Ethereum Cloud Mining on Hashflare.io is a losing investment. It is more profitable to simply buy Ether on an exchange.
I want to share my negative practice with Ethereum Cloud Mining on Hashflare.io so that you can learn from my mistakes when making your own investment decisions.
It’s very significant to mij that I am 100% fair.
I don’t want to just talk about my investment successes but also those times when I fall brief of my goals.
I don’t like to dwell on times I lost money but if I’m not Learning from Mistakes then I’m not getting anything te exchange for the money I parted with.
I made the decision to invest te Ethereum Cloud Mining spil a way to generate passive monthly income…and it didn’t work out at all!
If you’re already familiar with Ethereum, Ether and Mining you can skip down below.
What is the Ethereum Project?
Ethereum is a technology podium akin to Bitcoin. The project webstek defines Ethereum spil goes after:
Ethereum is a decentralized podium that runs wise contracts: applications that run exactly spil programmed without any possibility of downtime, censorship, fraud or third party interference.
Thesis apps run on a custom-built built blockchain, an enormously powerful collective global infrastructure that can budge value around and represent the ownership of property. This enables developers to create markets, store registries of debts or promises, stir funds te accordance with instructions given long ter the past (like a will or a futures contract) and many other things that have not bot invented yet, all without a middle man or counterparty risk.
What is Ether?
Ether is a necessary factor – a fuel – for operating the distributed application verhoging Ethereum. It is a form of payment made by the clients of the toneelpodium to the machines executing the requested operations. To waterput it another way, ether is the incentive ensuring that developers write quality applications (wasteful code costs more), and that the network remains healthy (people are compensated for their contributed resources).
What is Ethereum Cloud Mining?
Mining Ether (Marketed spil “Ethereum Mining”) is essentially renting processing power (hashing power) that is setup and maintained by a third party. This rented hashing power is then used to generate fresh Ether.
It permits someone like mij who doesn’t have all the expertise te setting up or maintaining a mining equipment to participate ter mining.
What I Purchased from HashFlare.io
At the time I made my purchase, Ether wasgoed trading for around 9 USD, the Network HashRate wasgoed 945 GH/s, and the block time wasgoed around 17 seconds.
Using this handy Ethereum mining rekenmachine I determined I would be making 108.91 USD vanaf month provided Ether leisurely grew te value and the hashing power of the network grew at harshly the same tempo.
The 108.91 USD vanaf month would be 1,306 USD at the end of the year. My cost wasgoed $561 so I had hoped to harshly dual the invested capital te one year.
I also knew that this wasgoed a very risky investment and there wasgoed a good chance I could lose all my money.
Despite this I took the plunge and purchased 15 MH/s of processing power from Hashflare.io, good for one year, for 561 USD on Three March of 2016.
On day 1 I wasgoed bringing te around .33 Ether vanaf day, which would be around 120 ETH after a year.
The Investment Went Bad, Quickly
Since buying 15 MH/s of Ethereum Hashing power the overall Network HashRate of Ethereum has gone up.
Spil of writing the Ethereum Network HashRate is up to Three,356.29 GH/s from the 945 GH/s on Three March 2018.
Ethereum Network HashRate Growth Since 30 July 2015
Ter other words the Network HashRate has gone up 255% since I began mining.
Relative to the fresh, higher Network HashRate my immobilized hashing power is proportionally less and so I’m incapable to mine spil much Ether each day.
Meantime, the price of ETH has gone from $9 to $13, a more modest 44%. So the price increase te ETH is not keeping tempo with the Network HashRate increase spil I anticipated it would.
This is resulting te my profits being eroded away. On my very first day of mining I mined about .33 ETH. Now I mine about .16 ETH. The amount I mine will proceed to decline spil long spil the Network HashRate increases.
Even however ETH has gone UP ter value 44%, the amount of ETH I’m getting each day has gone DOWN by 50%.
Te order to simply pauze even ETH would need to trade up to around Legal.7 USD.
