Cloud Mining Profitability 2019

Cloud Mining Profitability 2019

In this article, we will discuss profitability and return on cloud mining contracts for 2019. There has been much discussion on forums about cloud mining being a scam and if the model really can get profitable. Furthermore, it has been discussed about why companies sell profitable cloud mining contracts instead of using the equipment themselves. We will not discuss basic questions about what cloud mining is, why cloud mining exists and whether industry is a scam or not. We have answered these questions in other articles we have published (take a look at the post “How To Identify Bitcoin Cloud Mining Scam“). We will focus on answering the question whether it is worth investing in cloud mining in 2019. To answer the question of whether cloud mining will be profitable in 2019, we need to answer these questions.

  • What is profitability on cloud mining? 
  • What conditions are required for cloud mining profitability? 
  • Are there conditions for cloud mining to be profitable in 2019? 
  • What are the risks of cloud mining in 2019?

How to calculate Cloud Mining profitability

A simple mistake we have experienced that many people make when calculating their profitability is that they confuse the base currency. To be able to calculate profitability it is necessary to stick to only one base currency. The most common ones are USD or BTC for our readers. If you buy your cloud mining contract in USD, you must also calculate profitability in USD. If you invest in cloud mining with Bitcoin, you should also calculate your potential profitability in Bitcoin.

In 2017, many people wrote in forums that they would have bought Bitcoin instead of cloud mining contracts for Bitcoin. Yes, it is true that it would have provided a better return. But if one is to start comparing different returns from different investments, one must take the risk into account. We will not discuss risk-weighted returns in this article. Bitcoin was one of the best investments in 2017 so almost all traders or investors could have said “I would have bought Bitcoin instead”.

To calculate profitability, you put together all the payments you received from your cloud mining contract and switch it to your base currency. After this you compare with your initial investment and then see what return you have received.

An example:

  1. You buy a Bitcoin cloud mining for $ 100 with a credit card. The companies pay out in Bitcoin.
  2. You receive a total of 0.026 BTC in net return on your Bitcoin account.
  3. In this case, we say that the Bitcoin value was $ 4000 when you bought and $ 4000 when your cloud mining contract was over.
  4. Value in USD when contract ends: 0.026 x 4000 = $ 104
  5. Then you made a profit of $ 4 or 4% on your initial investment.

What conditions are required for profitability?

We have invested in various cloud mining contracts since 2013 and have bought both profitable and unprofitable contracts. What we have come up with is best for cloud mining to yield high returns is a stable currency with little volatility and that the memory gap should be stable. In other words, we do not want to see any price bubbles that we saw in 2017. Such rapid price increases mean that everyone wants mine because it becomes extremely profitable and that in turn leads to old equipment becoming unprofitable extremely fast. If the price is stable, we will see a slow growth in the number of miners and the development on mining halls, which means that our cloud mining contracts can provide a stable return and it will be easier to count on profitability.

Main conditions for profitable cloud mining 2019

  1. Stable Mining Difficulty (Almost the same as competition)
  2. Stable Price (An increase in price creates more mining competition)
 

Are there conditions for cloud mining to be profitable in 2019?

So far, 2019 has offered both the conditions we requested for cloud mining to be profitable. We will look at 2 different graphs to describe this further.

The first graph below shows the difficulty of my Bitcoin. It rose extremely much in 2018 to start stabilizing in early 2019.

Relative Bitcoin Mining Difficulty
A relative measure of how difficult is to find a new block. The difficulty is adjusted periodically as a function of how much hashing power has been deployed by the network of miners. Source: blockchain.com

There is a risk that it is not a stabilization we see but only a temporary correction for further steep rise. 


In this second graph, which we see below, Bitcoin has undergone a long correction against the USD in 2018. We clearly see in the graph that volatility has decreased and that the stable plateaus remain for a long time. This shows that the prerequisite number two for cloud mining to be profitable is also fulfilled.

Bitcoin Average USD price
Average USD market price across major bitcoin exchanges. Source: blockchain.com

There is a risk that we will begin to see a price increase as the next halving approaches and will take place around May 2020.

Summary Cloud Mining Profitability 2019

In this article, we have made a simple analysis of how cloud mining looks for 2019. Historically, there are prerequisites for cloud mining to be profitable in 2019. Either way, you can never guarantee any kind of profitability where there is a risk. All investments are at their own risk, but we try to provide as much information as possible in order to make risk-weighted decisions. In this article, we have not addressed risks such as cloud mining scams, cloud mining companies may incur electricity charges or other increasing maintenance fees. For the moment BitDeer offer the best cloud mining contracts. Other good providers, such as Genesis Mining and Hashflare are out of stock.

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