Last time out I was talking about Cloud Mining and how I had chosen Hashflare as my first mining host. The price was right for a first small step, I wasn’t expecting to get rich but I figured hey, what the heck. However, the problem of paying almost kept me out of the game.
The most common way to pay for cloud mining is bitcoin itself. Hashflare prices it’s stuff pretty good, and the conversion to bitcoin pricing is pretty much right on the money with no big extras. I can take a little while, as bitcoin itself is a bit slow to processes transactions these days. If you are thinking that the price of bitcoin is going to keep going up, then paying for hashrate with bitcoin is actually a pretty bad idea, really. I will talk about the whole concept of net value plus one or two years later on, it’s an interesting discussion that borders on the mentality of a roulette wheel player, but that’s another story.
The other ways to pay are wire (not useful for small amounts) or credit cards. Now, I will say right away if you are planning to max out your credit cards to buy hashrate, stop. As much as I would like to encourage people to get into mining, I would at the same time tell you not to spend what you don’t already have. You have to think of mining in the same way you look at putting money into a slot machine at a casino. You may make money, but you may also lose all of it. If you can’t afford to lose the money, then getting into mining may not be for you. So use your credit cards wisely.
In my case, I have a couple of pre-paid credit cards that I use for online things from time to time. One of them is through Entropay, and another is through a company called Paxum. Entropay is more of a virtual card, while Paxum issues a physical card. However, they concept is the same, fund the card, and then use it to buy things. You can accomplish the same thing with Visa and Mastercard gift cards if you like. That way you are spending money you have already “given” and are not getting into credit card dept to go cloud mining. Remember, the interest payments on your credit card will push up your costs of mining, and at near 25% in a lot of cases, credit card debt could in fact wipe out all of your earnings. Not recommended as a long term solution.
So I decided to try my pre-paid cards to pay for 1TH/s of bitcoin mining. The price at the time was $140, which projected out a break even in about 4 to 5 months and then 7 to 8 months of “profit”. Making 3 times the money sounded pretty good. I won’t mention which card I used for what, but what follows ends up being pretty comical.
One problem of pre-paid cards is that when a payment processor takes a pre-authorization, they “hold” the funds. With a pre-paid card, that means they hold your actual money in a pending state. So I tried one of the two processors on Hashflare, and my card was refused (apparently, that card company blocked out bitcoin related transactions, told you this coin thing comes off a bit shady at times). I tried the same card with the second processor, and it got stuck at pending, but wasn’t going anywhere. Hashflare reported it would take 120 minutes, but that quickly rolled out into a day, then a second day. At that point, I knew it was screwed. The downside? The money was held on the card! Crap!
So I figured what the hell, and tried the other card. First processor accepted it, but it got put in a pending status again. This was with the company that had denied the first card, so I figured it might work out better. Another while of waiting, and seemed it was pretty doomed, with nothing happening. I dropped a note to Hashflare support, but didn’t really hear anything for a bit. I was a little frustrated at this point, because I really wanted to get mining and start learning more about the whole deal, so I needed to find a better way to pay hashrate.
That, my friends, lead to my next lesson and next story, trying to buy enough bitcoin directly to pay for the hashrate.