Cloud Mining Contract Losses

We rate this tip S tier: the two clauses nobody reads in a cloud mining contract, the daily maintenance fee and the right to terminate, decided where $26,000 of George Vanous's money went. His notes record that he paid $30,846 on Nov 24, 2017 to a large cloud mining company, that the contract mined from Mar 15 to Aug 7, 2018, and that it produced 0.64 bitcoin, worth about $4,500 on Sep 1, 2018: 15 cents back on the dollar. The cause is arithmetic anyone can redo from public records. By our working from Blockchain.com's network difficulty chart and the St. Louis Fed's record of the Coinbase Bitcoin price, a unit of mining power that grossed about $1.52 a day when he paid was grossing about $0.28 a day when the payouts stopped. This page is a warning from one person's loss. It is not advice to buy, sell or mine anything.

We think the squeeze only tightens: Bitcoin's network difficulty stood at about 148.4 trillion on Nov 9, 2026 by Blockchain.com's chart, and we expect a higher figure on the same chart in Mar 2027, which makes every fixed dollar fee harder to cover. Confidence: Likely. Check by: Mar 2027.

The contract in his numbers

His own summary to the company's support desk that day was that he had paid $30,846 and "mined almost 0.64 bitcoin worth $4,500 at today's prices giving a loss of $26,000 USD." The Fed's Coinbase series puts Bitcoin at $7,191.08 on Sep 1, 2018, which values 0.64 bitcoin at about $4,600, so his figure holds.

Why the payouts stopped

Support's explanation, as his notes keep it and in our words: the contract charged a maintenance fee every day, the day's mining reward had fallen below that fee, and so the payout from Aug 8, 2018 onward was zero. The company did not bill him for the shortfall. The contract would keep running for 60 days, and under the terms he had accepted, the company could end it after 60 consecutive days in which the reward failed to cover the fee.

That is the whole mechanism, and it has two moving parts against one fixed part:

• The fee is fixed in dollars. It pays for electricity and hosting, which do not get cheaper when Bitcoin does.
• The reward shrinks as difficulty rises. Blockchain.com describes difficulty as a measure of how hard it is to mine a block, reset about every two weeks. When more machines join the network, the same hashrate earns a smaller share of each block.
• The reward is paid in bitcoin, so its dollar value moves with the price.

A buyer's hashrate never changes. What it earns does. For one terahash per second, the expected gross reward in a day is 86,400 seconds of hashing divided by the work a block needs (difficulty times 2 to the power 32), times the 12.5 bitcoin a block paid between the Jul 2016 and May 2020 halvings. Transaction fees and pool fees are left out. On his three dates:

Difficulty multiplied by about 4.4 between the day he paid and the day the payouts ended, while the price slipped 18%. Together they cut the dollar reward by 81%. His notes do not record the fee rate. The table suggests where it sat: the payouts ended when a terahash was grossing about 28 cents a day, so we think the fee was close to that figure, and the reply from support fits.

The 111 days that cost the most

The price of Bitcoin was almost the same on the day he paid ($8,215.01) and on the day mining began ($8,259.99). In between it had passed $19,000 (Blockchain.com's market price chart shows $19,279.90 on Dec 17, 2017) and come back, and none of that mattered to the contract. What mattered was that difficulty had gone from 1.36 trillion to 3.29 trillion while he waited. The contract had lost 58% of its earning power, from about $1.52 to about $0.63 a day per terahash, before it mined its first satoshi. He had paid a price set in November for hashrate delivered in March.

From there the margin over a fee near 28 cents was thin, and it took 145 days to close.

The answer to the loss was a bigger contract

George then asked the question most people would ask. In his words: "Do you recommend upgrading" to the company's new plan "for $36,000 USD ... to recover this $26k loss?" And: how could the company "guarantee that there will not be another big loss"?

The reply in his notes answers neither. It says the upgrade carried a larger discount than a new contract would, that it ran for five years, and that it could not be terminated when rewards stopped covering fees. It offers no guarantee and no estimate of what the contract would return. A contract that cannot be terminated for being unprofitable is not a contract that is profitable: the fee still comes out of every day's reward first. His notes record no purchase.

For scale today: with the block subsidy at 3.125 bitcoin since the Apr 2024 halving, difficulty at 148.4 trillion and the Coinbase price at $75,090.89 on Nov 9, 2026, the same terahash grosses about 3 cents a day, roughly a fiftieth of what it grossed when he paid.

What his case says to read first

These are the clauses his $26,000 turned on. They are questions to put to any contract's terms, not a recommendation to sign one.

1. Is the maintenance fee fixed in dollars, and how much is it per unit of hashrate per day? Work out today's gross reward for that unit with the formula above and see how much room there is.
2. What happens on a day the reward is smaller than the fee? His payouts went to zero.
3. After how many such days may the seller end the contract? His terms said 60 consecutive days.
4. When does mining start? His started 111 days after payment, and the difficulty of those days was his to bear.
5. Is any return promised? His support desk promised none, even when asked directly.

What regulators have said about mining contracts

Securities regulators have written about cloud mining mostly where it was fraud. The US Securities and Exchange Commission charged two Bitcoin mining companies on Dec 1, 2015 with selling about $20 million of mining contracts backed by far less computing power than they sold, and said most buyers never got their money back. The Texas State Securities Board halted a scheme on May 28, 2024 that offered cloud mining plans paying 1.6% to 2.8% a day, and urged the public to investigate before investing.

George's case is a different kind. Nothing in his notes suggests the company broke its terms: by support's account it applied them. The loss came from a contract that worked as written, which is why the terms are the thing to read. We found no regulator's page that warns specifically about maintenance fees or termination clauses.

What we checked on Nov 10, 2026, and what we could not

The difficulty and price figures are public records, read that day: difficulty from Blockchain.com's chart data, prices from the Coinbase Bitcoin series the Federal Reserve Bank of St. Louis republishes (each day's value as of 5 PM Pacific time). The reward column is our own arithmetic from those two series. The fee and the 60-day clause are known to us only from the support reply in George's notes. We tried to read the company's 2017 and 2018 terms in the Internet Archive and could not load them, so we have not seen the clause in the contract's own text, and the company is not named here. The 28 cent fee is our inference, not a figure from his notes or from the company.

Sources

• Network Difficulty, Blockchain.com, read Nov 10, 2026
• Market Price (USD), Blockchain.com, read Nov 10, 2026
• Coinbase Bitcoin (CBBTCUSD), Federal Reserve Bank of St. Louis, read Nov 10, 2026
• SEC Charges Bitcoin Mining Companies, US Securities and Exchange Commission, Dec 1, 2015
• Securities Commissioner Warns Investors About MLM Crypto Investment Schemes, Texas State Securities Board, May 28, 2024
• George Vanous's notes, Sep 1, 2018