In Part 1 of this review (that you can read here), we provided an overview of the Octoin company and took a look at how an investor can make money with its Trading activities. Now, I will do my best to sort though the section of the website on its Mining activities. I’m not very comfortable in this area but perhaps I can make a few comments that will be helpful to you.
First of all, in this activity, strictly speaking, you are not making an investment. Rather, you are leasing a certain amount of mining power in gigahash/seconds (GH/s) or megahash/seconds (MH/s). I suspect that you are actually SUBleasing it from Octoin and that they are leasing it from large data centers located elsewhere. I think that this is basically how cloud mining works. You don’t need all that expensive hardware yourself. You just lease the mining power from someone that has it.
With Octoin, you can mine either Ethereum or Zcash. You choose the amount of mining power you would like to lease (in MH/s) and the term for the lease. You should understand that, just like leasing a house, when the lease is over, your deposit is gone. This is very different from the Octoin Trading program where you deposit a certain amount of money and it’s returned to you at the completion of the investment plan term.
In an effort to understand how this works, let’s consider a specific case. We will choose to mine Ethereum and we will purchase the lease with US dollars (you can purchase it with a number of different cryptocurrencies as well). Furthermore, we will lease 100 MH/s of mining power. To complete the picture, you will need one more piece of information which is the cost of Ethereum in US dollars. At the top of the website there is a scrolling set of conversions that (right now) give the ratio of USD/Ethereum as 0.002172. That means that one USD is worth a LOT less than one unit of Ethereum. Turning this upside down (taking the reciprocal or 1/0.002171), we get the number of USD that is equivalent to one unit of Ethereum (the cost in dollars of Ethereum). This comes out to around $460. However, like all cryptocurrencies, this number is VERY volatile — as I will point out shortly.
Next, go into your account and, in the Mining section, set the mine tab to Eth (upper right) and the payment currency to USD (upper left). Next, set the mining power to 100 MH/sec by adding or subtracting units of 10 MH/s. Finally set the mining lease term to 30 days. With these selections made, you will see two numbers: the price for the lease which is $153 and the value of Ethereum that was mined for this size lease in the past 30 days. This gives you an idea of how much money you can expect to earn with a similar lease in the future. This is given as around 0.427 Eth. Knowing that one unit of Ethereum costs around $460, this is equivalent to around $196. So, your potential net profit would be the value of the Ethereum that you might mine minus the cost of the 30-day lease or around $43 (196-153). Dividing this by the number of days in the lease (30), you get an estimated daily profit for the lease period of around $1.40. I am rounding all these numbers off to emphasize that they are only very rough estimates. $1.40 is around 0.94% of the purchase price of the lease (1.40/153 x 100). So, with this lease yo,u clear around 1% per day net profit.
Now, let’s do the same thing, but with the 60-day lease term. In this case, since the lease is twice as long, we will double the estimated return of .427 Eth or $196 to get an estimated anticipated return of around $392. In this case, even though the term of the lease doubles, the cost of the lease doesn’t quite do that. Rather it is around $296. So, your profit would be around $96 in the 60-day period. Dividing this by 60 days, the daily profit comes to around $1.60. This is a little better than the return for the 30-day lease. However, you have to remember that you are tying up double the investment for twice as long in order to get it. This becomes apparent when you look at this return as a percent of the lease amount. Dividing $1.60 by $296 (and multiplying by 100), you get a daily percent profit of only 0.54%. This is tricky to digest (at least it was for me!). The daily dollar amount of your earnings for the longer-term plan is a little greater. However, when viewed as a percent of the lease cost, it is less profitable. You could make similar calculations for the two remaining longer-term lease plans to get the following results:
Days Cost Gross Net Daily Net Daily Percent
30 $153 $196 $43 $1.40 0.94%
60 $296 $393 $96 $1.60 0.54%
90 $437 $589 $153 $1.70 0.39%
200 $919 $1,309 $390 $1.95 0.21%
Well, what does this tell us? Let’s put it into the terms of an HYIP investment. Looking at the 200-day lease which costs you over $900, your daily net profit is only 0.21% per day. This is what we have been referring to as daily net interest (DNI) in previous Emily News articles. This is VERY low, probably lower than for any investment plan that we have reviewed so far. For an HYIP, we would certainly look on a return like this as being a sustainable one for the company. It minimizes the risk of a company crashing due to excessive obligations with respect to paying earnings to its investors. However, on the other hand, it is not very profitable for the investor as you are tying up a large amount of money for a long period of time and only receiving a small net return. THE WISER APPROACH WOULD SEEM TO BE TO TAKE OUT A SERIES OF SHORT TERM LESS EXPENSIVE LEASES INSTEAD OF A LONG TERM EXPENSIVE ONE. In that manner, you have much less of an investment at risk. However, admittedly, your daily net earnings will be somewhat less.
