[ANALYSIS] Genesis Mining "lifetime" BTC Cloud Mining Contracts
Hi everyone,
As most of you may know Genesis Mining offers cloud mining contracts in a few currencies (currently BTC and Etherium). I purchased a contract for both of them and after some research I came to the opinion that their BTC contract is sketchy and not that much of a good investment...
Here it goes: Their BTC contract is advertised as a lifetime contract. However, there's a very important clause in the contract saying that: if the daily mining revenue lies below the daily maintenance cost of the contract for 20 consecutive days, they will cancel the contract. So what does this really mean?
The daily maintenance cost is $0.00028 per GH/s purchased. Say you have a 2.5 TH/s contract, the daily maintenance cost is $0.70. For the current difficulty levels and the BTC/USD rates, the revenues look good. I got 0.00074142 BTC for my 2.5 TH/s contract "after the maintenance fee" on June 16, 2017, which converts into $1.8 per day for a $350 investment - roughly 7 months of turnover, not bad... However, things don't look good for the coming months considering the difficulty increase and the pressure that it will put on the BTC prices.
I've made a quick calculation that you might observe in the table below ↓. I'll make a detailed analysis on future outlook of the Genesis Mining BTC Contract when I have the time.
That being said, their Etherium mining contract is really promising considering the potential of Etherium in the coming year(s). I will also write a detailed analsysis on their Etherium contract in the future. You can use below links to get 3% off your purchases at Genesis Mining.
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Here's the table that I worked on. For the future BTC price forecasts, I used the values that just make this contract survive (considering the daily maintenance fee and 20 days clause) You can see that after 1 year, this requirement puts a lot of pressure on the BTC price it is highly probable that your contract will be canceled.
I'll detail and explain my calculations with a refined table in my next post. Cheers!
In your table above, I disagree with your USD per BTC column. (When I made my first post I made some very conservative BTC price estimates that have now proved to be unrealistic.) In July the price is more likely to be $3,000 USD instead of $2,200 USD.
Further out projections for USD per BTC have BTC prices at $5,000 around September 2017 and $13,800 around February 2018.
Here is a link that build the case for BTC price progression
By February 2018 your chart has the difficulty going up approximately 2.36 times. Yet the price expectations are for a price increase of 5.52 times. In this case the potential payout in USD should keep ahead of the difficulty increase.
Thus if the price appreciation stays ahead of the difficulty increase rate, the contract is likely to do well.
I do agree that the Ethereum contract is likely to do well.
For the Genesis Mining X11 contract, I have recouped the USD I put into it in much less than 2 years. Unfortunately the X11 contract is not available for purchase from Genesis Mining at this time.
Everyone should keep in my that any investment has risk and cryptocurrencies including mining contracts are speculative investments. Much research and self-education should be undertaken before making an investment.
@mkaya, very good post!
I am currently focusing on BTC mining and recouping my original investment well before the next halving event in 2020. For this reason I will stop purchasing BTC upgrades in September 2017. The only reason I can think of that will change my mind is a BTC price rise that even blows away my high expectations.
Thank you for alerting me to your post.
Have a great weekend!
Steem on,
Mike
Hi @etcmike, thanks for your input. You are right that I have used very pessimistic BTC forecasts until 4/18 - my intent was to show the worst case scenario. For further price estimates after 4/18 I've used exactly those BTC values that will make this contract "survive". (Any BTC price lower than those will trigger 20 days clause)
So, if the BTC price really lies over $10k next year, it will turn out good for the BTC contract. However if not, the BTC contract will most likely die in the second year. We'll wait and see.
In my opinion, instead of putting your money into an investment over which you will have no control, it is better to just buy BTC and trade with altcoins on exchanges such as Bittrex or Poloniex.
Overall, I think it is a very good time to invest in cryptocurrency. The interview below talks about how the millenials do not participate in traditional money markets and how the price of cryptocurrencies will increase once they catch public attention at some point. Cheers!
Yes, I have been looking at returns in two different ways, how long it takes to recoup the USD investment and how long it takes to recoup a BTC investment. It does make a difference. With a rising BTC price, the USD investment is recouped faster than the number of BTC used to buy the mining contract.
Great discussion and good points.
Have a nice day!
Steem on,
Mike
Thank you guys for this brilliant information. And @etcmike you have a great avatar. Check out Scrooge McDuck - His Life his Times by Don Rosa.
I feel that it is most important to be clear on what your objective is as an investor. Are you looking to make money/$ and profit on the contract or are you looking to generate btc/altcoins to hold onto for the medium-long term.
