Cryptocurrency Cloud Mining – Is it Profitable and worth it? A Reality Check

Cryptocurrency Mining through a home-made Mining rig using NVIDIA or AMD GPUs had been a profitable gig until the last couple of years. However, since the difficulty level of mining blocks has increased exponentially, it has ceased to become profitable now. Also, after considering the costs of electricity, mining has become relatively expensive and not feasible. Enter Cloud mining companies like Genesis Mining, Hashflare, NiceHash.
Recently, Cloud Mining has nowadays caught the fancy of cryptocurrency enthusiasts partly because of the hype created around Bitcoin rising prices in the media. In this blog post, I want to explore whether cloud mining through these companies is really profitable or not.

What is Cloud Mining and how is it different from Hardware Mining

Hardware Mining is where you set up mining rigs. Mining rigs are essentially a bunch of GPU’s set up, which inherently have high processing power and can solving those hashing algorithms effectively and efficiently with faster processing times. You can set up mining rigs with essentially your graphic cards like NVIDIA or AMD. The best option here is the NVIDIA GeForce GTX 1080 TI or GeForce GTX 1060 TI. AMD essentially is cheaper, but at the same time gives you less processing power as well

Cloud Mining in simple terms is just simple mining, but by buying shared resources through companies having enormous mining rigs. These companies have these mining rigs setup in countries where electricity costs are cheap. So, these companies generally set up rigs in countries like China and Iceland, where electricity and other infrastructure related expenses are cheaper. These countries mentioned are the favorites to set up mining operations.

Cloud mining companies obviously charge for their services. You would probably think, when these companies can mine for themselves and make huge profits, why do these companies sell these mining contracts at all? Good question. First reason is by selling these contracts, they hedge their risks of fluctuating cryptocurrency prices by locking their sale prices of contracts. When buyers buy these contracts, in essence indirectly they are locking in the rate of cryptocurrency over the period of the contract. Thus, the mining company spreads their risk by diversification. Second reason, is that these companies sell these contracts at rates which essentially are on average profitable for them given their costs.
What’s in it for the crypto enthusiasts, you ask. These companies can provide us with a transparent, reliable and easy to use platform for mining our favorite cryptocurrencies.

Let’s conduct a review of cryptocurrency mining companies, starting with one of the biggest cloud mining companies – Genesis Mining. We will then move onto Hash Flare and Nice Hash exploring the pros and cons of each.
Reliable Cloud Mining Companies

Genesis Mining is the largest Cloud mining service available. They are by far the most reliable and legit cloud mining services available today. Genesis Mining has contracts for Bitcoin, Ethereum, Lite coin and other smaller altcoins like Dash as well. Genesis Mining has contracts starting from 29.99/ month right up to contracts which run into thousands of dollars for a 2 years contract. Based on my calculations, it may take roughly a year to recover your investment money. After this first year, you can reap in the rewards of your investment and what you gain is pure profit.

Hash Flare is another such Cloud Mining option available. The contract prices are similar to Genesis Mining, the only difference being that Hash Flare offers 1 year contracts. Again, it may take roughly less than a year to recover your investment money.

Nice Hash is another of these cloud mining resources available. Similar to Genesis and Hash Flare, it offers its services for cloud mining. The main difference they offer is micro contracts. Micro contracts are contracts which give you large hashing power for a small duration such as 24 hours.

One catch with these cloud mining services is that over the duration of the contracts, which are fairly long, the difficulty level of solving Blocks will go up exponentially as the prices of these cryptocurrencies goes up. That is a major stumbling block as the Break-even periods mentioned above will change drastically and may increase.
Final Take on Profitability of Cloud Mining

Cloud Mining services that are reliable, like the ones I described above may be a decent bet at times when the prices of the desired crypto is suppressed or those that are not mined by many. This also calls for a lot of patience on the part of cryptocurrency enthusiasts. In my humble opinion, its better to invest directly in the cryptocurrency rather than pay for a mining contract, if you are sure about the future of the cryptocurrency that you are purchasing the mining contract for.

Wish you all the best in your crypto endeavors!