Recently I've noticed here an article about the so-called "cloud mining". In general, I agree with what is said there, but in particular, I believe it would benefit from several tiny additions -- which I'm going to add down here.
First, I would say that the most of those "cloud mining" services are pure scams. Really, a Ponzi scheme with nothing behind it except a flashy website. You buy a "hashrate speed" that "earns" you some BTC sats daily. You can't see this "hashrate" on a pool, can't change the coin you mine, can't do anything with your hashrate. At best, you can check "earnings" against current network difficulty and other data from independent sources. Needless to say that these Ponzi games always end as usual.
Second, if a "cloud mining" service really has something behind, real mining hardware and everything -- it's only profitable on rare occasions when coin price quickly goes up, but the difficulty and network hashrate remain steady. Otherwise, a 1 Th/s you buy today will earn you nothing in a year, then the hashrate will be measured in zetta-hashes or coin price will dump to zero. Meanwhile, the mining service will charge their electricity, maintenance, security, cleaning and I don't know what else flat fees no matter what.
1st+2nd actually means that even if you don't get into another Ponzi and buy from a legitimate "cloud mining", say, a year's 1Th/s of BTC's sha256 for 200 bucks minus fees -- you probably lose the most of these 200 bucks unless BTC goes sharply up to $1M within a year, as Mr. McAfee promises. And funny enough that if Mr. McAfee's crystal ball is right, you could equally simply buy BTC with a credit card today and hodl them until then.
However, among this "cloud mining" sh*t there're two outstanding / different beasts (at least, the two I personally know of and tried myself). Mostly they're good when you want to try "cloud mining" but don't want to spend whole 200 bucks on it.
The beasts are Nicehash and Miningrigrentals.
Nicehash is a hashrate exchange (i.e. like stock exchange or crypto exchange, only for mining hashrate). Hardware owners sell algo hashrate from their hardware, cloud miners buy it and try to profit. It's simple in theory: you place an order for, say, 1 Th/s of sha256, point it to a BTC pool and mine more BTCs than you spent on the order. PROFIT!!!1, yeah? Well, practically it will hardly work out, especially if you simply put an order on top of the order book. Really, why would a hardware owner sell you his bitcoin hashrate for cheap, when he can mine bitcoins himself directly at a pool? In other words, the hashrate sold at Nicehash is normally more expensive than what you can mine with it on a pool (I doubt I could explain this concept quite clearly, but here're the limits of my English). Of course, you can put a cheap order at the bottom of the order book, but such an order can be never filled (i.e. nobody will sell you hashrate at such price).
Miningrigrentals is a, hmm... a rental of mining rigs. For example, for a small amount of BTC you can rent an Atminer ASIC for an hour and do what you want with its hashrate. The theory is the same -- you try to mine more than you spent on rent. The same is the practice -- no one will sell you hashrate cheap that easy. However, unlike Nicehash, you don't need to place orders and the like. If you rented an ASIC (or more exactly, bought the hashrate produced by that hardware for some period of time) -- you rented it, for a fixed price and time. You can cancel your rent or extend it, rent more hardware and the like. Think of it as a "rent a car" service, not as an exchange.
I hope you got a general idea -- trading (arbitraging) hashrate with Nicehash or Miningrigrentals is tricky. Profits are not guaranteed by far. It's not enough to simply DYOR your theoretical math. You have to DYOR it very well, plus consider timing, lags, slippage, outbreaks, a good many sudden nasty practical things that can make your "cloud mining" lose.
"Well, that's the point of these two then? Why they're so popular?" you might ask. Well, first because too many people unknowingly try to cross the stream where it's the deepest and run across a minefield thinking themselves smart and lucky enough. Second, there're at least 4 scenarios when Nicehash and Miningrigrentals can be handy and profitable.
The 1st one is when it just happens. Sometimes it's really possible to buy hashrate cheap and mine more than was spent. Beginner's luck, so to say.
The 2nd is "crypto laundering". You buy hashrate with stolen BTC and get new shiny BTC back at a completely innocent address. Of course, you can lose some on the way, but who cares. (This scenario is theoretical, I myself never tried crypto laundering and don't know if anyone really does it this way).
The 3rd is insider speculation. If you learn about a coming pump of a small mineable coin and can't buy it cheap at exchanges -- you can quickly buy a lot of hashrate and try to mine the coin quickly.
And the 4th one is solo mining. You mine a coin yourself, without a pool (or with a "solo-pool") and get all the block reward to yourself. Of course, solo mining of BTC requires a lot of hashrate and a ton of money, but many small altcoins can rather easily (i.e. with adequate hashrate at affordable price) be mined solo even now. If you do know the right coin and right math, you can get more (sometimes much more) with solo than with PPS, PPLNS, PROP, etc. pools.
Well, that's all for now, folks!
I must only put here some small financial advice based on my own experience -- if it goes about earnings, don't bother with any "cloud mining" sh*t. Hobby PoW mining is dead being it "cloud", "shiny", "rainy" or whatever. You must be very smart or very rich or both to really profit from PoW mining nowadays.
