Cloud Mining Questions

[SpeedoSam]

I am just wondering about the cloud Mining services out there that allow you to purchase computing power in order to mine, they're obviously scams right? If someone has the computing power to sell why wouldn't they just use it to mine themselves? Is it just because they don't want to take the risk with market volatility?

[Charles-Tim]

You ar right that cloud mining are scam. It is better to avoid them. Some will begin with good profit but later the profit will be decreasing in a way the person will be losing. Some most cloud mining are just scam in a way that if you pay them money, you will get no profit from them at all and all the money you give them will not be returned.

[philipma1957]

I am just wondering about the cloud Mining services out there that allow you to purchase computing power in order to mine, they're obviously scams right? If someone has the computing power to sell why wouldn't they just use it to mine themselves? Is it just because they don't want to take the risk with market volatility?

Waste of time.  They all have a "we can fuck you anytime we want clause"

So if mining gets worse they shut you down.

If mining whale to the moon they shut you down and mine themselves.

So the only way you can make out is have mining go sideways.  And squeak out a tiny profit.

Just buy the coins.

BTW all above is what the legit ones do.

The thieves just vanish with your coins.

[NotFuzzyWarm]

Case in point: https://www.justice.gov/opa/pr/two-estonian-nationals-extradited-estonia-united-states-575m-cryptocurrency-fraud-and-money They ran a cloud mining Ponzi called Hashflare that got shutdown in Nov. 2021.

[BitMaxz]

Like others said it's a scam for most of them but there are a few legit that offer a service to rent units or hashrate samples in Nicehash/miningrigrentals/Binance cloud mining they are the only ones legit for now.

The reason why they sell their hash rate is that they can sell their hash rate at a higher price compared to mining directly to the pool but if you are a customer and you think deeply why not just buy BTC instead of renting it or buy a unit and mine with your own its obvious scam if you think it deeply.

[jrrsparkles]

Cloud mining = scam, end of the story.

In 2017 run, people may not have that clear knowledge but it's been years and whenever you type cloud mining even Google will give you scam as the next keyword for your search which concludes what it is. And if you want to know why it's not possible try googling it.

[Felicity_Tide]

Case in point: https://www.justice.gov/opa/pr/two-estonian-nationals-extradited-estonia-united-states-575m-cryptocurrency-fraud-and-money They ran a cloud mining Ponzi called Hashflare that got shutdown in Nov. 2021.

Quite an interesting story, but a sad one for those that couldn't get their funds back. Though I don't really know much about this cloud mining service, but I think everyone should have a knowledge that any company offering a cloud mining service must have a physical location where their mining equipments are set. So, does this mean that none of the investors could even confirm the actual location of the mining site where everything is done?. Just imagine buying cryptocurrency to pay off your investors when you actually mine cryptocurrency on your own. A very funny situation I must say.

[pgrach]

Agree overall with above comments direction: by default be very careful when considering cloud mining.

I just wanted to add a bit of nuance:

Imagine you invested in a mining farm: land, warehouse, shelves, transformers. Your primary concern is to fill up 100% of your capacity as quickly as possible.

You have three options:
(1) Raise more capital and buy machines yourself => self-mining.
(2) Find clients who bring their hardware => hosted mining (or "mining hotels").
(3) Sell "virtual" machines, collect money, and buy machines => cloud mining.

Some operators might use a mix of all three options.

Cloud mining is administratively simpler than (2) since contracts are not based on specific units (which can fail or underperform), but rather on a theoretical hashrate. Some sell it as if new model "ASIC" while on the real shelves there are completely different models (who can check?). Also (3) allows to sell a "fraction" of a miner, making it more retail-friendly. The problem arises when the underlying hardware starts to fail. For instance, if you promised a certain hash rate to your cloud clients but the machines you bought are faulty. Many other issues can occur if risks are not properly managed, ie when the actual hashrate from operations is behind promised hashrate.

In theory, cloud mining, if done correctly, can exist (IMHO). However, it is challenging, which is why those who have resources prefer to go for option (1) or, at most, option (2).


To answer your question about why someone would choose cloud mining instead of mining themselves:
- In option (1), earnings are volatile since revenue is in BTC and operating expenses (OPEX) are in fiat currency;
- In options (2) and (3), earnings are fixed since contracts are usually in fiat currency per TH/s or kilowatt-hour kWh.

I hope we can add a section to our calculator (https://aidala.uk/dashboard) that allows users to visualize and compare earnings from mining versus earnings from hosting over a selected period. This comparison can often provide very interesting insights.