I am new in the bitcoin world, and I saw this publicity on instagram about cloud mining, it claimed that I could earn bitcoins with any investment, even without having a hardware. I did a little research but didn't understand much, it seems too good to be true.
Cloudmining is almost always a scam. If the people actually did have hardware that would work to mine as much as they claim, then why would they not just use the hardware for themselves?
It doesn't make sense for the people to give you a cut with the hardware. Logically, the only true option for the reason of cloud mining is to be a scam.
I am not arguing that it is always honest, but I think I may give another perspective on why you might choose to rent your mining power.
You see, when you use your mining equipment for mining, it is
you who must ultimately handle all the risks involved. You are a winner if the price of the currency you mine goes up, but you are a big time loser if it declines, especially if the decline is heavy.
On the other hand, if you would prefer to have a more reliable profits (even if smaller on average) you might want to choose to rent the mining power. Then all the risks
are transferred to the party renting your power. You have less risks. You pay for it, obviously, by having smaller profits. But it still may make sense for some business models.
The problem with this kind of setup "Cloud Mining" is that you really don't know how long it will last. As you said the risk is onto the party renting their Hashing power, so they can actually close anytime they want if they feel they are losing without given "YOU" the investor a warning or refund.