Quote from: Netwerked on August 08, 2014, 07:54:04 PM

Quote from: jjc326 on August 08, 2014, 05:35:44 PM

Quote from: BitcoinFr34k on August 08, 2014, 05:34:34 PM

Quote from: akujin on August 07, 2014, 07:22:59 PM

I don't get this cloud mining Undecided

So let's say I buy 1TH/s, that's worth BTC2.9 then I mine for 30 days. Then after that, I don't want to mine anymore.
Do I get my BTC2.9 back plus my earnings from mining??

not after you decide to do mining in the cloud PBmining
then there will be a contract for 5 years, after 5 years of the contract will be completed
and for 5 years you will get the added benefit of capital

With this 5 year thing, is there any way it would become unprofitable to mine within the 5 years? I guess not since there are no fees right? How do they manage to keep this up with no fees, when expenses are probably changing all the time?

Here is how I look at it. If you go to https://tradeblock.com/mining/, the cheapest mining hardware available is made by Spondoolies-Tech and costs about 2.00USD per GH/s, plus one-time shipping, plus monthly electricity. A pbmining.com contract can be purchased for ~1.71USD per GH/s, which includes all future fees.

I as a consumer cannot beat pbmining's price, so it makes sense to use their service, assuming one is willing to take on the risk that comes with bitcoin mining (i.e. difficulty can get out of control, thus reducing the chance one will ever break even). Lately, difficulty increases have been mild, which is great news for us!

Yes, pbmining does seem too good to be true, but it could be possible for it to run profitably. Perhaps the owner has a special deal to buy mining equipment at a reduced cost. Perhaps a data center with solar power is used. Perhaps the mining is outsourced to another company in an area with low electricity rates (or solar power) that offers volume purchase discounts. Of course, a business is not going to give away its trade secrets, or other businesses might take advantage of that same business model.

Yes, there is a concern that 0.0029BTC is not enough money to fund the electricity for mining at 1GH/s for 5 years. That's true if today's hardware is used for 5 years, but there will be a lot of advances over the next year. For example, in April 2013, my Butterfly Labs Jalapeno cost $425, used 30 watts, and mined at ~5GH/s (actually it was a 7GH/s model, but it didn't mine as fast as promised). That's 6 watts per GH. Today there is mining equipment from a couple of vendors that use as little as 0.5 watts per GH. Let's see what the future holds.

What if pbmining is using our money to make volume purchases of short-term mining contracts somewhere else? After that first contract expires, subsequent contracts can be purchased for less, and so on. For this hypothetical business model to be successful, the price per GH and watts per GH must drop significantly over time, or they'll hit a financial crunch. We're relying on pbmining to charge enough for our contracts up front to cover 5 years of future fees. At least most of our investment comes back to us near the beginning of the contract, so we can rest easier every week. Just don't put all of your eggs in one basket.

good point