sells ALL their contracts (100 BTC worth) for less than 100 BTC altogether it loses money.To profit it has to rent for more than 100BTC from ALL the people buying contracts making ALL these people mine less money (less than 100BTC) than they paid for (fiat).

The only way to profit for these people is to hoard their bitcoins so they will be more valuable.

Keep in mind there are differences between a defined lump sum of currency now and an indeterminate amount of currency over a specific period of time. The seller is offloading some of his risk and uncertainty onto the buyer, as well as earning a lump sum payment in exchange for potentially greater, yet speculative, future profits. This is the service the buyer provides to the seller, which enables the buyer to potentially earn a profit. A mining contract could be considered win/win for both the buyer and seller if: the seller gains the benefit of guaranteed cash now, for reinvestment or other purposes, and reduced risk exposure to conform to their risk management strategy; while the buyer receives the seller's future mining profits, which are greater than his initial investment, as a reward for taking his income over a longer time frame with greater exposure to external risk factors.

That said, in my opinion most of the mining contracts I see are very overpriced, but I don't think it's impossible to have a successful cloud hashing business model that is not a scam.