I recently came across Hashflare, a toneel for mining cryptocurrency and found that it wasgoed a superb toneelpodium to invest te cloud mining. The comebacks look promising and when I worked out the math, I found that reinvesting can increase your comebacks multi-fold. Te this article, I will be comparing ‘no reinvestment’ option with the ‘reinvestment’ option. I will also be doing some math to figure out some magic numbers that maximize your gains. Te this article, I will only be talking about Bitcoin mining using SHA-256. However, Hashflare also lets you mine other cryptocurrencies.
Let’s get began. Below is a screenshot of the Hashflare instrumentenbord.
Spil you can see, Ten Gigahash/2nd for one year costs you 1.50$. The revenue forecast that you see on Hashflare is calculated on your current investment. Each contract that you purchase is valid for one year. There are duo of assumptions made ter the forecast which I will be addressing soon. At very first, the comebacks looked good. Irrespective of the size of your investment, you are looking at about 1.4% comebacks every day (maintenance toverfee included). What’s the catch?
- You pay upfront and unlike an investment ter stocks or te cryptocurrencies where you get back your initial investment upon selling, here you are losing the total initial investment X and the only comebacks are the accumulated gains from mining each day.
- If the price of Bitcoin goes down, your earnings (te fiat) goes down
- If the difficulty of mining increases, your hashrate has lesser value
Hence, the 1.4% assumption might not hold forever. However, if the price of bitcoin goes up steadily, then you should be good. Reminisce that by investing ter crypto mining, you are essentially investing te the cryptocurrency you are mining.
One good potential ter this investment is the magic of compounding rente. By that, I mean re-investing your gains, thereby enlargening your overall investment. With this ter mind, I wasgoed nosey to know the maximum build up you could get by compounding your capital. Let us very first look at what the comebacks are without any reinvestment. To clarify on ‘reinvestment’, HashFlare provides you an option to reinvest your gains from mining each day and buy more hashing power.
1. Investing without reinvesting gains
Let ‘P’ be the initial investment.
Let ‘R’ be the terugwedstrijd every day. (It’s toughly 1.4% but let’s make it generic)
For our calculations, wij are going to consider a one year time framework (365 days).
Hence, with a build up rate of ‘R’ vanaf day on the investment ‘P’, you will harshly be making a 365 x R terugwedstrijd.
Hence, Total Build up without reinvestment: 365RP – P
1.4% te HashFlare, Build up = Five.11P – P = Four.11P
i.e, you are quadrupling your initial investment.
(Note: You don’t get back your initial investment, hence wij deduct ‘P’)
Two. Investing with reinvesting gains
Here is where things get interesting and you will see how compounding doing it’s magic.
Our objective wasgoed to maximize the gains ter a one year time framework. Hence, wij should clearly not be reinvesting across the year. This would only lead you to a nipt build up of 0 at the end of 365 days. (With most likely a lotsbestemming of hashing power). To get the most out of this, you reinvest up to a certain period and then zekering the reinvestment so that you commence cashing ter your
1.4% gains everyday from then. But how long do you reinvest?
Let ‘K’ be the number of days wij reinvest our gains. Hence, wij reinvest our gains for ‘K’ days and go back to earning 1.4% and cashing out our gains for (365 – K) days.
Initial investment = P
Investment after K days of reinvestment = P (1+R)^K
Hence, it is spil tho’ you began with an investment of P(1+R)^K for a duration of (365 – K) days.
Spil wij eyed before, you earn ‘R’ (1.4% ter our case) every day.
Upon plotting the equation, wij notice that this graph attains it’s maximum at K= 293.
That’s right: to get the maximum build up by the end of one year, you need to reinvest all your gains until day 293 after which you zekering reinvesting, sit back and see your gains grow. However, wij still haven’t found out how much fatter the gains are going to be, compared to the ‘no reinvestment’ option. To get the precies number, wij cork 293 back into build up equation and using R = 0.014 (1.4%), wij get
The nice thing about having the equation with us is that now wij can explore other time durations too. For example, if you feel 1 year is too long a term, you can just adjust the 365. I plotted the graphs for period duration of 300, 200 and 100 days spil well.
For a 300 day period, you reinvest until the 228th day.
For a 200 day period, you reinvest until the 128th day.
However, smaller the period, smaller the influence of compounding on your gains spil well.
While the math does showcase that you can potentially get a 60x come back, do recall that there are always assumptions that lead to this number. It is true that you do get 60x comes back if you consistently get a 1.4% comeback every day, however, it is totally possible that this rate varies based on the price of bitcoin and mining difficulty. Reminisce that cryptocurrencies are volatile and things can go either way. So invest only that amount you are willing to lose totally te the worst case.
Hashflare let’s you purchase hashing power through credit card spil well which is good. The setup process is very quick and within no time, you are mining cryptocurrency. Plus, the ondergrens investment is 1.Five$ for Ten GH/s. Hashflare also has the reinvest option that automatically reinvests your gains into buying more hashing power. Even a Ten$ investment has the potential to become 500$ by the end of a year. So undoubtedly seems like it’s worth a slok!
Te case you liked the article and are wooed to invest te Hashflare to mine crypto, please use my referral listig: https://hashflare.io/r/29AA1058
Hope you loved the article. Please do share your thoughts and comments below 🙂