How does Bitcoin mining contracts work?

[Kprawn]

I have someone, who has no knowledge of Bitcoin mining. {Technical knowledge}

He wants to know, if he can pay someone, to do the mining for him? Instead of him paying for a expensive rig, to mine coins, that may be obsolete in a month.

Does companies like the one below, cater for this?

PB Mining

We operate Bitcoin mining ASIC hardware. When you buy a contract with us, you will begin earning Bitcoins instantly. At Piggyback Mining, we cover the electricity costs and all pool fees. Your contract is 100% insured because we want you to succeed.

What other companies are there?

Which of those are reliable?

Is it more profitable, to pay someone to setup a rig for you. {Out of the box} options? and then mine yourself?

There are not a lot of information on how these contracts work, and if it is worth doing.

Thanks for any constructive comments. I did not want to place it, under mining, because it's a newbie question. 

[DolanDuck]

Take a look at this site, perhaps it can help you a bit:

Cloud Mining Reviews – Compare and find the best miners!

http://www.cloudminingreviews.com/

[Peter882]

Is it more profitable, to pay someone to setup a rig for you. {Out of the box} options? and then mine yourself?

IMO, nope.
Think about this: If the hashrate can bring the owner 0.01 btc, will the owner sell it for less than that?

[Kprawn]

That is the type of questions, I need answering too.

It might mean, that they need investor capital to grow? But if they can get more money, from paying it out of their own returns, from the mining, why allow investors to take a share?

Or is this Cloud mining, just another money making scam, for them?

Eg. 10 x GHS SHA-256 will cost you $50.8 and your Estimated Monthly Mining Payouts, will be 0.00790298 BTC {In affect, if everything stays that way, your break even point will be, +/- 10 months.} A lot can happen in 10 months.

As the difficulty increase, the payout would go down, and the break even point, will increase. But if the value of Bitcoin increase, your initial investment cost would be small in comparison to your monthly income.

Wow... There is a lot of calculations, that come into play, to calculate profitability.

[Kprawn]

Has any of these cloud mining companies ever provided proof, of the hardware they are buying?

Have they posted any photo's of there data warehouse's?

Have they invited people to visit their sites, to see for themselves, that these sites really exist?

If I had to explain to someone how this work, they would just say 1 word...."Ponzi"

Proof them wrong, I dare you.

[KimNam]

Has any of these cloud mining companies ever provided proof, of the hardware they are buying?

Have they posted any photo's of there data warehouse's?

Have they invited people to visit their sites, to see for themselves, that these sites really exist?

If I had to explain to someone how this work, they would just say 1 word...."Ponzi"

Proof them wrong, I dare you.

cex.io seems can proof it since they are part of ghash.io
some other cloud mining provide hardware photos and where they mine too
but pbmining never proof that, they never show any photos about their hardware. they never show where they mine bitcoin and newly generated coins
many people talk about that here : https://bitcointalk.org/index.php?topic=484355.0

[Yakamoto]

Has any of these cloud mining companies ever provided proof, of the hardware they are buying?

Have they posted any photo's of there data warehouse's?

Have they invited people to visit their sites, to see for themselves, that these sites really exist?

If I had to explain to someone how this work, they would just say 1 word...."Ponzi"

Proof them wrong, I dare you.

cex.io seems can proof it since they are part of ghash.io
some other cloud mining provide hardware photos and where they mine too
but pbmining never proof that, they never show any photos about their hardware. they never show where they mine bitcoin and newly generated coins
many people talk about that here : https://bitcointalk.org/index.php?topic=484355.0

cex.io has been good so far for me, assuming that you know how to invest. It all depends on what you do.

[KimNam]

cex.io has been good so far for me, assuming that you know how to invest. It all depends on what you do.

did you manage to get ROI there?
i see many users frustated invest there, because their price is so overpriced and their they mantainance fee is too high
even after they add trade fee, make it worse for us to get profit from trading

[Sydboy]

don't buy a mining contract, or hardware unless you intend to spend a fortune.
or if you must, but hardware. atleast you can see it and sell it. Plus mining is alot more fun, and frustrating (which adds to the fun when you resolve issues).
But yeah listen to what everyone else has said AND reading the mining section. people aent just negative or bitter for fun, it is because they lost alot of money waiting for hardware. but still atleast you own the hardware, once and or if it arrives.

