EXPLAINER
Cloud mining: when the maths works, and when it never can
Most cloud mining contracts cannot profit the buyer by construction. Here is the arithmetic that tells you which is which before you pay.
Quick answer
Compare the contract price per terahash against buying the hardware outright over the same term. If the contract costs more and you carry the difficulty risk anyway, it cannot beat owning the machine.
Cloud mining sells you hashrate you do not own, for a term, at a price. Whether that can work is an arithmetic question, and for most contracts the answer is no before you look at anything else.
The comparison that settles it
Work out the contract cost per terahash per day: total price divided by terahashes divided by contract days. Then do the same for hardware you could buy — purchase price divided by terahashes divided by the same number of days, plus your electricity.
If the contract is more expensive and you still carry the difficulty risk, the operator has priced in their hardware, their power, their overhead and their margin. You are buying the same exposure with a markup and no residual asset at the end.
Where it can make sense
Two cases. Where you genuinely cannot host hardware — no space, no power, a lease that forbids it — and you want exposure to mining economics rather than to the coin. And where a contract is priced below what the operator can be earning, which occasionally happens when someone is dumping capacity.
Red flags
- Guaranteed daily returns. Mining revenue is variable by construction. Anyone guaranteeing it is either mispricing risk or not mining.
- No stated hashrate. A contract quoted in dollars per day rather than terahashes cannot be checked against anything.
- Referral structures earning more than mining. If the affiliate programme pays better than the product, the affiliate programme is the product.
- No named operator or facility. Real mining happens in buildings with electricity contracts.
Before you buy
Put the contract’s hashrate into our calculator with a zero electricity cost, since power is the operator’s problem. That gives gross revenue at today’s difficulty. Compare it against the contract price across the full term, then knock the result down for the difficulty growth the contract does not protect you from. If it does not clear comfortably, it will not clear at all.
Key takeaways
- A contract with a fixed term and no hardware ownership transfers all difficulty risk to you.
- Guaranteed daily returns are the clearest red flag in the sector.
- Compare $/TH/day against the equivalent owned hardware before anything else.
Risk notice
Mining returns depend on coin price, network difficulty, block reward and electricity cost, all of which change continuously. Figures here are a snapshot under stated assumptions, not a forecast, and hardware can become unprofitable well before it fails. This is not financial advice.
Frequently asked questions
Is all cloud mining a scam?
No, but the sector has a poor base rate and the economics are against the buyer even when the operator is honest, because you pay a markup and keep the difficulty risk.
What about contracts that pay in the coin?
Payment currency does not change the arithmetic. Convert to dollars at today's price and run the same comparison.
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