3 Reasons Why You Should Not Cloud Mine
Assalaamu Aleikum (may peace be upon you). Is cloud mining worth it? Is cloud mining profitable? Let’s discuss the top 3 Reasons Why You Should Not Cloud Mine. I know, I know. How could I say such a thing?
Well, if you want to know why I believe you should not cloud mine and you don’t want to watch the entire video or read the transcript below, then here it is in a nutshell. The reasons why I believe you should not cloud mine are the following:
1. It is too difficult to make a profit with cloud mining
2. There is no such thing as profit-loss-sharing with cloud mining
3. Some cloud mining websites may be Ponzi schemes
If you would like a more in-depth explanation of these three reasons, then please do watch the video or read the video transcript below.
Show notes – these are the videos referenced in this video.
There is no such thing as profit-loss-sharing with cloud mining.
…Andre Rishi
Video Transcript
As-salamu alaykum and thank you for checking out this latest video on Islam and Bitcoin. Today’s video, 3 Reasons Why You Should Not Cloud Mine. That is correct. I said 3 Reasons Why You Should Not Cloud Mine. Today’s video is actually a shorter version of the previous video that I may call, Should I Cloud Mine?
The reason I decided to make this video was because, in my previous video, I went into detail when it comes to taking a look at two particular cloud mining services. So my previous video, we looked at Eobot Cloud Mining services as well as Genesis Mining. We looked at that in detail.
We looked at the pros, the cons, the pricing packages, all the different alt coins you could mine, I even shared with you my experience with Genesis Cloud Mining and showed you my earnings.
Again, we went into detail, however, I think there are a lot of people out there who probably really don’t care to take a look at a cloud mining services that in-depth and they really just want to know the reasons why should I or why should I not cloud mine.
So I figured I would make a much shorter version and share that with you today. However, if you are that person who you really want to learn more about Eobot Cloud Mining services and Genesis Cloud Mining, which Genesis is probably, probably the most if not, one of the most popular Cloud Mining services then I do recommend that you go check out my previous video called Should I Cloud Mine?
So let’s get moving. Let’s get cracking as they say. All right, so, do know that I am not going to address the Sharia aspect of whether or not it is halal or haram to cloud mine, simply because I do not know. I am a student of knowledge and that information, I simply do not know.
I am operating under the Islamic principle that things are considered permissible until proven otherwise. And as of now, there is no consensus amongst the ulema that cloud mining is haram. Therefore, I am not going to say that it is.
Again, I’m operating off the Islamic principle that things are considered permissible until proven otherwise. Now if sometime in the future, I do hear that the ulema has come up with some fatwa or some ruling that cloud mining is haram then insha’Allah, I will make another video posted here and we will all be the wiser for it, all right? Cool, so let’s get right into it, Three Reasons Why You Should Not Cloud Mine, three reasons why I think it ain’t worth it.
1. It is too difficult to make a profit with cloud mining
Reason number one, it is too difficult to make a profit. It’s too difficult to make a profit. In my last video I shared with you my experience while I was cloud mining with Genesis Mining. I showed you my daily earnings, my payouts and with all of that going on, I was not able to make a profit. I wasn’t even able to break even.
The reason why I think it is too difficult to make a profit when it comes to cloud mining is because you are constantly competing against the changing difficulty when it comes to the hash rate on the Bitcoin network.
Now, when you purchase a cloud mining contract, the number 1 thing that you want to pay attention to is the hash rate on the Bitcoin network. Your– the package that you purchase on the cloud mining, with a cloud mining service, the terahash, I believe should be greater, should be greater than the current hash rate on the Bitcoin network.
If it’s not, well then, you’re not going to successfully mine an abundant amount of Bitcoin. You just won’t. You’re just throwing money away.
As we know, the hash rate changes on the Bitcoin network every 2016 blocks. So every 2016 blocks, the hash rate changes. It either goes up or it goes down, most of the time it goes up, which means if it goes up, that means you will have to also increase the hash rate that you have with your cloud mining service and you’re not going to do that for free, it costs money, right?
So you’re putting in money to increase the hashing rate that you have with your cloud mining packages and I easily see that purchasing upwards of I think 10 per, 10 Terahash with the cloud mining service can easily take you upwards of 700 USD, maybe above a 1,000 USD and that is a lot.