[Yakamoto]

cex.io has been good so far for me, assuming that you know how to invest. It all depends on what you do.

did you manage to get ROI there?
i see many users frustated invest there, because their price is so overpriced and their they mantainance fee is too high
even after they add trade fee, make it worse for us to get profit from trading

Well those who complain don't know how the market works. I've already made an ROI, and a profit. A 800 satoshi fee a trade isn't half bad, assuming you can trade correctly.

Sadly, a lot of people think that they can do everything with no fees. Those are the fools.

I trade and mine, and I have made a profit, starting with 0.0013 BTC. About 2 GH/s. Learn how to trade before you complain.

[zvs]

cex.io has been good so far for me, assuming that you know how to invest. It all depends on what you do.

did you manage to get ROI there?
i see many users frustated invest there, because their price is so overpriced and their they mantainance fee is too high
even after they add trade fee, make it worse for us to get profit from trading

Well those who complain don't know how the market works. I've already made an ROI, and a profit. A 800 satoshi fee a trade isn't half bad, assuming you can trade correctly.

Sadly, a lot of people think that they can do everything with no fees. Those are the fools.

I trade and mine, and I have made a profit, starting with 0.0013 BTC. About 2 GH/s. Learn how to trade before you complain.

Seeing as how you're such a master trader, might I suggest working the DOW or NASDAQ instead?  I'm sure it'd be a lot more profitable.

Every time you buy something that's worth 3-4x what it should be, you're taking a risk.  Reminds me of Xcelera.

Shame that we can't sell cex short.

[blumangroup]

I have someone, who has no knowledge of Bitcoin mining. {Technical knowledge}

He wants to know, if he can pay someone, to do the mining for him? Instead of him paying for a expensive rig, to mine coins, that may be obsolete in a month.

Does companies like the one below, cater for this?

Your best bet is cex.io (aka ghash) you can buy mining power with BTC or LTC, mining will start immediately and you can sell (at market rates) any time.

Although you will probably get the best deal from cex.io cloud mining (and rented mining) is a very bad deal for the buyer and would likely not be profitable ever.

If you are looking to have a certain amount of capacity for a fixed period of time you could try nicehash and/or leaserigs (I think they are both '.net' but I am not 100% sure).

Your best bet to make money off of mining is to buy a large enough quantity of mining machines (to be able to command a large enough discount, and to get priority on receiving your machines) and have them hosted in a datacenter that can provide cooling, internet and cheap electricity (location is important for this).

[mailmansDOGE]

I hope they do! I currently have a scrypt mining one in hash-master.com



This is what the dashboard looks like. I'm really hoping to get a healthy ROI out of this.

Edit, I must add that I've been running this for 2 days. It has 24 hour payouts orange box is the daily one.

[Yuki1988]

Your best bet is cex.io (aka ghash) you can buy mining power with BTC or LTC, mining will start immediately and you can sell (at market rates) any time.

Although you will probably get the best deal from cex.io cloud mining (and rented mining) is a very bad deal for the buyer and would likely not be profitable ever.

The hashrate on cex.io is highly overpriced, and its monthly maintenance fee is just insane.

[Harley997]

Does companies like the one below, cater for this?

PB Mining

My understanding is that PB Mining had little details hidden in the fine print that makes investing with them very unprofitable. One example of this is that a one year contract starts at a certain time, say the first of May. Then an investor will buy the contract on June 4th. The contract is set up so that the year starts on May first but the investor does not earn any mining rewards until the contract is paid for. This essentially means that they receive over of month of your mining rewards and drastically affects your possible ROI.

The most "honest" cloud mining service is CEX.io, although investing in GH/s from them is also probably a losing deal as they are probably too expensive to ever become profitable. Another issue with cex is that they control very close to half of the network and many people do not like this. I believe yesterday they got up to ~45%, although I don't know where they are now.