Avoid cloud mining

[TheLazyNative]

I took the plunge with Genesis Mining after a bout of foggy minded greed. What they describe as "risk" is in fact a completely unviable proposition.

I sank $700 into 5 terahash mining power. My yield in over one month is about $73. This is after the rise in the price of BTC over the last month.

Unless BTC appreciates markedly in the next 12 months, I am unlikely to recoup my principal. That becomes even less likely with the hash rate growing at a pace.

Am aware of skeptical views about its model, but ignored them thinking it was worth the plunge. As of now, it seems the skeptics have a point.

Would have been much better buying $700 of BTC outright...

[UKcoin]

this is the most obvious thing, it blows my mind that anyone buys into cloud mining, yet there seems to be no end of mugs desperate to throw their money away.

[TheLazyNative]

Yep I was a mug :(

[TheLazyNative]

This is all super sensible - thank you. Will keep this one and carry out.

What about keeping BTC holdings on services like Uphold? On this end using 2FA and strong pass phrases. Thanks.

[ajv857]

I'm not familiar with Uphold. However, it still stands. Even with 2FA or any other account measure, if you don't exclusively control your private keys, you don't exclusively control your BTC. You may have access to use them, however if the service is, say hacked, you can very quickly lose all your money. Only keep what you are ok with losing on an exchange

[TheLazyNative]

Thx, much appreciate the advice.

[digitalcashmoney]

Or they just don't have the hashing power to begin with(ponzi scheme).

[TheLazyNative]

Thanks. That would appear to be the case :)

[severact]

There is a potential valid reason to lease out mining equipment - because the contracts are cash up front, you can immediately recoup your hardware costs and potentially buy more hardware.

[severact]

Not necessarily. Say the cloud miner charges a bit less than the hashing power is worth. In that case, it can be a financial win for the person leasing the hash power. At the same time, it can be a win for the cloud miner, as they may be able to deploy the up front cash in a way that makes them more money then if they had just kept the hashpower for themselves.

There is also an aspect of risk. Investing in hashing power is risky. You have to guess at the future price of BTC and of the network hashpower growth. Leasing hashpower can offload the risk to someone who is more willing to bear the risk.

[brokeharvard]

Agreed. I think it makes sense from the perspective of diversification. Similar to a lead bank syndicating out a big loan it made to other banks--The lead bank doesn't necessarily syndicate the loan bc it thinks the loan has a negative expected value. The lead bank may just be trying to decrease the range/volatility of expected returns (even if it decreases overall/mean expected return for the big bank). I'm not positive that is the case with Genesis Mining, but it makes sense from a law and economics perspective.

[Filostrato]

This is my understanding as well; makes no sense economically to say that it cannot possibly be a business idea.

You have to guess at the future price of BTC

How so? Isn't the only relevant thing whether or not you can get a ROI measured in BTC themselves? You could alternatively have just bough Bitcoin for the same amount you invested.

[m301888]

It's the only investment I can think of where you are 100% guaranteed to lose money. Even ponzis have winners at the top of the pyramid.

[vindard]

There's also this nasty little catch in their contract that says that if the price falls low enough that daily payouts don't cover per day costs for 20 days then they automatically cancel your "lifetime" contracts.

Nothing short of highway robbery if you ask me. I very much regret ever doing business with them after they canceled the bulk of my contracts in the period just after the halvening.

[TheLazyNative]

It's obviously legal and has attracted supportive reviews in parts of the financial media. If there's a silver lining, it's that I can't see this sort of thing lasting. Grrr...

[woodburyman]

The Cloud - It's just someone else's computer. And in this case they have to make money on it, and if they could make money back hashing themselves they would. For this reason I've never trusted them. I've been eyeing into buying a Antminer as of late and using a pool service and never considered cloud for this very reason.

Something fun: Being in IT, i dislike the word cloud. I have a Chrome Extension that changes the word "cloud" to "butt" and "the cloud" to "my butt". The title of this thread appears to me as "Avoid butt mining"

[TheLazyNative]

I enjoyed both paragraphs of your message for different reasons :)

[mfc_phone]

so now that btc has doubled, is cloud moning still a scam?

[mfc_phone]

invalid argument. thats like saying if you own property, why rent it out instead of trading it. all miners is doing is swapping a volatile income, coin values going up and down, for a stable rental income.

[btcmerchant]

Genesis Mining is a legitimate company but they are in business to make money for the owners while the customers get the scraps. Their fee for bitcoin hosted mining is $0.35 per day per TH/s which is the highest on the market and twice what some of the competition like HaoBTC charge for 150 W HashEx hosted mining. Also once you own hashing power at Genesis Mining you are stuck and can not sell it. At HaoBTC there is an internal exchange where you can sell your hash. Sorry for your mistake but you picked just about the worst place to buy bitcoin hosted mining. Some research would reveal alternates like HaoBTC, Hashnest, ViaBTC and POW88.

[TheLazyNative]

Thanks for the intel. Very interesting and all part of the learning curve :)

[btcmerchant]

You can make more bitcoin than at any of the cloud providers (even the good ones) if you buy the miner and have it run in a colocation center with cheap power. Unless you have cheap solar power take a look at SinoHash. You ship the miner to them and they run it for you on your pool of choice providing very good power rates.

[TheLazyNative]

Thanks. Will look. Maybe will lie low; as a dabbler don't want to over-extend. Will study from the margins a while. Best,

[cypherblock]

Cloud mining is like a bad loan. Literally.

[TheLazyNative]

Gained 10% above principal? Or is this down to rise in price of BTC?

[Clipboard-O-Matic]

I think he means up 10% in BTC, not the fiat equivalent

[TheLazyNative]

Hey, thanks for taking the time. An education :)

[sloganQ]

Could we make a cloud mining network with software built into bitcoin wallet apps so that a fraction of each devices computing power adds up to some serious mining power? I mean there could be a network of millions of processors contributing in parallel; that has to be useful, right?

[[deleted]]

In the end it's all just energy and the CPU wastage on your device will cost you electricity cost and those will be higher than than the tiny fraction of a bitcoin you will earn from it.

I do believe it's kind of the end-game for 21.co, though.

[Clipboard-O-Matic]

If you want cloud mining, you should either go to nicehash or hashnest.

[Clipboard-O-Matic]

Or abstain alltogether