About two months ago, I have invested $500 in Genesis Mining as an experiment. In this post, I will tell you what I have learned.
So, What is Genesis Mining, Anyways?
Genesis Mining (GM for short) is a cloud mining company. let me explain a little bit to those of you who are new to the mining world:
Many cryptocurrencies depend on mining to run their network. In return, the miner receives rewards for her efforts. However, running a miner is not that easy. It needs technical expertise. Moreover, in many cases, it is not cost-effective because mining devices consume so much power.
So, in short, not so many people are able to run a successful miner. Yet, so many people wanted to join the gold rush. So, cloud mining companies started to emerge as a solution to such people.
A cloud mining company would run a data center hosting a huge number of mining devices. They usually choose countries with low electricity costs to build their data centers there. Then, they start renting their computing power (also called hashing power, since the main computation made by a mining device is calculating hashes!). If you are interested in mining and you can not run a miner yourself, you might find this to be a good opportunity.
At least, I did. So, I started researching and reading about the different cloud mining companies out there. I discovered that most such companies are scams. Yet, a few of them had a good reputation. One of the most famous clod mining companies was Genesis Mining. So, I decided to try it out.
My Contract: Dash X11
GM offered many mining options at the time. Based on many recommendations, I decided to go for Dash mining. many fellow steemians were saying it was the best option and that it will be out of stock soon. So, I went on and bought a $500 contract. The following are the details:
| Contract type: | Dash Mining |
|---|---|
| Mining Algorithm: | X11 |
| Start Date: | 2017-07-03 |
| Contract Term: | 2 years |
| Mining Power: | 100 MH/s |
My payouts
The total payouts I have received from this contract after 75 days is equal to 0.4555 Dash. So, based on the current price of Dash = $325, the Dollar value of my payouts = $148.
| Contract Value | $500 |
|---|---|
| Payouts for 75 days | 0.4555 Dash |
| Payouts in $ | $148 |
| Percentage % of contract | 29.6% |
| Annual percentage rate (APR) | 44% |
Declining Payouts with Increased Difficulty
As you can see, the Annual percentage rate (APR) of the payouts is 44%. However, this assumes that the payouts are going to continue with the same average. Unfortunately, they probably will not. The reason for that is the increased difficulty of Dash mining. Difficulty is "a measure of how difficult it is to find a hash below a given target".
As the total computational power of miners increases, the difficulty also increases. This makes the rewards of a certain mining device decrease by time. The following table and diagrams show my payouts vs. difficulty:
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As you can see, my daily payout has fallen from 0.01253 to 0.00266, which is about -80%. So I do not expect my payouts to continue to be equal to the average of the past payouts. Rather I expect them to be equal to $1 per day. Which means that the total return of the contract after 2 years should be around $800. This makes the APR to be around 30%.
Conclusion
Genesis Mining was not a scam. Although they had some security breaches in August, their mining process was not compromised and they have sent all payouts. The service is fully restored now. Moreover, the payouts that GM produced were in line with what the mining calculators predicted given the difficulty levels.
However, mining Dash was not such a great investment. if I had invested that $500 in Dash itself, my returns would have been much better. I don't expect to lose money on this, but I don't expect to make a fortune either.
So, in short, Investing in this contract was not a good decision, but that was not because GM was a scam, but because the difficulty of Dash has increased so much causing the payouts to diminish.
This post has received a 8.15 % upvote from @bellyrub thanks to: @sadekj.
As all mining goes, it is almost a fact that the difficulty increase with the appreciation. I have been mining with GPU and with GM, I compared the returns various, but close. For GPU mining, the best thing is that I could swap to various algo anytime. We could do similar things with about 24 hour period.
For a 2 year contract (GPU mining), it is very important to check with the return rate and 2 years of appreciation expectation. It is, as always, uncertainty for both hardware mining & GPU mining.
Thank you, @michaelsi, for sharing your experience.
I knew that. Yet, when I chose to mine Dash X11, I checked the difficulty history. Dash's Difficulty increased 20%-30% every month. Based on that I decided to invest in it. Unfortunately, after I joined, the difficulty skyrocketed. It increased 300% in less than 3 months.
I did not understand this.
BTW, you seem to be new here in Steemit. So, welcome! Do you need any help here? I know Steemit can be a little bit confusing for new people.
We could do similar things with about 24 hour period
"I did not understand this."
I mean in a limited sense, you could swap your GM hash power into another cryptos. I think ZEC is kind of becoming more profitable.
About "helps", yup, just landed here. Thanks for offering helps. Too confusing that I don't even know what to ask, yet. I am now just surfing around and replying. Also, just starts to write some blog post in sync with blogspot (yup, the G-centralized blog).
It is good here, at least China GFW is not yet blocking it. Just not yet...
Glad to have you here.
Check the easy tutorials prepared by @sndbox. They can help you understand a lot.
This wonderful comment has received a bellyrub 2.67 % upvote from @bellyrub thanks to this cool cat: @sadekj. My pops @zeartul is one of your top steemit witness, if you like my bellyrubs please go vote for him, if you love what he is doing vote for this comment as well.
I am sorry to say so, but despite the fact that GM is not a scam..they really put their contracts the way that everybody (not GM, but all the investors) will finally loose. Why? Becasue the instability of the price and mainly due to increasing dificulty. I had a "longlife" contract with GM and invested couple of BTC in that I lost almost all as the contract was terminated after 20 days of non profitable mining. It was very unfair as GM purchased power using my money, terminated my contract shortly ufterwards and start "profitable" mining again shortly after my contract ws terminated. Not a scam, I agree, ut very very unfair company. I was happy when I found them as it looked like a real group of BTC enthusiastic people, same as me, but it turned to be a group of hoarders interested only in their own profit. Very sad!
I am sorry to hear about your loss, @belhejna.
I agree, their contracts make their profit guaranteed not the investor.
BTW, my contract does not have the profitability condition
Did you find a better option for mining?
One friend suggested GiggaWatt.
Sure, they are selling shovels in the new Gold Rush.
I starts cloud-mining BTC last November. Now, returned more that 200%, but mostly due to price appreciation. If the same amount of money was invested into BTC at the same time being, the current returns is about 41%. Difficulty increase with appreciation for sure, even if you have your own hardware mining.
Forget forever terms, mining hardware obsoletes (return rate < electricity price) for probably less than 1 year if the crypto mined are profitable and appreciated.
I am on the break now with any mining. I started with GR mining which unfortunately was a scam and was happy when found Genesis thinking they are fair. My current strategy is buy and hold (I am really not the only one:-)) ) The only pitty is that I didnt start this strategy 2 years ago with my firts BTC:-))
I get your frustration with mining. Holding BTC is still a great strategy.
Not that frustrated:-) I will chececk this GiggaWatt:-))
There are so many people doing mining nowadays. No wonder if the payout diminishes. Thank you for this testimony. And this is a well-written post. I think I have some things to learn from you about mining and posting :-)
Thank you @alketcecaj for your kind words.
Thanks for the information sir.
that's very helpful post!!
thank you ;))))))
Glad you liked it @amanda12
what an amazing place this is!! just speechless
most welcome :)
Thank you, @sizuka.
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