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I just started investing in Bitcoin and before I actually implement it, I want to verify my strategy / steps.

1) I made a wallet account on blockchain. 2) I want to purchase subscription from Genesis Mining for 1TH/s at $150.

My aim is to run this for a few months and transfer bitcoins to my wallet and see how market behaves.

Is this a good option for beginners to invest or get an idea of how Bitcoin works?

  • Think, if it was profitable, wouldn't they be mining themselves instead of renting their equipment and dealing with customer service issues? – Chloe Mar 17 '17 at 0:13
  • I did this last year and the year before for our children and nephews. Whereas the bitcoin value at it's original price never made a positive return (I spent 100 Euro, and taking the bitcoin price of this time after a year, the return would have been in the 90 Euro). But with the growth of bitcoin price it makes sense, cause during the last 2 years it went times ten. So this is a question of willingness to trust in further price growth of bitcoin... – pebwindkraft Dec 7 '17 at 14:51
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Keep in mind, at current prices it would take a very long time to get your initial investment back with cloud mining. There have been many reports of cloud mining to be a ponzi pyramid scheme as they have the advantage of "time" on their side. They are basically paying you back what you paid them slowly.

However, if the price of BTC does rise significantly you can make a profit doing cloud mining. You are better off using the $150 to buy $150 worth of btc and holding that vs mining it via the cloud. You would instantly get the BTC to USD value vs waiting.

My advice if you want to get into mining as a "hobby" just get a usb miner you can find on ebay. Or just mine with your computer and join a pool with one of the other profitable coins found here: http://www.coinwarz.com -- bitcoin mining is a losing battle for the soloist.

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No it is not. The value of Bitcoin fluctuates over time. Cloud mining takes years, not months, to be profitable. By then, you've missed out on profit from the price fluctuations, which is much higher than the profit from cloud mining. Cloud mining is only profitable if you assume the value of Bitcoin will not increase during these years.

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NO. Cloud mining is DEFINITELY NOT profitable. Do not get any cloud mining contracts.

  1. There is a FIXED AMOUNT of reward per crypto. This means the more it is mined, the less each miner makes.
  2. Any profitable crypto that is profitable to mine will attract miners, cause the proportion of the reward to decrease per miner. With cloud mining you typically can't change what you mine. The amount of coin you mine will be greatly reduced as miners switch to the crypto you are mining, causing any profitability to be short-lived.
  3. Any profitable crypto is likely to attract hardware manufacturers to produce commercial Asic miners, which can mine 12-13X more efficiently than GPU miners. This will cause miners' proportion of reward to be greatly reduced. Additionally, hardware is constantly being improved, with dedicated hardware for mining now and new players joining the field. The competition's hashing power is improving quickly, yours is constant.
  4. Mining contract cryptos are likely to be "pumped", causing price to be artificially high. This could be actual pumps by miners (no proof, but it makes sense) or it can be buzz created by miners. What looks on paper to be a good return may be only good because of pumped prices
  5. The Difficulty is indicative of how much coin you will get per mining power. Typically, it doubles every 2-3 months REGARDLESS OF CRYPTO PRICE. This is not dependent on crypto price, it depends on how many miners there are. So you your income stream in coin halves every 2-3 months (or less, if it is profitable to mine).
  6. Additionally, in the case of privacy coins (network of computers infected with a virus), botnets are often the biggest miners and this trend is likely to increase. This is free computing power for the mining recipients that no one can compete with. Monero is mined by 60% botnet power.
  7. The truth of cloud mining is obscured because it has pyramid incentives. The reason it is promoted heavily on youtube is because promoters are incentivized through affiliate programs, if you click on the link in the video they get substantial rewards if they have enough followers. They probably can get around a dollar per view. So promoters can receive 10's or 100's of thousands of dollars worth of mining contracts if they have that many views.

Case study: Dash was the most profitable contract in June 2017, with a payback time of 1.5 months. Around then, Asic miners were introduced. The payback time for dash contracts as of 3/14/2018 is 544 years (according to profitability calculator on the cloud mining company website itself: ccg mining). If you look at the price, it appears to have been pumped, and now is in the dumps despite IMO it being a good technology.

Bottom line, if you were to pay for a contract in the crypto in question, the chance that you will make back the same amount of coin is very small. You could make money in dollar terms, but that is not the metric that you should look at, you should look at return in terms of the crypto. It may look profitable on paper, but this is very deceiving as the numbers ALWAYS change in time against you and are typically calculated in dollar terms. If you get back half, you will be lucky. That is why people say it is better to hold the coin.

protected by Community Dec 9 '17 at 23:08

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