Why Cloud-Mining isn´t only risky

This story is a translation of this German version. If you find any grammar mistakes, feel free to point me - I´m not a native speaker and need some more practice in English. :-)

In the last time I´m always reading such hugh praise about cloudmining providers telling how great and horny all of that would be.

BULLSHIT!

Whoever makes this statements either has no idea about the matter and / or can´t calculate! Why? Easy:

Cloud-Mining is risky:
In the intire western world, a cloudmining service provider needs a banking license. [Correction: They don´t need a banking license, but they do need a certificate / registration at the banking supervision.] This is, because they are collecting money from the public, invest this and generating a profit which will not payed out directly to the investors. Because of managing the payouts for the investors, the systems needs to be supervised by the banking supervision. In the case, a cloudmining provider does not have this, the banking supervision is entitled to close this company by now and to confiscate any technical equipment.

In particular, the provider Genesis Mining from Iceland promotes that the customers can buy a share of hardware (Do they sell shares or investment papers?) which can be sent to the user at any time (but at the earliest after one year) and in case of insolvency. Even the hardware would be in ownership of the users. Honestly folks: Do you really believe this marketing crap?!? If the company goes into insolvency, the CEO is replaced by an external insolvency administrator who has absolutely no idea about mining. He will see a lot of hardware, will be glad there´s something to silver and will offer all the hardware at the free market. Unless the investors, so YOU, get this in time and can prove a retention of title. Does Genesis ever sent such a paper? I don´t know one case...

Has anyone ever bothered to find an imprint at Genesis or the Bitclub-Network? I haven´t found one...

Cloud-Mining is not economical:
It shouldn´t be a secret, I´m selling GPU-Miner and run an own Datacenter in Switzerland. I even know the prices in wholesale and retail for any parts, know the prices of electric power and even know, how a datacenter provider need to calculate in order to run economical.

A miner with 320MH ETH-power costs about 4000€ in wholesale. If you buy the machines in a thousands package, you might get it for 3800€ with a lot of negotiation skill. Then, the machine needs to come from China to Europe. The Shipping by airmail costs about 4 USD per kg - one miner will cost about 150€ by airmail. After reaching Europe, the machine needs to pass the customs. There will no import taxes apply but, depending on the country, there will be 8 to 25% import VAT on top of the invoice amount. So we had 4150€ - with import VAT of about 20% the miner will cost about 5000€. If I run this machine at my home at ignoring the costs of power for the moment, those 320MH will have an output of about 500€ monthly. So the miner will be in profit after ten months.
At my home in Switzerland, electricity costs 0,10€ (industrial power!); the miner consumes ca. 1300W per hour. So let´s calculate the costs of power: 1.3kWh * 24 = 31.2 kWh daily * 365 = 11,388 kWh yearly / 12 = 949 kWh monthly. 949 kWh * 0,10€ = 94,90€ = 95€ costs for power monthly. Out of this, the machine earns just over 400€ monthly. So I paid my machine at home after 12 monthy and start to make profit. In this bill I have now deliberately ignored the calculatory costs for RZ technicians, buildings, fire protection, Internet, .... These costs are per machine in the data center from their own experience at around 10 to 15 € / month. A dealer for pre-configured miners must also take into account the risk of defective hardware (vulgo: warranty & guarantee) - in IT it is known as about 10 to 15% failure rate, which must be taken into account. Also the technician who assembled the parts, installed and tested I ignored!

But with the CloudMining provider you have an ROI (return-on-investment / time, until you get your investment back out) of "only" 24 months.

Are the cloudmining customers really so flagging?!? The calculation does not work! Even, if they´re paying affailiate provisions!

How can the end customer protect themselves from scam?
First of all, the customer should pay attention not only getting access to a control panel to view statistics. Rather, it´s really omportant to find a datacenter who gives the consumer a 24/7 on-site access and grant 24/7 access to the customers hardware using Teamviewer, AnyDesk or other remote maintenance tools. In addition, the payout of income may not run through the provider. The consumer must therefore be able to administer the hardware himself and can define the target wallet of the mining software at any time. Only when your hardware broke down or isn´t available, the datacenter operator should be authorized to intervene - and also only on explicit instructions from the customer. After all: It´s your hardware! You bought it!

Ultimately, you need your own hardware (which you can certainly BOT buy for 500€...) and a datacenter who acts in the sense of the customer and doesn´t want to make the quick money. A ROI of 12 to 16 months is normal with GPU-miners. Keep in mind: Even a datacenter need to buy the hardware, the power, the power distribution, the technicians. A datacenter can never ever be cheaper than you!