I don’t think most people have a 1,000 USD just to throw into cloud mining. They don’t. I think most people will be able to manage about 50 USD maybe even 100 USD, but most people will not spend 1,000 USD, 700 USD, and even 500 USD.
If you’re going to spend that much, you might as well purchase Bitcoin outright. I have had more success, I have had more success having sabr (patience) and watching the market when it comes to Bitcoin. You know, checking up on the latest news, looking at the latest developments, seeing what the development team, the core team is doing working on Bitcoin or any other cryptocurrency that I’m looking to purchase.
I’ve had more success by purchasing the Bitcoin outright than I have with cloud mining services. Like I said, when I cloud mine, I wasn’t able to make a profit. I wasn’t able to even break even.
The difficulty in that is that the changing hash rate on the Bitcoin network, and in order to keep up with that changing hash rate, you are going to consistently have to continuously put more and more money into your cloud mining service in order to purchase a higher and higher hash rate in order to successfully mine Bitcoin to try to keep, to keep ahead or to make a profit, and I think it’s just too difficult for most people to do that.
So, that is my number one reason why I think it ain’t worth it to cloud mine.
2. There is no such thing as profit-loss-sharing with cloud mining
Reason number two, reason number two why I say you should not cloud mine is because there is no such thing as profit-loss sharing, and what do I mean by that?
I mean it would be nice if when we purchase cloud mining packages, it was done in a manner whereas a profit-loss sharing, meaning both parties benefit from it and if both parties are losing, we both cut our losses, right?
It doesn’t work that way. And what do I mean by that? Now, whenever you purchase a cloud mining package, let’s just say, I’m just making up numbers here, let’s just say you purchase a 5 terahash cloud mining contract for 500 USD, right? You purchase a 5 terahash cloud mining contract for 500 USD.
Now let’s just say the Bitcoin network is currently mining the hash rate of the Bitcoin network is at, I don’t know, let’s say 4.5 terahash meaning the hashing power you purchased is higher than the Bitcoin network, OK?
Now, as we mentioned earlier, over time we know that the difficulty rate of the Bitcoin network changes, it usually increases so let’s just say now the difficulty rate of the Bitcoin network increased to 6 terahash or 6.5 or higher than that.
Well that means your 5 terahash is really no good, it’s really no good. You’re not going to be able to make substantial gains in mining Bitcoin if your hashing power is lower than the hash, or than the hash rate of the Bitcoin network.
Now, it would be great if the cloud mining service said, “Hey look, you purchased $500 or 500 USD contract with us, I tell you what, you keep cloud mining with us, you keep cloud mining and make a profit. We also make profit because we take from you fees in order to make a profit for ourselves so we would allow you to keep mining on the network so long as it is profitable for you.
If we find that there’s a certain point where the hash rate changes on the Bitcoin network and you are no longer making profit, we will give you back the money, we will give you the difference, right? We will give you back whatever the difference is that’s where, you know, your cloud mining package became obsolete.
So maybe that, maybe they’ll say, “We’ll give you $200 back because really you got $300 worth or I’m saying like $300 that you put in, that’s where you really made a profit. Anything after that, you lost, you lost because the hash rate of the network increased so you didn’t make any profit.
So we’ll give you back $200 that way you make some profit, we make profit, we’re all happy, we can walk away, everyone walks away happy or we’ll give you back your $200. If you want, you can reinvest it again in another cloud mining package and we’ll go again from there, both of us making profit, both of us being happy.”
This is not how it works when it comes to cloud mining services. They keep all your money. They keep it all. So let’s just say you purchase, you know, a $500 cloud mining package, generally speaking, once you do this, the hash rate changes on the Bitcoin network, it goes higher, it goes to 6, 7 terahash and then you, your package no longer allows you to mine Bitcoin.
It’s not like the company turns around and says, “You know what? Well, let’s give you some of that money back because we clearly see that your package is obsolete.” They don’t do that.
So that’s my second reason why I would say one should not cloud mine because there’s no true profit-loss sharing between the client and the one running the service. It would be great if it would be like investors, right?
I invest, you invest, we both invest, together we both share the risks, and then after that, we both cut our losses if we see that there’s a loss. None of us is really– none of us gets– loses financial in a huge way per se. That’s not how it works and that’s my second reason why I would say one should not cloud mining, there’s simply no profit-loss sharing.
