Why doesn't ghash buy miners for themselves with revenue? Business model Q

[innoculatant]

Hi all,

I'm writing a paper on Bitcoin mining to present to some businesses in IT and I'm looking at the business case of cloud mining operations like ghash. If a cloudmining entity is subsidizing the cost of its mining hardware by leasing shares to be sold to buyers their capital is then freed up to purchase more miners, lease more shares, free up the capital again etc. Their revenue model revolves around a commission being paid on their infrastructure and the capital costs of new miners borne by the buyers of new shares but there should come a point where their commissions more than pay for the next batch of miners and they're better off buying it outright and mining themselves earning even more revenue than if they leased it perhaps. Is this what happens?

[adaseb]

Why?

Its simple, because they can make more money when they don't mine for themselves but instead get you to overpay and mine for you instead.

Same reason why Bitcoin Manufacteurs sell ASICS to the public, because they will make more money selling the ASICs then mining themselves.

Only reason why ASICS in 2013 made the public money is because the manufacteurs got their forecasts wrong. But if they could go back in time, they would of never sold the miners until mid 2014 and just mined themselves.

Its all about money.

[cryptojumper]

can you actually profit from cloudmining these days? even from legit mining where they don't escape with money and really mine..? or is it just a big fraudulent concept and they are looking for fools to lose their cash

[innoculatant]

Why?

Its simple, because they can make more money when they don't mine for themselves but instead get you to overpay and mine for you instead.

Same reason why Bitcoin Manufacteurs sell ASICS to the public, because they will make more money selling the ASICs then mining themselves.

Only reason why ASICS in 2013 made the public money is because the manufacteurs got their forecasts wrong. But if they could go back in time, they would of never sold the miners until mid 2014 and just mined themselves.

Its all about money.

So when they release new shares to the market after expanding their mining capacity, how do they ensure they sell those shares above the price they bought those new miners at? If the market price is constantly floating, wouldn't the situation arise where selling new shares in the miners you wouldn't be able to recoup what you paid for them if the price per share drops significantly? If that were the case it might be better to just mine with them and take the risk?

[TriggerX]

Many cloud mining services allow you to trade gigahashes and doing this there is a fee involved so that's one possibility. Also they probably earn more money renting them because of the transaction fee and miner fee, if they mine themselves they probably wouldn't make a big profit.

[Rmcdermott927]

Wait, isnt Ghash the same as CEX?   

[renee25]

Cex's actually rents the GH/s from some chinese miner, they pay a electricity fee and charge you a maintenance fee, that's why they shut down cloud mining. It's not profitable at this price levels, now you can see their miners are mining on chinese pools, they presumably have lower electricity costs. You will not be able to cloud-mine on cex.io until btc>350, you can continue mining with your own hardware on ghash.io thought.