Why cloud mining providers sell hash power instead of mining for themselves

[Pono]

Hi all,

No, I'm not going to advertise any particular cloud mining company here. As you (probably) know there are providers where you can buy hash power instead of setting up your own rig or mining farm.

The question that keeps bugging me is why they sell hash power instead of mining for themselves with all that hardware that they have installed? Is is really more profitable to sell hash power rather than use the very same hardware just to mine the coins for themselves?

Thanks in advance!

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[EXtremeAEX]

They claim to use the money to invest more in their 'mining hardware', so essentially you are buying hash power indirectly. But on a serious note, most cloud mining sites are scam sites that claims to have reasonable returns, but they themselves disappear after some time and won't ever return your money. Scrypt.cc was a notable scam, that even got me, and I learnt it that hard way.

You are right, why would they sell it to you if they can profit? Surely there must be a catch...right? 

[carlfebz2]

Hi all,

No, I'm not going to advertise any particular cloud mining company here. As you (probably) know there are providers where you can buy hash power instead of setting up your own rig or mining farm.

The question that keeps bugging me is why they sell hash power instead of mining for themselves with all that hardware that they have installed? Is is really more profitable to sell hash power rather than use the very same hardware just to mine the coins for themselves?

Thanks in advance!

Okay lets talk about on those cloud mining company like genesis or hashflare since they are the most common cloud mining now which operates quiet long time as of now. They do really offer hash power to people or let them rent it for a particular contract and those money being used for the expansion of their number of miners which would add up their hashrate even more and come to think off that the more people invested the more expansion it would be but the sad thing about this things that they are already offering contracts which do have 1 year duration unlike on previous years which they do offer lifetime 

[pixie85]

The question that keeps bugging me is why they sell hash power instead of mining for themselves with all that hardware that they have installed?

The answer is really simple. They don't have the hashpower they're selling and need money to buy hardware. When you're buying a contract you're giving them money to expand and buy more hardware and if that hardware pays for itself you'll get your money back. Once your contract ends they'll be left with that hardware that they can keep using or sell and profit. Without your money they would have to take a loan and that's always risky.

[swogerino]

The legit ones like Genesis Mining and Hashflare do so in order to upgrade their farms. They simply don't have the money to upgrade the farms on their own. During this time they made a lot of victims with the typical and well known excuse now that they shut down your miner when the difficulty goes really high and so people lose money with them. You can understand that in the end only the owners of Genesis Mining and Hashflare are making money while users are struggling a lot even to just ROI.

[richardsNY]

The legit ones like Genesis Mining and Hashflare do so in order to upgrade their farms. They simply don't have the money to upgrade the farms on their own. During this time they made a lot of victims with the typical and well known excuse now that they shut down your miner when the difficulty goes really high and so people lose money with them. You can understand that in the end only the owners of Genesis Mining and Hashflare are making money while users are struggling a lot even to just ROI.

Another person placing obvious scam sites in the category of legit mining services. Funny thing however is the way you talk down on them after your ridiculous statement. May I know what you think makes these services legit? Is it that they are paying people out? Is it that they have done a tremendous job on putting themselves in this market by smart marketing tactics? Most people choose the first mentioned option, but they fail to understand that it's their own money that they get paid back slowly. This continues as long as there is fresh money coming in from delusional people thinking it's a legit mining service....

[shield132]

Hi all,

No, I'm not going to advertise any particular cloud mining company here. As you (probably) know there are providers where you can buy hash power instead of setting up your own rig or mining farm.

The question that keeps bugging me is why they sell hash power instead of mining for themselves with all that hardware that they have installed? Is is really more profitable to sell hash power rather than use the very same hardware just to mine the coins for themselves?

Thanks in advance!

Thanks someone asked this question.. Of course it's more profitable for them in some way. Let's explain.. Imagine genesis mining, they sell hashrate + take some fees and your contract ends very soon, they got money and you aren't able to profit so they got pure profit here, they made you to pay for them and electricity fees..
Now let's imagine hashnest. They are better than genesis but they got profit too. You buy/sell hashrate and they take some % from it which means finally they profit more than you. For example you buy 100 hashrate for 1 btc and decided to sell, they take fee and you get 0.095 btc (example) this is were they profit..

[pinkflower]

Pono, what cloudminers do is they pass some of the financial risk to their clients. In a way, it can be also viewed as hedging their bets, with you the customer as the hedge.

Mining BTC is a very competitive business, most miners would be lucky to breakeven after expenses.

[VitKoyn]

Hi all,

No, I'm not going to advertise any particular cloud mining company here. As you (probably) know there are providers where you can buy hash power instead of setting up your own rig or mining farm.

The question that keeps bugging me is why they sell hash power instead of mining for themselves with all that hardware that they have installed? Is is really more profitable to sell hash power rather than use the very same hardware just to mine the coins for themselves?

Thanks in advance!

Some real cloud mining companies sell their hash power to use it for their expenses, for maintenance or expand their mining farm, they do it because not all people can afford to buy mining hardwares and do mining, for cloud mining companies it is profitable but for investors it's not. But for those fake cloud mining sites, I bet they are selling hash power that really doesn't exist, what they do is pay investors for some weeks but after some months the contracts are worthless and they take all the money. Investing in cloud mining sites doesn't really make sense it's more of a charity than investing.

[crazyivan]

Because they get more money from noobs paying more then that hash is actually worth.

Plus most of the companies will building mining rigs, rent it to you for a year while asking you to pay for the rig. After that 1 year, the rigs is their ownership and you get no ROI in return. Be smart and analyse your investments before you send cloud companies any money.

[BlackPanda]

Because they get more money from noobs paying more then that hash is actually worth.

Plus most of the companies will building mining rigs, rent it to you for a year while asking you to pay for the rig. After that 1 year, the rigs is their ownership and you get no ROI in return. Be smart and analyse your investments before you send cloud companies any money.

That is a simple overview of the process of doing cloud mining. what you say is true because all RIGs owned by the company will be fully owned. we can only see and we do not have the authority to have RIG. Moreover, cloud mining today is a system that is detrimental to us all, very rare now investment that could be ROI and if it happens then takes a very long time. So Cloud mining is not a solution to investing, there are still many ways that are far more useful and better.

[eagleman]

I'll give an example, do you know banks are working and on how their business is remaining to be intact?
From the deposits of their clients, they are having extra fund that will be used for their main business which is loaning. They are using other people's capital in order to expand their business and this is how these "real" cloud mining works. They use other's fund in exchange of those hash power to buy their upgraded rig.