3. Some cloud mining websites may be Ponzi schemes
Reason number three and my last reason as to why I say you should not cloud mine is because it can all be a Ponzi scheme. Yes, it can all be a Ponzi scheme, we don’t know. We have no way of truly verifying whether these companies are actually doing what they say they are supposed to be doing, which is mining Bitcoin.
Unless you have the means to go to that particular facility or you know someone that you trust that can go to that facility for you, open up the doors, take a look inside, verify that they are cloud, that there are cloud mining rigs in there, and that these rigs are up and running 99.9% of the time, then hey, we’re really all just going on trust, right? That’s what it is.
Now I’m not saying that every single cloud mining service out there is a lie or a sham, but the potential for fraud, the potential for someone to be running a Ponzi scheme in the realm of cloud mining services is very, very, very high.
And like I said, if you don’t have the means to physically go there and check out the facility to see for ourselves that cloud mining is actually taking place, then it’s all based on trust.
Now you might be saying, “Well yeah, I hear you, but I purchased a cloud mining contract and I’m getting daily payouts. I’m looking at my wallet every day and it showed me that I’m getting cloud mining payouts.”
Well that just may be the case, but you don’t know whether the cloud mining payout is really them just shifting money around. Maybe they have a whole bunch of people who have pulled into this, and all they’re doing is giving you bits, a drip-drops, drip-drops, and payments of Bitcoin payouts from other people’s money that they put into the pot.
Worst case scenario can be is that they are giving you your own money that you put in. So let’s just say you invested 500 USD, they can turn around and give you back 200 USD back in Bitcoin telling you that you really received Bitcoin payout from cloud mining when you didn’t.
All they did was turn around and give you back your own money, give you back $200 then kept $300, kept $300 for themselves telling you, “Oh I’m sorry, your, the cloud mining package that you purchased is now obsolete because that hashing rate that you have purchased is no longer strong enough to mine the difficulty rate on the Bitcoin network so hey sorry, it’s no good for you. But if you’d like, you can always purchase more hash power with us.” Right?
That could be the case and it becomes a vicious cycle or it can become a vicious cycle where you continuously try to keep up with the hash rate of the Bitcoin network by purchasing more and more hashing power with the cloud mining service with the hopes that one day, you’re going to make all this money, you’re going to get all a ton of Bitcoin back just by you know, cloud mining.
You know as they say, “If it seems too good to be true, maybe it is.” Right? But you know what, don’t take it from me. There’s a gentleman in the Bitcoin space called Andreas Antonopoulos. If any of you have been following Bitcoin for a while, you probably know who he is.
So I’m going to put a clip of a video that he is in of an interview that he took part of, where he talks about cloud mining services. I’m actually going to put a link to that video in the show notes on Islam and Bitcoin in case you want to watch the entire interview that he is in.
But take a look at this clip, “Bitcoin Q&A. Feb 2017” – Andreas Antonopoulos, and see what he has to say in regards to cloud mining services;
Interviewer: If they are leasing mines and actually making money from the mining, then it’s from the *inaudible* because people can either buy their own hardware and do mining or they join up with larger organizations, we’ve got fastest machines in warehouses processing, and type of share in a mine. And the…
Andreas Antonopoulos: Yeah, 95% of cloud mining schemes are scams. They are straight up Ponzi schemes and the reason is there is no effective way to prove whether the money you’re making comes from the mining share that you’ve invested in or simply from the money that the people after you are investing into the same scheme, which is what a Ponzi is.
Cloud mining in itself is almost always a Ponzi. I have not seen a single one that I will trust yet and I’ve seen hundreds of examples of them collapsed. So if they’re making money from mining, but they’re not actually running any hardware, they just put some money in and money keeps pouring out every month, I would take a 95 to 5% bet on that myself that it’s a Ponzi scheme.
And there you have it from Mr. Andreas Antonopoulos. And these are my three reasons as why I do not feel it is a benefit to cloud mine. Number one, too difficult to make a profit, too difficult to make a profit. Number two, there is no profit-loss sharing. Number three, it can all be a Ponzi scheme. It can all be a Ponzi scheme.
I do hope that you have found this video a benefit, any good that you have found in this video it is from Allah Subhanahu Wa Ta’ala, any mistakes in this video, it is all on me. I ask that you forgive me and make a du’a for me. Please do– if you found benefit in the video, like it and share it.
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Thank you for checking out this video today. I leave you in the way that I greeted you, As-salamu alaykum wa rahmatullahi wa barakatuh. Masalamah.
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