Hi Mervanwe Smith here and today I want to layout hopefully a very simple way what Bitcoin – Cloud Mining is all about … from my experience and perspective anyway.
First of all what is cloud mining? Well as you know bitcoin is a digital currency and bitcoins are “mined” by people or companies (miners) who have expensive computer equipment that run specific open source algorithms that uncover coins. All these transactions are recorded in the BlockChain.
Mining is an expensive process with large overheads such as top end computers, electricity and cooling facilities as the computers generate incredible heat, running 24/7 and need to be cooled down. Plus computer repairs and maintenance costs with high usages it is astromical.
Alright with that very basic explanation over, let’s get to what I think about cloud mining.
When I very first started out my journey in bitcoins, I really thought cloud mining was the way to go. That way I didn’t need any of the equipment or expertise and could increase my holding and earnings with bitcoins simply by getting into cloud mining – it was new, sexy and well invigorating really.
The theory – great …. the reality – very different.
I was introduced to a company called Bitknock. They were supposedly miners and they paid out around 20% monthly on the “capital” you invested. I only had to pay a minimal $100 for the mining contract and with the balance of $400 I bought GHS (gigahash – mining power). I was really excited about this and reinvest my daily earnings so I could use the “compounding effect” and increase my earnings.
So how did that work out for me?
Mmmmm overnight Bitknock ran away with all my bitcoins and money I had in my wallet. They were fly-by- nights or HYIP and I have no recourse to get my money back – close to $1,500 that I had in the system.
However there are some genuine mining companies out there that are not fly-by- nights. And in the example below I want to show you my experience of a genuine mining company and my earnings so far. I will then summaries and let you have my final opinion on whether I consider it viable or not.
Ok, so the mine I am using as an example today is Genesis Mining.
I purchased a contract (you always need a contract in all mining companies, whether they are legit or not – it’s their way of funding their operations) I didn’t put in a lot of money as even when I was introduced to Genesis, I just couldn’t see how I could get rich with this concept. But went ahead anyway thinking because I was new at this I must not have all the information. (Guyz trust your gut!)
I love the 7th wonder of the world – compounding – so as and when I had sufficient money/coins in my wallet that were generated from my mining contract, I purchase more contracts which in essence is a way to increase the mining power and that way generate more income.
So have a look at my results from my first contract purchased 22nd November 2015 to the 23rd of April this year. Just a side note, the bitcoin price on the 23rd was $451.89 and today the 25th, as I write this article it is already $462.43.
You will notice in the first section which is purely Genesis mining – I am still in a loss or unrecovered costs period. In addition to this, every 4 years the mining yield from a “block” is halved. Meaning the number of coins anyone can get out of a section or block is finite and every 4 years up to 2040 that will be halved. There are also only ever going to be 21 million bitcoins mined, ever, and there are already 15 million in circulation.
I seem to remember being was told that I would earn around 6% monthly on the price of the contract I purchased. So it would take me around 16 months to recoup the cost of the original mining contract, but no one ever said that the 6% would most likely be reduced due the halving of the mining yield!
I am sure once you look at the real figures I have in the graphic above, you will notice that had I taken the same amount of money and put it into an accumulation vehicle (like the one I mentioned in my previous post) I would in the same period be plus $212.90 as opposed to the minus $68.33.
So the bottom line then – I do not believe that cloud mining for the person trying to generate a passive income or increase their wealth would do it with cloud mining on its own. Obviously if you are networker and are amazing at recruiting people, then that would give you some additional money. But I am talking here about people like myself who just want to sort out passive income and live the lifestyle I want and not be that recruiting machine.
Well that’s all for today. Thank you for taking the time to read this post and I do trust it has been an eye opener for some of you and perhaps will guard you against making a wrong decision.
I would love to connect with you on Facebook. I have a page called Cashflow Explosion and would love to keep in touch with you. Go ahead and like the page to get updates on present and future projects.
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