A detail investigation into cloud mining business: And Please THINK TWICE before taking any cloud mining contract
Abstract
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There are multiple sources and reviews indicating that cloud mining does not work as intended. Yet steemers still put their promotional content here. While their articles are legit in some ways. Please think twice before accepting any "profitable" mining plan.
This article is focusing on cloud mining business and in specific Genesis Mining.
But first, I need to emphasize that Genesis mining is not a honest company (well at least not a big scam) that does not really give you the amount you actually deserve. I bought an extremely small amount of cloud mining plan in Ethereum and the amount I received was in large depreciated with the independent website(https://etherscan.io/ether-mining-calculator).
**To verify my has rate is 3.2 MH/s, please see the picture at the end of this article, I don't want to duplicate figure in this article.
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The difference in mining payout between an independent official calculator and Genesis mining can be up to 35%
Set aside all the business scam, the real problem is in the mining difficulty.
1. Exponential increase in mining difficulty
Promoters often calculate break-even price to show how easy a mining plan could make a profit. However, the calculations always assumed that mining difficulty remains unchanged.
I have to reiterate that mining difficulty is the most important factor a user/miner should consider.
A mining plan in Genesis Mining lasts for 2 years and the mining difficulty increases 3-fold already. How are you supposed to break-even if your mining amount decreases by 66%?
Detail calculation is investigated and posted by the community here:
https://99bitcoins.com/genesis-cloud-mining-review-scam-legit-investment/
The logic here is: Even though coin price / market cap is volatile and catching our attention, it's mining difficulty that we should investigate before making a mining contract
2. Proof of work (mine to get coin) will be depreciated (or simply cancelled)
Popular currency like Ethereum will not be solely supplied by miner, as the entire crpyto environment is changing. In the future (actually by the end of this year), ETHER can be generated by both miner and coin holder.
This is known as Ethereum Ice Age, or the formal name Proof of stake. The margin of ethereum (for the miner) is going to be shrinking a lot.
3. Mining plan is not flexible
Genesis mining claims the option for users to switch from one to another currency whenever appropriate. I have contacted the customer service and understand that this is only partially true. In the mining allocation page, a panel is given for you to "switch" hashpower to mine another currency. But all of you may notice that there is word "(AUTO)" near the currency name. What does that mean? Fortunately customer service does not hesitate to provide the correct answer, and I quote
"You cannot mine STEEM directly with any of our contracts, but you can get payouts in it ... ETH coins are mined and traded at payout time to STEEM. "
There are a lot of Steemers promoting cloud mining service and I have no idea how far this article can reach. But if you come across this article and read through here, please resteem this article for a better awareness in this community.
For other steemers who want to promote cloud mining business, you can. I mean, everyone has the freedom of choice and incentive to do anything. But at least try to disclose the risk and show honesty.
I think nowadays altcoin mining become faded. Since mining is not a good solution for scaling up the altcoin. The altcoin is going to change from POW to POs. And there are more and more ICO with fixed amount of tokens. So the future of mining is not so optimistic...
That's so true. Recently many beginners asked how to buy mining contracts but I think it is not profitable. The difficulty will only keep increasing, even when the price increases, many more people will then rush into mining that coin, making the difficulty increases exponentially. So it is actually betting on the price will only increase with time with zero flexibity.
very nice! thanks for sharing with us such a informational post
yes many new users will be attracted by the large amount of posts and will invest without careful consideration. hope that new users can see your post and think twice before buying
@jimsparkle I made a post yesterday on my first 20 day results with hashflare ethereum contract and I definitely agree with most of what your saying especially with the difficulty increase being my number one concern. I did however recoup almost 30% of my investment in the first 20 days. 220 in and already 60 out but that is due to the rising price in ethereum. I am very curious to see how this will play out over the year if you have any questions check my post I went into detail. https://steemit.com/ethereum/@cryptocure/hashflare-first-20-day-results
Thanks I will.
Nice post! I have also brought the genesis mining for 4mh hast rate for ETH. I have not tested the actual hash rate they give me, but I am sure that it's not worth. As the payout is keep decreasing everyday. I know that payout would be decreased after all, but I don't think it would be a singnificant amount every single day..
Good post. I have an AMD RX480 that mines at 21 Mh/s and I also have 21 Mh/s Ether mining on Genesis Mining. They do pretty much the same. I get a 0.05 ETH payout from both about every 3 days. It's not so much the mining difficulty that makes your profit less, it's the daily maintenance fee(covers electricity I think). If I subtract the electricity cost from my GPU, they're pretty much dead even. Also, we're calculating profit at current exchange rates. If you believe the coins will be worth more in the future, then it could be very profitable at a later date. Hell, I still mine BTC with a jalapeno from Butterfly Labs, because I believe the small amount it mines will be valuable one day.
Thanks for supporting my story. They sometimes do pretty much the same. If the difficulty goes up, your payout went down accordingly. But when the mining difficulty goes down, they wont do the reverse.
Thats why it is very tricky to follow the trend.
I'll take another look at my payouts later. Thanks.
I decided to put alot of money into Cloud mining... made charts and seemed very profitable at first.. but you go through the details of MEFs and the changing difficulties... shits almost impossible
Keep spreading truth and education @jimsparkle! Good work! Useful article. Seems the images or html is broken, so your post may need an edit, but it was still right on target about mining schemes.
Thanks so much. I will see if the problem occurred in other computers. Follow me for more update : )
I already followed :)
Cheers : )
I strongly believe that investors these days should thoroughly examine an investment scheme before jumping into the bandwagon.
I had a few friends that came up to me and asked my honest opinion about cloud mining services and to my dismay, i was pretty shocked at these guys for bluntly investing tons of money in these cloud mining services without understanding the true nature of it.
Most investors feel that they are able to generate extraordinary profits by singing up for these cloud-mining services and generating a daily passive income without understanding the TnC's of Genesis mining.
The part that discouraged me from investing with Genesis minining was the clause which stressed that a contract may be cancelled without notice if Genesis finds it to be unprofitable or if the price of the given coin has been dropping significantly for over 60days. Wow, what a turnoff
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