Disclaimer: This article is not intended as investment advice, and only contains my personal opinions. Cryptocurrencies are risky. Never invest more than you can afford to lose. Always seek professional advice before making any investment.
Hashflare’s cloud mining rates jumped to $2.20 per 10 GH/s in December 2017 from the previous rate of $1.50. That’s a 68% increase in cost and the annual contract rate looks a whole lot less attractive now than it did just a short while ago.
The attractive thing about Hashflare (or any cloud mining platform) to me, however, isn’t the annual return of the initial contract period. The most attractive feature is the power of compounding micro-reinvestments over the course of a year – or two, or four, etc.
If you’re mining with hardware, you should be doing the same thing, right? Build or buy a rig, pay it off and then reinvest to build or buy your next mining rig. The advantage of cloud mining, is that you can purchase small amounts of hash power on a daily basis so that those investments compound over the life of your cloud mining contract. And since each reinvestment is technically the start of a new 12-month contract, the hash power really starts to grow after the first year of mining.
190 Day Reinvestment Strategy
You can see in the below video how that reinvesting all of your payouts from Hashflare back into new hash power purchases for the first 190 days of your contract can yield some crazy results. He’s using an outdated spreadsheet but I’ve got a new one with the new rates for you below.
The 190 day reinvest strategy maximizes your first year payouts. Technically, if you’re in it for the long run, you could reinvest everything the first year and have a bigger run the second year. After 365 days, your initial contract expires and every day after that the subsequent reinvestment contracts expire. However, since you continue to reinvest and only withdraw funds every other day, you have new (and bigger) contracts starting every other day. So, your overall contract continues to grow.
Breaking Down ROI on Small Investments
Given a BTC value of $15,279 (it’s been up and down lately), if you started with $220 for 1TH/s, along with a 2% increase in BTC price and a 2% avg difficulty increase, you’d have $1759 in BTC value at the end of year one.
After 730 days (2 years), the total return jumps to $12,229. Again, this is starting with a 1 TH/s purchase from the first year for $220.
This continues to grow over the course of each year and after four years, that $220 investment ends up with a return of $123,765.51.
Of course, if you start with 2 TH/s instead of 1 TH/s, you are putting $440 in today and the 1 year number is $3592, which is a little more than 2x of the $220 investment at the end of year one. Compounding continues to roll in year 2 as you start with 25.55 TH/s instead of 12.37 TH/s with the $220 1 TH/s investment.
At the end of year 2 (for the initial $440 2 TH/s investment), you are looking at a potential return of $25,944, or 0.6184879483 BTC at a $41,947 bitcoin value.
It gets bananas in at the end of year 3 ($32,160 for 1 TH/s starting investment OR $69,166 for 2 TH/s starting investment) and year 4 ($99,964.31 for 1 TH/s starting investment OR $218,821.35 for 2 TH/s starting investment). And these are just very small investments into cloud hashing power. The numbers get really crazy if you purchase 15 or 20+ TH/s and reinvest.
You can access the updated spreadsheet for free with the new $2.20 price per 10 GH/s rate and with extend timelines out to 4 years (1460 days). I initially found this spreadsheet on YouTube from someone breaking it down and modified it with more time and updated rates to answer my own questions. Play around with it using your own numbers and see what you think. From the Google Sheets menu, go to File > Make a Copy… to get your own editable version. If you found this introduction to reinvestment strategy on Hashflare helpful, you can join Hashflare using my referral link.