When most people hear about cloud mining, they either think it's cheap endless passive income or a scam that can never be profitable. The truth however like always is somewhere in the middle. In this article I will try to show you a different perspective on cloud mining. First, I will show you which factors you should consider when buying cloud mining contracts. Then I will test and compare all the largest providers so you can make sure you always buy into the most profitable option! You can find the comparison in this spreadsheet.
When considering to buy a cloud mining contract you need to take the following 8 things into account:
- Legitimacy of the company
- Simple ROI
- Bitcoin mining difficulty
- Bitcoin block reward halving
- Maintenance Fee %
- Bitcoin mining vs bitcoin holding
- Real ROI
If you invested in cloud mining and don't understand half of the terms mentioned above I would strongly recommend you read the full post.
Legitimacy of the company
When I just started my whole crypto adventure I figured quite quickly that at the time zcash was a profitable coin to mine. So of course I googled a zcash cloud mining contract and it existed! A crappy site nobody ever heard of called zcashminer.com offered lifetime contracts with ROI in 40 days! That seemed like a great idea for me! So I decided to invest 40 dollar which I of course never saw again. In the crypto world you can't be too careful, even large corporations are often scams. This is why you must always make sure you invest in a well known and transparent organization. Genesis-mining, bitcoin.pool and Hashflare are in my opinion the most trusted options.
Simple ROI
This is often the only thing people look at when investing in cloud mining and often a misleading factor. They look at what they make a day and how much the contract costs and then calculate how many days it would cost them to make back their money. This however doesn't takes into account the mining difficulty and the bitcoin price fluctuation.
BTC mining difficulty
As more and more people invest in bitcoin mining, the difficulty to mine a block increases. If you still have now idea how bitcoin actually works after investing half your life savings in it, I would watch this video, it explains very well how bitcoin works. If you are too lazy to watch the video, it basically comes down to this: The more people that invest in bitcoin mining, the less everyone gets. In my sheet I calculated from personal experience during the last 5 months how much % of my income I daily loss due to increased mining difficulty. For me this came down to 0.12% loss per day (I will keep updating this in the spreadsheet).
Bitcoin block reward halving
As you can see on this site it will take about 1039 days for the bitcoin rewards to halve. Yes, this means that after 1039 days your cloud contracts rewards will also halve. There is a good chance that when this happens cloud mining becomes unprofitable and your contract will end. However, If your pool pays out the bitcoin mining fee's and or if the difficulty doesn't grow faster than the bitcoin price it is very likely that the contracts will stay active a longer time.
Maintenance fee %
Once the maintenance fee becomes more expensive than the daily turnover, your contract will end. This means that the more efficient contracts with a lower percentage of its profits going to the fee's, will stay active the longer and thus generate bitcoins for a longer period.
BTC mining vs BTC holding
If you invest in cloud mining you should always compare between just holding bitcoins and your cloud mining contract. Why would you invest in cloud mining if in the end holding bitcoin would have been more profitable? In the end, the goal is to get ROI in terms of BTC and not in terms of dollars.
Real ROI
When calculating a simple ROI you don't take into account that your daily profits decrease every day. In the real ROI you do take this into account. making real ROI means that you gained more bitcoins from the contract than initially invested in it which means you gained more in value than when you would have just kept your bitcoins.
Genesis-mining
Genesis-mining is the largest cloud mine provider. Although they had some pay-out problems lately I still see them as one of the most trusted parties in the industry. Their bitcoin lifetime contracts are however not as profitable as their competitors.
Discount code: eapSXt
http://bit.ly/2hWAduX
pool.bitcoin
Bitcoin.com is one of the largest bitcoin media companies with one of the largest mining pools. They recently opened their cloud mining contracts. When they just started they payed out 120% and the contract was just $129- per TH. This made them at the time the most profitable cloud mining provider. By now they decreased their pay-outs to 100% and started charging $169,- instead of $129,- per TH which makes them more costly than its competitors. Once the mining fee's will increase they will consider raising their pay-outs to 120% again, this would make them a lot more competitive.
Discount code: rj686Z
http://bit.ly/2uA2FIS
Hashflare
Hashflare is currently my favourite choice. It is also a well trusted transparent organization active for a long time in the industry (like genesis-mining). In the sheet you can see that they have the most competitive pricing for 1TH. On top of that, Hashflare is the only provider that allows its customers to choose which pool to mine from. In my sheet you can see that if the bitcoin difficulty keeps increasing with the same speed as it did during the last 5 months, you can currently triple your bitcoins with the Hashflare cloud mining contract in less than 3 years.
http://bit.ly/2hWAduX
minergate
Minergate is a smaller organisation with less time in the industry. However although they are a smaller and less known party, I am personally convinced they are trustworthy. As you can see in the sheet, they are one of the most expensive and most inefficient cloud mining providers. What I really love about them though is their PC mining tool:
On their website, you can download this mining tool. When you have an account you just have to log in and click on play. The program will then pick the most profitable coin for you and start mining it on your pc! As you can see in the picture it is very easy, all you have to do is log in to the program and click play!
http://bit.ly/2uT7bxm
Google sheet
In this sheet I test and compare all the main cloud mining providers on all the important criteria. I calculate the expected daily income of every contract after 1, 2 and until the reward halving based on the average difficulty increase and average bitcoin price increase. After this I make an estimation of the total amount of bitcoins you will receive until the block reward halving. I will keep updating the sheet and will compare more crypto related services in later! Feel free to save and share the excel sheet with everyone who this would be useful for!
http://bit.ly/2uT3705
For any questions, suggestions or requests, feel free to contact me! I am willing to try out services and make spreadsheets on request!
Let me know what you think of this information in the comments!