Thinking of cloud mining with Genesis? Get your head out of the clouds and READ THIS FIRST!
You want to generate steady income for the next 2 years with a Genesis cloud mining contract? Get your head out of the clouds! I am here to tell you that this isn't exactly the most profitable investment, and I speak from experience. When I signed up for a Genesis cloud mining contract, I did some quick math and with a mining profitability calculator decided that it would take about 4 months to break even. At the time Ethereum was trading around $240, thus I must have calculated that I would get well over 1.5 Ethereum in about 4 months. At the time difficulty was roughly 600T.
In the past 2 months, difficulty has more than doubled at over 1350T. This current doubling of difficulty and drop in price puts Ethereum mining out of profitability range within a couple of months, maybe even less. Thus a two year contract purchased for Ethereum will be worthless VERY soon. Ethereum is going to be switching over to Proof of Stake in the near future as well, therefore mining will be obsolete.
You may be thinking about a Bitcoin contract because it is open ended, but the fine print states that it will mine as long as it is profitable. Bitcoin difficulty is increasing at a slightly slower rate, but the probability of profit still remains ridiculously low.
Dash difficulty seems to be increasing the slowest, but x11 currently is one of the least profitable algorithms to mine.
On 6/3/17 I spent what at the time was $436.38 worth of litecoin or 15.8 LTC for a 15 mh/s 2 year Ethereum mining contract at Genesis mining. This calculates to about $30 per mh/s. At first the payouts were decent, coming in at about 0.01100083 Ethereum per day. My most recent payout came in at 0.00488596 on 7/22 (payouts delayed due to hack, which is another story altogether). So in a total of roughly 54 days, my mining contract has generated 0.39260898 Ethereum. So currently I have ETH payouts amounting to a total of $72.1677689609, and may squeeze in roughly 1/4 of that amount in the next month or 2..Lets give a generous estimate of about .6 ETH at current prices and I will have a whopping $110 worth of ETH. To put this into perspective I would have been sitting on $619.7414345196 in LTC if I had just held the coins.
Ethereum daily payouts chart I threw together
As it currently stands, the entire cryptocurrency market is Bearish, but at the time the price of Ethereum was on a bullish path and broke $400 momentarily in a period of about 8 days. Things were looking bright, and if there was a continuation of the bullish market, these contracts may have been profitable.
After my hasty decision to enter into the cloud mining world, I ponied up around $400 a piece for 2 Gigabyte 1070 Founder's Edition video cards, which mine consistently at around 30 mh/s. This calculates to around $13 per mh/s, not including the cost of electricity. Therefore, I am getting double the hash rate for around the same price, and with the difficulty levels increasing at the current rate, and current prices, may still not break completely even. But, at least I come out of the deal with two bitchin' GPU's that can be used to mine other altcoins with lower difficulty levels, or for video games if nothing else. At current difficulties, my two GPUs are generating around $2.15 in profit per day in ETH when you calculate power costs of around $35 per month. This generates a total of about $64 profit per month and has already netted me more than $200 in mining revenue in less than 2 months.
There is no way you are going to find any video cards that are perfect for mining right now unless you are willing to shell out over 2x fair retail price for them.
If you are contemplating purchasing a cloud mining contract, I wouldn't recommend it at this moment in time!. Difficulty and time are against you, so think about other ways to invest your money. Just purchase some coin outright since the price is low. I am no financial advisor, but I would also recommend easing into a position and watch for support and resistance levels to serve as entry points.
