Lately, I've been reading reviews and gigantic praise about cloud mining providers and how great and horny and at all that would be all.
BULLSHIT!
Whoever makes this statements either has no idea of the matter and / or is too stupid to calculate! Why? Very easily:
Cloud-Mining is risky:
In the entire western world, a cloudmining service provider needs a banking license. This is because public funds are collected and invested, and these funds are used to generate a profit that is paid by the provider to the investors. If a cloudmining provider does not have this license, the responsible banking superviser can now close the shop on the same level, seize any technology - done.
In particular, the provider Genesis Mining from Iceland promotes that anyone could buy a share of hardware (Does they sell company shares or just investment papers in real?), which in case of insolvency would be users inventory and the investor (you) would be able to get the hardware at any time (but at the earliest after one year). Honestly, people: Do you really believe this marketing crap?!? When the booth goes into insolvency, the CEO is replaced by an external insolvency administrator who really has absolutely no idea. He sees a heap of technology, is glad that there are material values to silver and offers the whole technique in the free market. Unless the investors, YOU, get this in time and can prove a reservation of ownership. Has Genesis ever sent such a signed paper? I don´t know a case...
Has anyone really ever engaged to find an imprint of Genesis or Bitclubnetwork? I haven´t found one...
Cloud mining isn´t economical:
It would be no secret, that I´m selling GPU miners and operate a datacenter in Switzerland. So I know the market prices in the wholesale as well as in retail trade, know the electricity prices and also know, how a datacenter operator need to calculate in order to be able to economically work.
A miner with 320MH ETH-power will cost about 4000€ in wholesale. If someone buys the machines in a thousands pack, one may create it with much negotiation skill at 3800€. Then the machine has to come from China to Europe (shipping costs about 4 USD per kg - a miner about 150€ shippingcosts with airfreight) and the machine has to go through the customs. Customs will not charge anything within the EU, only the import turnover tax is charged. Depending on the country, this is between 8 and 25% of the invoice amount. On the 4150€ (4000€ + 150€ shipping) come thus roughly 20% on top - whereby the miner is ultimately at roughly 5000€. If I leave the machine at home, ignoring the costs of electricity, those 320MH will take a profit of about 500€ monthly. So the miner will be in profit after 10 months. In switzerland, electricity will cost about 0,10€ (industrial power!); the miner needs about 1300W per hour. So let´s calculate the electricity costs: 1.3kWh * 24 = 31.2kWh daily * 365 = 11388kWh yearly / 12 = 949kWh monthly. 949kWh * 0,10€ = 94.90€ = 95€ electricity costs monthly. Out of this, the machines earns me just over 400€ monthly. So I paid my machine at home after 12 months and start to make profit. In this bill I have now deliberately ignored the calculatory costs for technicians, buildings, fire protection, Internet, ... These costs are per machine in a datacenter from my own experience at around 10 to 15€ per month. A dealer for pre-configured miners must also take into account the risk of defective hardware (warranty and guarantee) - in IT it´s known as about 10 to 15% failure rate, which must be taken into account. Also the technician who assembled the parts, installed and tested I ignored.
But with the cloudmining provider you have a ROI (return-on-investment / time, until you get your investment back out) of "only" 24 months.
Are the cloudmining customers really that flagging?!?
How can the consumer protect itself from scam?
First of all, the expert should pay attention not only to access a control panel to view statistics. Rather, it´s important to find a datacenter operator who gives a 24/7 on-site access to the datacenter, and the customer always have direct access to it´s own hardware via teamviewer, AnyDesk or other remote maintenance tools. In addition, the withdrawel of income has not to run through the provider! The customer must therefor be able to administer the hardware himself and must be able to define the target wallet ID of the mining software at any time. Only if hardware broke down or is not available, the operator is authorized to intervene - and also only on explicit instructions of the customer. After all: It´s your hardware. You´re responsible to it - in any way!
Ultimately, you need to own your hardware (which certainly can´t be bought for 500€....) and a datacenter operator who acts in the sense of the customer and not only seeking quick money. A ROI of 12 to 16 months is normal with GPU miners and, in my opinion, only by scam / MLM / pyramide games to undercut.