There is still ANOTHER important factor that must be considered. This is the volatility of Ethereum (and, in general, ALL cryptocurrencies). Two days ago, I did this same analysis and, at that time, the value of Ethereum was only around $360. Likewise, the cost of a 30-day lease was only around $125. These are HUGE differences in a two-day period. At that time, I worked up a chart similar to the above which was:
Days Cost Gross Net Daily Net Daily Percent
30 $125 $156 $31 $1.03 0.83%
60 $243 $312 $69 $1.15 0.47%
90 $357 $468 $111 $1.23 0.34%
200 $752 $1,040 $288 $1.44 0.19%
The point is that, if you can get this much variation in only two days, ALMOST ANYTHING CAN HAPPEN in a lease having a term of 30 or more (or much more) days. So, with Ethereum and other cryptocurrencies being as volatile as they are, an earning plan that depends heavily on their value will be just as unpredictable. So, how should a person handle all this?
When it comes to Trading activities, a good trader can come out ahead both when a cryptocurrency increases or decreases in value relative to, say, the US dollar. However, based on the arithmetic above, it appears that earnings from Mining activities will be better when the cryptocurrency has a high value relative to the dollar or increases in value as the term of the lease goes on. For example, suppose that two weeks ago, I purchased 100 MH/s of mining power for $125 and expected to earn $1.03/day on it. Now, as I understand it, that 100 MH/s will be earning me $1.40/day. A huge difference. Of course, the reverse could have happened. So, the bottom line is probably that, when it comes to Mining activities, the investor is essentially gambling on whether or not the cryptocurrency will rise or fall in value. One needs a crystal ball for this.
In this review, I have limited my discussion to what we feel are the two most important things a person would like to know before investing in an HYIP. These are the reliability of the company and the profitability — and long-term sustainability — of its investment plans. We discussed this at length in the article in HYIP Insights #16 (which you can read here).
Concerning the reliability of the company, Octoin probably scores high owing to the great amount of effort that has been put toward the creation of a very high-level program as well as a magnificent website to support it. There are a lot of bells and whistles in this website and I haven’t discussed them all. I must also mention that there IS a virtue in simplicity. In that regard, the website is lacking. It is so jam packed with features that it is often difficult to get to the essential points of the Octoin program. One almost needs a tutorial to understand what’s going on.
So, to sum it all up, the way I see it, investing in the Octoin Trading activities might be a sensible thing to do given that the interest rates which are offered are definitely within a range that could be sustainable for the company in the long term. On the other hand, if I have this figured out right, investing in the Octoin Mining activities might be best reserved for folks that are serious gamblers at heart — the same type of folks that would invest in a cryptocurrency in hopes that it will increase in value.
So, the potential investor has a lot to think about with respect to whether or not to invest in this program. Of course, as we always say, the safest posture is always to diversify your investments among a number of programs; never put all your eggs in one basket. This is especially true in the HYIP game where, literally, anything can happen. And, finally, as we always say, never ever invest more than you can afford to lose. Good Luck!
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