{"id":2386,"date":"2017-03-21T07:31:22","date_gmt":"2017-03-21T11:31:22","guid":{"rendered":"https:\/\/howigrowmywealth.com\/?p=2386"},"modified":"2022-04-03T21:51:09","modified_gmt":"2022-04-04T01:51:09","slug":"ethereum-cloud-mining-waste-money","status":"publish","type":"post","link":"https:\/\/howigrowmywealth.com\/ethereum-cloud-mining-waste-money\/","title":{"rendered":"Ethereum Cloud Mining was a Waste of Money"},"content":{"rendered":"

I wrote back in June of 2016 in an article Ethereum Cloud Mining is Not Profitable<\/a>. Today is exactly 1 year since I purchased an Ethereum cloud mining contract at Hashflare.io. As I recapped in that article:<\/p>\n

In order to simply break even<\/strong> ETH would need to trade up to around 18.7 USD.<\/p>\n

I would also be better off<\/strong> if I had just bought ETH.<\/p><\/blockquote>\n

That article was written about 3 months after I had made the investment in Ethereum Cloud Mining.<\/p>\n

I wish I had done the in depth analysis in that article before<\/em> I made the investment in Ethereum Cloud Mining so that I would have known not to make the investment.<\/p>\n

And that is the lesson I learned:<\/p>\n

Perform your due diligence before making an investment!<\/em><\/p>\n

\"\"

An artist’s representation of how I envisioned Ethereum Cloud Mining would go<\/p><\/div>\n

I attempted due diligence but I did not consider all the relevant facts. These relevant facts were available to me at the time if I had known to look for them.<\/p>\n

Since my mining contract is up I want to recap what actually happened with the benefit of all the facts.<\/p>\n

The main beneficiary of my bad experience is anyone who is newly considering Ethereum Cloud Mining: caveat emptor<\/em>.<\/p>\n

There might be other cloud mining services out there that are profitable but in my experience Hashflare.io was not one of them.<\/p>\n

Ethereum Cloud Mining Recap<\/h2>\n

On 21 march 2016 I spent $561 for a cloud mining contract at Hashflare.io. Ethereum was trading at $10.81 at the time. In the one year of mining I mined 41.27 Ethereum. As of writing Ethereum is currently trading at $42.6.<\/p>\n

Source: http:\/\/coinmarketcap.com\/currencies\/ethereum\/<\/a><\/em><\/p>\n

So that 41.27 Ethereum would be worth $1,758 if I had held onto all of them and then sold today.<\/p>\n

This is a $1,197 gain which sounds nice but it really isn’t and I’ll explain why.<\/p>\n

Why a $1,197 Gain Wasn’t Very Good<\/h2>\n

But what if the price of Ethereum had not gone up 294%?<\/p>\n

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An artist’s representation of how Ethereum Cloud Mining actually went<\/p><\/div>\n

What if it had stayed the same price of $10.81. Those 41.27 Ether I mined would be worth just $446.<\/p>\n

What does that mean?<\/p>\n

It means: The gain was entirely due to the increase in the price of ETH–the mining itself was not profitable.<\/strong><\/p>\n

In fact, if I had taken $561 and just purchased Ethereum directly, I could have acquired 51.89 Ethereum, which at current prices of $42.6 would now be worth $2,210 or a gain of $1,649.<\/p>\n

So other than sounding cool Ethereum Cloud Mining through HashFlare.io provided no value.<\/p>\n

The Problem with my Analysis<\/h2>\n

The downfall of my analysis when initially evaluating the investment in Ethereum Cloud Mining was assuming linear growth in hashing power of the Ethereum network.<\/p>\n

I explain this in more detail in my original article<\/a> and I also provide a process for making more accurate predictions wether a cloud mining contract will be profitable or not. Using that process I predicted I would mine about 30 ETH.<\/p>\n

This prediction was much closer to what I actually mined compared to the 120 ETH predicted using static models.<\/p>\n

It was a tough lesson to learn but thankfully the amount at risk was relatively small at $561.<\/p>\n