Don’t use a cloud mining calculator without keeping in mind they are static calculations. You need to remember that mining difficulty almost always goes up as time passes.
But don’t worry. If you’re thinking about cloud mining profitability I have an easy rule of thumb you can use to quickly rule out unprofitable cloud mining contracts.
You simply calculate the profitability using a static calculator and determine if you’d make back the initial amount.
I’ll use hashflare.io as an example, as of 19 March 2018 they are selling 100 KH/s for USD$2.20.
Using a static mining profitability calculator like the one over at etherscan we can see that if network hashing power stays the same, we’ll make a whopping $0.1141 per month or $1.3692 per year. In other words you’ve spent $2.20 to get $1.3692 worth of Ether.
But say the number came back at $3. That would be $0.80 profit per contract. Easy money right?
Don’t Stop with A Static Cloud Mining Calculator
Unfortunately it gets worse, because as I previously mentioned that is using a static network hashrate calculation. As more and more people mine Ethereum the network hashrate increases meaning you’ll mine less.
For example if the network hashrate were to go up to 300000 GH/s you’d only make $0.10 per month.
Network Hashing Power Has Historically Only Gone Up
Is it possible the network hashrate stays the same or goes down?
Yes, but it has never gone down over an extended period of time.
So unless the hashing power of the network stops going up and drops off, there is no way that ethereum cloud mining at hashflare.io will be profitable.
You’re Probably Better Off Just Buying the Cryptocurrency
It’s possible the price of Ethereum goes up and you end up making some money, but you would have made MORE money if you bought ETH directly.
If the mining contract will yield at least the amount you pay, I go to my second rule of thumb. A 50% discount.
I would have to see a cloud mining contract at a 50% discount or more to even consider purchasing buying it. So if hashflare.io was offered 100 KH/s for say $0.65 I would consider it.
With cloud mining you are risking that the network hashrate doesn’t go up too fast and you’re risking that the price of the coin doesn’t go down. I want to be compensated for those risks so I look for a 50% discount.
However, as it stands, ethereum cloud mining at places like hashflare.io is a losing investment, and you’re much better off simply buying the cryptocurrency outright.
I’m not aware of a cloud mining service that has a chance of being profitable. If you know of one please let me know!
I made the mistake of buying a ethereum cloud mining contract at hashflare.io and it cost me 20.73 ETH and I hope others don’t make this same mistake.