Let me explain why cloud mining is a scam. Do not be scammed.
For those who don't realise or know why.
When you pay for a contact in cloud mining you are paying for a set hash rate over usually a 6-12 month period. You will pay a fee usually just under the current rate at which you would earn under the current conditions of blockchain. (Diff, net hash etc) So when you start mining in the first 1-2 months you turn a small profit. The second new hardware or farms come online that profit drops. When the diff goes up profit drops. When the net hash in general goes up the profit drops. The reason is simple you need more hash too earn the same profit. You are paying for a set hash which will not increase. Do not fall for this trap. It is just that. People would use it themselves if it was more profitable than contracting it for a year.
I love the mathematics of mining and just trying too stop my fellow steemit members from wasting money.
Here is my thoughts on it:
Why would the "cloud mining provider" rent out the hash power instead of just taking the profit themselves? I can think of four reasons. First reason: they've found that it's possible to rent out the rig for a higher price than the expected profit. In other words: whomever is renting will most likely go in minus. The average weekly return on investment, measured in BTC, is constantly sinking due to increased difficulty and better hardware being poured out to the market. At the same time the value of the BTC may be growing. The mining company has probably done quite extensive research on this, much better research than the average naïve and optimistic bitcoin enthusiast.
The second reason may be that they want to expand the farm, and that such expansion requires lots of capital, and finding the capital may be hard. Then again, if one is having a "water tight" business case it should be relatively trivial to take up a traditional loan or to raise capital through traditional ways ... but perhaps it's more lucrative to sell "mining contracts" to naïve bitcoin-enthusiasts than to take up a loan. Again, this depends on the naïve investors expectation on the yield from the mining equipment he's renting is much higher than the expectations the mining operator has for the equipment.
The third reason is that the mining operator is trading away risk; they want a stable and predictable income. This is legitimate.
The fourth reason is that it's just a scam scheme and not a real mining operation.
In any case ...
What about mining zCash? The launch date is on 28 oct! It worth to get a contract for 1.2H/s (58$/year) from Genesis?
Interesting article. Nice to see I'm not the only one who thinks like this. Most of the coins might not even know they are a scam. I'm sure they have good ambitions but they simply don't have the team to conquer those ambitions. Do your research properly. I found this amazing platform: https://www.coincheckup.com They seem to give this complete indepth analysis of all cryptocoins. Sorted by team, product, company, advisors, previous investors, etc. See: https://www.coincheckup.com/coins/Zcash#analysis For a complete Zcash Investment research report.
There are different kinds of "cloud mining".
Quite many "providers" have been running true ponzi-scams, not even bothering to invest a cent into hardware, just collecting "investments" into a big pot, paying back a very good return on the investment from the pot. It's profitable for the scammer as long as the new investments are pouring in faster than the dividends are paid out. Finally the scammer runs away with the full pot and close down the "cloud mining"-business.
Other mining providers may be legitimate, leasing out hash power as a way of funding expansions of the mining farm. Still one should be lucky to make a real profit out of it.
Hi Thank You for this. I must confess I do not know what this means, where can I find out more about it ?
good info. makes sense. the cloud people only wanna make a profit on us poor mining addicts :)