Bitcoin mining about to get a whole lot more difficult.
Bitcoin difficulty gets adjusted every two weeks to maintain a block reward time of about 10 minutes.
Think of it this way, if there was a quarter on a football field it could take you a 1/2 hour to find it. If you had 100 friends, you would find it in minutes, maybe seconds. In order to maintain the 1/2 hour time frame to find the quarter, you would have to expand the search area from 1 football field to 100 fields.
Bitcoin does the same thing, as more miners enter pools, difficulty gets adjusted.
It appears that miners are abandoning Bitcoin Cash(BCH), and moving back to Bitcoin. Over the past few weeks, the hashrate of BCH has gone from 3 ExaHash to 1 ExaHash.
Over the past week, during the selloff, Bitcoin hashrate did dip to 4.5ExaHash but has recovered today to over 7 ExaHash:
https://blockchain.info/charts/hash-rate?daysAverageString=7
Bitcoin Wisdom is predicting that in less than 2 days, the mining difficulty is going to increase by 20%. That means if you are hardware, or cloud, mining your daily earnings are going to decrease by 20%:
https://bitcoinwisdom.com/bitcoin/difficulty
Our Antminer S7 will be reduced to about .50c/day in earnings. For $15/month profit, the wear and tear on the unit is not worth it unless you are using it for a space heater. Also our cloud mining contract will be at risk of being voided due to costs exceeding output.
Keep an eye on Bitcoin price next week, the difficulty adjustment is going to have a huge impact on everyone.
is cloud mining a scam or could it really be profitable?
There is only 1 situation where cloud mining could be profitable. The price of Bitcoin has to keep going up, and it also has to exceed the difficulty increases. There is also a fine line between buying the contract, and just buying Bitcoin. If you buy a contract, and the price of Bitcoin stays the same or goes down, the contact will most likely be void within months. In that case you were much better off buying Bitcoin, and holding.
We bought a 2.5TH/s contract for $350 USD last year, and have earned about $1250 in bitcoin as of today(there is a small amount of referral income mixed in there). If we would have bought 1/3 of a Bitcoin instead, we would have about $1200.
You are better off buying the coin, and not have to worry about timing the market.
G/L