A Look at Cloud Mining with Hashing24

When I first got involved with Bitcoin in early 2013, I was excited to see all the optimism and energy. A lot of that was spurred by the rise in price from less than 90 to more than a thousand dollars, but a lot of it was also coming from the many people who saw Bitcoin as a long-waited for opportunity to do something good in the world – to make a difference. To do well, by doing good. Bitcoin was going to the moon, and it would be taking those smart enough to catch it early with it.

I got caught up in that enthusiasm, and I decided that I could benefit even more if I took the few bitcoins I had bought and put them into a couple of interesting investing opportunities that presented themselves.

I’ll cut to the case: I lost my shirt.

And that experience taught me to be more careful where I put my dollars, and my bitcoins. I’ve been a pretty solid HODLer since, so when a representative of Hashing24, a Bitcoin cloud mining operation, got in touch with me a few weeks ago asking me to write a review of their service, I was skeptical. Cloud mining on the face of it seems to be ripe for scamy behavior. But I had never really investigated any of the companies, and thought that this would be a good opportunity to find out more. In the process, I thought, I could see if I had learned anything from my earlier experiences.

Why Cloud Mine Bitcoin?

Experience

For anyone serious about Bitcoin, but not willing to put in the time and money necessary, cloud mining is a way to participate in the real meat and bones of what makes Bitcoin Bitcoin. By mining, whether with your own machine or through the cloud, you are helping to secure the whole of the Bitcoin network. Of course, you could always try hashing for yourself by hand too:

**Get started with Bitcoin at Coinbase.**

Profit

This one is a little less clear. The days of mining on your desktop were already long gone when I first caught a whiff of what Bitcoin is. Now mining is dominated by large mining farms with rows and rows of specialized hashing computers, often located in areas with cheap, cheap electricity or where it’s really cold because those computers run hot! (There are stories of people heating their apartments with them.) Based both on the profit calculator on Hashing24’s site and on reports on Reddit and BitcoinTalk, it can take around 12-18  months depending on a variety of conditions to recoup initial investments.

Some of the things that will affect profitability are the difficulty level of the Bitcoin network and the price of Bitcoin. I’m presuming anyone reading this would know what the difficulty is, but if you don’t, you can find out here. If the difficulty increases, then the profitability of your investment will decrease. On the other hand, if the price rises, the value of the bitcoins earned will be all the greater. The difficulty has historically been on a pretty constant upswing. In the future, I have a feeling that we’re going to see a flattening out of the difficulty, but we’re going to see an explosion of price.

New Coins

This is something that I had not even thought about until I started researching for this article. Bitcoin is not perfectly fungible. Unlike dollar bills can be traded hand to hand with no way to track them back to where they came from, bitcoins can be tracked on the blockchain from creation through current address. This means that if the coins you own have ever been part of a theft or been used on a darknet site, it might be possible in the future to ‘taint’ those coins. Cloud mining means that the coins you get are pure and unquestioned – and you will be able to check this fact the minute you get them.

Interestingly, many cloud mining operations do pay out in old coins – previously circulated. I’m not entirely sure why, given that the point of being a miner is to get those newly mined coins. Hashing24 is one of the few operations, the only one I’m currently aware of, that does pay out in new coins.

How do I tell if a site is honest?

Well, based on my experience from being fleeced in 2013, there were a few red flags that could have tipped me off.

  • The person running the business was using a pseudonym.
  • You couldn’t invest using credit cards or any payment method showing the business had to go through any legal or documentary procedures to be a business.
  • The rate of return was ridiculously high.

So how well does Hashing24 stack up?

Identifiable

Not so well. They have only been in business since November of 2016. They have three offices, Glasgow, Thailand, and Ukraine. Only Glasgow has a physical address, and that seems to be a virtual office. Their website says that they are experience professionals who have involved in mining since 2012, but no names are given – so it’s hard to know who to hold responsible if something goes wrong.

That being said, it’s not entirely unreasonable for people working in this business on an international level to want privacy. Some of what I wrote here might be mitigated by…

Legitimate Business Relationships

Hashing24 does accept an array of credit cards showing that they’ve convinced those companies that they have some legitimacy. What’s more, Hashing24 has a partnership with BitFury, a Bitcoin mining rig manufacturer and blockchain service provider. BitFury is a known and respected company, and one that has been a rational voice in the often vitriolic debate over scaling that Bitcoin is just seeming to get past.

As a matter of fact, BitFury lists Hashing24’s link along with its own on its ‘about’ page. It may be that the ‘partnership’ between Bitfury and Hashing24 is a little closer than just a business relationship and they’ve not chosen to make that public.

Too Good to be True?

At the currently difficulty and price, it would take a miner 12 months to make back their initial investment, and this is calculating in the daily maintenance fee. This is not ‘too good to be true,’ and it might be a slow, steady way to passively increase your earnings – given that the difficulty level and price play nice.

Fees

When signing up for hashing power, the miner will pay an upfront charge based on the amount of power they’re buying. After this, there is a daily maintenance fee deducted from income received from mining used to pay the cost of electricity and upkeep. The fee is deducted from the volume of mined bitcoins that your contract earned based on a dollar amount calculated using Coindesk’s price chart, and what is left after this is your net income which is credited to your Hashing24 account balance. If the amount of bitcoins earned falls below this fee, it will be deducted from the balance in the miner’s account, and if that fails to make up the amount, the miner will have to top of their account with their own funds or the contract will be canceled.

Bitcoin Alliance

One more interesting thing to note is that BitFury is a participant in the Bitcoin Alliance, a Bitcoin industry to law enforcement outreach program dedicated to make the Bitcoin ecosystem a safer place for all of us, as well as to make sure that lawmakers and law enforcement act with a true understanding of the nature and use of Bitcoin.

Final Analysis

After taking a look at Hashing24, their service, and how they are situated in the industry, I would personally feel comfortable investing in some hashing power with them and joining the small number of people actually helping to secure the Bitcoin network.