How do mining contracts work? I see mining contracts but how does it work?. What happens when I buy one? . I've seen multiple mining contracts I don't know whether the prices are worth it because I have no idea what they are. Anyone care to explain ?
Well it depends on the contract, usually they promise you a fixed hash rate working for you for a fixed time (as 200Mhs for 2 months) and you will get whatever that miner gets. This can be done hiring full machines and then you can just tell the operator the pool and client configuration so you get the coins directly on your account.
Or the can sell you just some part of the machine hash power, in that case you will not have the option of changing the pool settings but instead you are given a way to get the hash rate and result of your machine and then the operator gives you the percentage of it's earnings that you paid for.
Currently there is a new kind of mining contracts, that is the cloud mining, it is just the same as the percentage system but instead you get a contol panel where you can increase or decrease the MHs you want and the operator usually runs a whole datacenter of miners.
The contract's price almost always are more expensive than the expected returns of that hashing power by the end of the contract but if they are paid in fiat could be an instrument to invest if you are confidant in the rise of the coin. Also they are a good way to mine without having to worry about electricity, noise, temperature...