Cloud mining is basically banking on a coin, not an investment.
IF you believe a coin will have a substantially higher value then cloud mine.
because if it doesnt, you lose your investment.
the companies basically are "selling" the risk.
they get their pay either way using this method.
the companies buy the hardware, and sell its power at current value.
they get their ROI upfront for their expected return before the next hardware swap and sell the risk to investors.
thats it, you take a risk. will the coin go up? if not, net-loss.
even if it stays the same, net-loss.
thats really it.
If you buy into say a contract, that is for bitcoin.
and it goes up $400. youre going to make green.
if you say, buy into monero contract, and it remains unchanged
youre going to lose.
in all cases, you lose if the value of the coin goes down.
those contracts are priced for a duration, that they expected to earn during
that time if they used it themselves.
and they took network difficulty rise into consideration when they priced.
thats why even if the coin stays the same, you often lose.