Can you make money with Cloud Mining???
When I first got into Bitcoin I wanted to start mining. I heard it was no longer profitable to mine at home but I still wanted to see how it worked.
At home you basically can't mine anymore. You now need specialised hardware to mine. In my search it wasn't long before I came across cloud mining.
ROE 78%
Today I did some quick calculations if I was to use a leading cloud mining service, and came up with ROE of 78% over a year, using the current difficulty and a price of 2000 for Bitcoin. Is this too good to be true?
Genesis Mining
Genisis Mining appears to be the cloud mining industry heavyweight. Its been around for a long time and has a good reputation. I used Genesis Mining about a year ago and in my experience this company is honest and provides a good service as advertised. I am just not so sure you can make much money from using the service. Today I looked again at Genesis Mining and I got initially excited when I calculated 78% ROE. Had they changed their fee structure? Was what I was seeing too good to be true?
Fixed Fees
The key variable in these contracts is the fact that fee is fixed in Dollars. If the price of Bitcoin goes up you will make money. If the price doesn't go up you won't because the difficult will almost certainly increase over time and even if the price goes down the fixed dollar fees still need to be paid. Don't worry If your account runs out of money they wont come after you for the money, most contracts are set up to just cancel at that stage.
Difficulty
Another important variable is the Difficulty. Over the last year the Difficulty has increased about 3 fold. The Bitcoins earned per day is very sensitive to the value chosen for this variable.
Alternative Scenarios
Lets look at a few alternative scenarios with different assumptions.
Difficulty
Latest Difficulty (Bitcoinwisdom.com)
Projected Difficulty
A reasonable approximation for the forthcoming year would be to multiply the current difficulty by 1.5 times to work out on average the difficulty for the coming year. That gives a difficulty factor of 743954470975.
What happens if the Bitcoin Price goes up significantly?
I am bullish about Bitcoin so lets assume its going to be stable at 3000 Dollars in the next year. It might be more realistic to assume a volatile price; swings, up to 5000 then back to 1000 then up and so on, but lets keep it simple.
Putting these variables into a calculator to work out the ROE gives 78%.
That's still a decent return but ...
What would happen if the Bitcoin Price stayed at 1000 Dollars?
In this scenario with the same difficulty assumption your ROE is -85%.
Here you lose, sure you still earn Bitcoin each day but you lose your initial investment.
Conclusion
Cloud mining still is not something I wish to invest in. If I want to bet on the price of Bitcoin I will buy more Bitcoin and HODL for dear life.
This post has not intended to be financial advice and if your thinking of investing money do your own projections specific to the contract your purchasing.
Thank you for reading this. I write on Steemit about Blockchain, Cryptocurrency, Travel and lots of random topics.
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Thanks, I will study it.
I use Genesis mining, and ya don't use it for bit coin, right now Dash is the more profitable coin to mine, most investments in dash in Genesis mining will give you ROI in about 3-5 months and they are two year contracts. They have a great affiliate program that gives people 3% off purchases for using other users codes and the originator of the code gets free hash power. Hate to plug myself here, but every Saturday the first people to reply to my post. I'll use their code so they will get a free hash boost, and every 4th Saturday I give away free bitcoin. If you don't want to invest to much into genesis mining, maybe just start a genesis mining account, go to my blog put in your affiliate code and that will give you a free boost, and since no one is really following me your chances are high for free bit coin. A sorta cheapish way for you to test Genesis mining.
Thanks @halfdime I'll give your affiliate code a try.
There has been a huge spike in the price of dash which means it's profitable to mine at the moment. One strategy to make money with cloud mining is to switch the coins your mining depending on which is up.
You don't have to use my code, go here https://steemit.com/crypto-news/@halfdime/halfdime-s-unofficial-genesis-mining-affiliate-code-swap-meet and post your code, I use the first four codes posted and this will give you a small boost in hashrate, pretty much free mining for you
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Thanks for the shoutout @screenname.
remember it is a w year contract so for example eth will likely be moving to pos from pow so no mining returns.
Even bitcoin could move away from mining which could change your roi significantly, also you are open to currency devaluation.
can you move your hashing power from coin to coin?
Your limited to certain coins and ones that are compatible with the algorithm you have purchased. You can switch between coins. I think that is the only way to make money, but you need to be lucky and a few of the coins listed need to go way up in price to be profitable.
This is an interesting theory, I have been researching the costs of mining and the possibility of creating a farm.
If you have access to cheap electricity it might be profitable, it's just very difficult to get into it at this stage.
Great post! upvoted and followed you. I test and compare all the largest cloudmining contracts in a google sheet file. I regularly update it so everyone can get the best deal for their money at any time! I also describe all the criteria you described and which everyone should take into account before buying a cloudmining contract. If you are interested you can find it on: https://steemit.com/cloudmining/@circularitylabs/everything-you-need-to-know-about-bitcoin-cloud-mining-comparing-genesis-mining-vs-bitcoin-pool-vs-hashflare-vs-minergate