Personally, I am doing the later. I want to use my btc and eth contracts to generate coins and hope that they remain valid though the life of the contract - 1-2yrs on BTC and 2yrs on eth. Having completed a month on each, I now ONLY mine alts with both contracts through the automine option. I later exchange thes into 8 different coins on poloniex that look promising.
Sounds like a good strategy.
My objective is an additional passive income from mining. That is why in my latest post on BTC mining I gave the difference between recouping initial USD investment and the initial coin investment. Typically recouping the initial investment in coins takes longer.
Great comment!
Steem on,
Mike
Read your post on mining. The chart is a great way to estimate safety levels and if one has the capacity to tweak (diversify) the investment, nothing better. In the end it is all about putting in a 100% effort to ensure 150% returns.
I like your strategy. What is your genesis referral code? My code is: RUXnyi
Love the information in these posts. If your pessimistic about the BTC mining, are you optimistic about any other mining (such as the ether mining contract) or just pro buying the coins instead?
Hi, sorry for the late reply I was on a business trip for the last four daysi didn't have the chance to reply.
I think ETH mining looks bright for now, but I'll also make a detailed analysis on it considering the recent price changes and ETH mining protocol. -- stay in touch :)
I have 48.5mhs of the ETH contract on Genesis. I am using it to automine BTC (they mine the most profitable alt and convert to BTC), automine STEEM or ETC straight up (bound to go higher as ETH difficulty bomb makes mining impossible). This is giving me decent returns and I will make profits well before contract expiry.
My concern is **what happens to the contract once Vitalik & Co implement PoS **(later this year... hopefull 2018)??? Will Genesis honour the 2-yr contract and let us mine Alts?
I consider Genesis to be the leader in cloud mining and hope that the case is the latter. I'm betting on that and reinvesting in the ETH contract each week.
In the end, it depends on your timeframe and ability (to trade coins and grow your investment). I prefer to mine and accumulate for 2020 rather than investing $10k and riding the rollercoaster of BTC market to High blood pressure
mining on your own hardware is also an option. my old 280x and an amd cpu are still bringing in $150+ a month. Try minergate if you're tech averse
I think the ETH contract is ok, but BTC will most likely lose money.
Won't the upcoming change in ETH to Proof of Stake dramatically change the dynamic of the payout? Has anyone clarified with Genesis if they'll allow a change to a different but similar coin if/when that happens?
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Extremely helpful post as I am just starting to get into Genesis mining. I will use your code shortly. Here's my code for whenever you upgrade next: RUXnyi
Hey, how did you calculated upcoming BTC difficulty?
If someone uses my Genesis mining code " xMYnwN " will be grateful, you get 3% discount.
Great post. What do you think about the company? They have the biggest network of current generation graphic cards in the world and buy everything they get from nVidia and AMD I heard. That makes one heck of a super computer and it is quivkly growing. They could switch from mining to AI one day and would be market leader. Sadly these contracts will end when the mining ends. So all the current customers will be left out in that case.
I think they are legit. Genesis Mining is a real company with great infrastructure; however their contract offers might fool customers. (again, this is normal in business - every party secures its own benefit)
Regarding AI, I believe software is much more important than hardware to develop an AI. Google leads the way as well as Amazon because they "own" the vast amount of data that is needed for the Machine Learning algorithms.
Everyday a new currency is getting created so, when BTC or ETH mining is over, I'm sure they'll find something to make use of the hardware. Plus, they will have earned their USD investment back for a few times until then ^^
What do you mean with the contract? The fact that they can cancel when it is not profitable anymore?
They offer multiple contracts that allow you to mine a group of similar coins. Currently, BTC, ETH and XMR contracts are available. ETH is a fixed - 2yr contract, not sure about XMR.
BTC on the other hand is a 'lifelong contract' - many people are fooled by this and dont consider the fineprint. Genesis charges a maintenance fee of $0.00028 per 10GHs - which means if the difficulty rises too quickly and BTC price drops - your earnings may dip below the maintenance fee. If this happens - your contract will essentially be in hibernation until a rise in BTC price or a fall in difficulty result in your mined output being higher than the maintenance fee.
If your contract stays unprofitable for 60days (pl confirm), it will be voided
I must say, I am not very convinced about this business model. Everyone is hyped up about that because we all can see how much people like CryptoNick or BoxMining are making there. But that is just thanks to the referral program. I don't know, I am torn between liking Genesis-Mining and having a bad feeling about it.
Great post. Supper informative. I recently purchased the open-ended BTC contract but the mining won't start until Oct. 31st. I am excited to get started. Here is my Promo Code in case anyone feels like using it. aOeSCj
Thanks for the information in the post, it's always good to get someone else's perspective! I used your code to get 3% off of my purchase of 5 TH/s. To get 3% off your purchase here is my code JfwN98.
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