-snip-
I never fully understood the point of "cloud mining", even if it was a legitimate business, for it to be profitable the owners of the hardware would need to "rent" their hash power to competitive rates for them, so they could pay electricity, maintenance, their own salary, etc. So whoever pays for a contract to "cloud mine" an specific algorithm or coin does it hoping for that coin to increase in value, basically getting coins at discount, otherwise they get overpaid coins.
Would not be easier for anyone who wished to speculate just to move onto a reputable exchange and play with future contracts?
ok lets run a non scam scenario of cloud mining..
but include some factual economics to show some flaws even in a legit cloud mining system
usually industrial size asic farms have efficient mining costs.
take this year. its about $15k a coin mining cost(hardware+electric) in the most cost efficient farms of wholesale bought asics and lowest electric regions
however users living in say hawaii if they were to personally mine on their residential rate would have a $90k per coin cost to mine
so they dont want to locally mine from home
they are then advertised into 'if you pay us $24k" we will get you 1btc in the summer (it sounds like a good deal compared to self mining at home in hawaii, right)
the cloud mining company mine for $15k and sell for $24k so its good business
however when the bitcoin price drops to $17k the cloud service can still sell coin for $2k profit to other people. but wants the customer of their cloud to continue to pay the agreed $24k/btc rate.
but the customer would be stupid to still be locked into a $24k contract for 1btc