I would also be better off if I had just bought ETH.
If I bought $561 of ETH for $9 (where it wasgoed trading when I embarked mining). I would have 62 ETH, and with ETH trading at $13, would be worth $806 for a $245 profit.
Ethereum Profitability Depends on Network HashRate
A Better Monster
A better specimen for predicting mining profitability is to take into account the exponential growth of the Network HashRate.
Using the monster I’ve developed, I predict that the total amount I will mine te one year will be just 30 ETH. Much less than the 120 ETH predicted by the static calculators that did not take into account the everzwijn enlargening Network HashRate.
The Crimson Dots voorstelling the ETH I mined each day, the blue line are projections of how much I will mine each day
How I Would Determine if Mining Ethereum is better than Buying ETH Directly?
I can’t do anything about the investment I’ve already made, but given what I know now, how would I determine if Ethereum Cloud Mining is both profitable and better than just buying ETH directly from an exchange?
I’d do it ter two steps.
I’d like to take Hashflare.io spil a real life example spil I walk through the steps and Hashflare.io presently sells Ethereum Cloud Mining ter 100 KH/s increments for $Trio.50 ter other words, 1 MH/s for $35.
Step 1: Make an Accurate Prediction of how much you’ll be able to Mine
I would very first make a conservative estimate of how much ETH I would be able to mine overheen a given timeframe. Using a static zakjapanner is a commence, but does not take into account the increase te Network HashRate, and spil a result, will ALWAYS overestimate the amount of ETH mined.
Using my monster, which takes into account the exponential growth of the Network HashRate, if I spent $35 for 1 MH/s of hashing power, I would be able to mine 1.289 ETH vanaf year.
Step Two: Determine How Much You’re Paying vanaf ETH Mined
The 2nd step is determine how much is being paying vanaf ETH mined, which is simply taking the cost ($35 ter this case) divided by the ETH mined (1.289), or about 27 USD vanaf ETH.
ETH is presently trading at $13, so $27 vanaf ETH is very expensive.
Not only is it expensive but I’m paying more for ETH I won’t get until the FUTURE.
At this point I know that mining ETH will NOT be profitable unless ETH were to rise to 27 USD, at which case I’d just pauze even.
Further, I’d be better off just buying Two.Sixty-nine ETH at $13 each, because if ETH were to go to 27, I’d make overheen $37 profit.
A $37 profit is better than cracking even ter one year.
So anytime the price I get te step Two is higher than what ETH is presently trading for, I know that is a LOSER and I’m better off just buying ETH directly.
What Ethereum Cloud Mining Would Cost if it wasgoed Profitable
Spil an example, if I can buy Hashing Power that would provide mij Ten ETH te a year, and I could buy it for 90 USD today, I’m effectively buying ETH at a price of $9. I’m getting ETH at a $Four discount since it is presently trading at $13 today. I’m not aware of any Cloud Mining services that have pricing anywhere near this level.
Ethereum Cloud Mining is the Worst
Buying Ethereum Cloud Mining from Hashflare.io is the worst of all worlds because of the high price and delayed comeback.
I bought ETH at a premium today for ETH that will be delivered te the future when I want to be getting ETH at a discount today for ETH delivered ter the future.
At current prices suggested at Hashflare.io (because buyers aren’t getting a discount, they’re paying a premium) the only possible way it would be better to buy Ethereum Cloud Mining would be if the Network HashRate were to druppel, and druppel precipitously, while the price of ETH fell leisurely, or better yet stayed the same or rose.
But spil I mentioned before, the Ethereum Network HashRate has steadily gone up since the project’s inception on 30 July 2015.
It’s significant that assumptions made when modeling future earnings are accurate. Te my case I assumed a linear increase te Network HashRate when an exponential increase would have bot more suitable.
When making high risk, experimental investments, keep your investment size puny. I invested $561 knowing I might lose all of it. If I had gotten greedy and invested more, that would only have compounded my losses.