If none of this has convinced you to stay away from cloud mining, feel free to use my code wE0q1X for a 3% discount because I do still have active contracts and free hashpower wouldn't hurt. But I seriously wouldn't recommend it!
thanks to @kristyglas for the line breaks, find more here
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Witness Awareness Series: Interviews with various witnesses
Interview with @dragosroua
Interview with @timcliff
Interview with @someguy123
Interview with @neoxian
Interviews with @aggroed, @theprophet0, and @ausbitbank
How to stop robots from killing us. Musings of the sentient rapture
Just read another one of your articles and like you I jumped into genesis without doing much research and my results have been about the same I'm still quite new to cripto and actually only stumbled ont steemit yesterday so I am still hopeful but I have learned I need to do more research but thank you for the article I'm going to give you a follow
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I found exactly the same thing, started a contract (ETH 25 MH/s) with a breakeven at that point (13th June) being around 4 months, with daily payout starting at 0.015 ETH. Now, 6 weeks on, the daily payout is 0.008.
Also it is worth noting, that Genesis have been holding on to payouts since 23rd Jul, due to "an intrusion" here. They put a notice up 3 days ago saying payouts had resumed, but my account shows nothing since 23rd July.
They could do a lot better on the communications, even an email to their customers would have been the minimum that could be expected when their customers money stops showing up.
I would not invest in an ETH contract at this point, the market will need to change a lot to make new 2 year contracts attractive.
I agree, they should have been more transparent about the hack and their intended resolution
Great report @necrophagist.
I've been thinking about removing the genesis mining affiliate links on one of my sites, this post just confirms that I should.
I think there's one problem with the mining contracts and the profitability calculators, they don't factor in the real increase in difficulty do they?
It's all butterflies and rainbows when you are selling something isn't it?
Nope, they don't.
Why should they tell the truth when painting a pretty picture makes them a pretty penny?
Haha! That's a great way to put it.
Luckily, since the site is new I haven't sent any referrals. So that's good news.
Hey man! Got here from Peace,Abundance and Liberty.
I personally bought a $225 ETH mining contract at the begining of June.
Since then, profitability has gone 4 times lower than when I started
It's not like we're not gonna make a profit, since ETH WILL go up considerably in the next months. But it sure sucks with this sudden difficulty rise :( . Not to mention the hack.
Followed you btw
If I had known the truth about the speed at which rewards diminish I would have never signed up. I feel betrayed by all the steemit users who just spam their affiliate codes and make videos about how wonderful Genesis is. Never trust another's opinion! Shame on me
I appreciate your insight! I have always wanted to take the plunge and pick up a few 1070's to embark on my own ether crytpo mining journey. I am currently involved with hashflare SHA-256 lifelong mining and it has been pretty good to me over the past year. Any advice on getting started or you think purchasing coin at this point is most reasonable option?
Honestly, GPU's are way too expensive to purchase anymore and even if you find a used one at the same price as a new card should be, the time frame is closed on breaking even, let alone making a profit. Just buy the coins on dips..don't go all in at once
Just buy & hodl the coin. This whole thread is a monument to the folly of buying mining contracts instead of just buying the coin directly.
The problem with Ethereum is that the price was going down while the difficulty was going up.
Usually with Bitcoins and some other altcoins, the difficulty graph is similar to the price graph so... IMO mine Bitcoins is going to be most of the time profitable, even if the difficulty grows a lot.
I will share some analysis regarding this.
Meanwhile, take a look at this post: Cloud Mining ROI - What if Difficulty DOUBLEs https://steemit.com/cryptocurrency/@bitatlas/cloud-mining-roi-what-if-difficulty-doubles
I went ahead and read your post..great information there
Glad you enjoyed. I'm going to write soon one similar but projecting the growth of the Bitcoin.
Great post. Appreciate the brutal honesty.
I learned this lesson the hard way back in 2013 when the Bitcoin manufacturers talked a great game about Gen. 1/2 ASICs. They proceeded to then mostly delivered 'em all too late to their customers to do any good.
My advice to anyone thinking of a mining contract: "Don't. do. it."
Mining is profitable for a very short period of time when the equipment is cheap and the price is just right. I am still profiting on my mining rig, but the time decay is creeping in quickly
And what happens when difficulty goes up? Yeah you guessed it: prepare for 1000 dollar eth.
Thank you for the warning, I was so close to invest on Genesis Mining but thankfully I did not.
Very wise decision my friend