A beginner's experience with Bitcoin Cloud Mining. Is it worth it?

I ended up with a small Bitcoin cloud mining contract sort of by mistake. Having signed up with Genesis Mining specifically to mine some Ether (just for fun), I started looking into altcoins more seriously and decided I was also interested in a few other currencies like Peercoin (PPC), Monero, and Dash. Now, each time I log in to my cloud mining account at Genesis Mining I see hash rates displayed under 3 categories: sha256, X11, and Ether; All 3 are proof of work mining algorithms (Ether is actually Ethash, a modified version of Dagger-Hashimoto) but the important one in this specific example is sha256, which represents Genesis Mining's "Lifetime Bitcoin Mining" contract.

Having just read that Peercoin uses the same mining algorithm as Bitcoin (SHA-256), I assumed (incorrectly) that I would be able to mine PPC directly using the hash power from the Lifetime Bitcoin Mining contract and figured why not throw in a hundred bucks to test it out. Almost immediately after my order was approved I realized that Peercoin wasn't listed as an option when assigning my newly purchased hash power. 

I contacted Genesis Mining – Customer Service for a little clarification and learned that only Bitcoin, Unobtanium, and Zetacoin could be mined directly. The service then allows users to "autotrade" the chosen currency to BTCD, DASH, DOGE, or LTC. The helpful customer service agent also let me know that their X11 Cloud Mining contracts did allow for autotrading to Peercoin. The system would automatically mine the most profitable X11 coin and exchange it for PPC. Not what I was looking for but the helpdesk response was timely and pleasant.

Since processed contracts cannot be changed or reverted, I was stuck with the 0.6TH/s Bitcoin mining contract I paid $110 for (after 3% discount from a promo code I found). So, I went ahead and left the default setting for hash power allocation which was 100% Bitcoin. Below you can see the results of my first day of mining, 0.00105928 Bitcoin or roughly $0.72 US Dollars.

As it turns out that tiny amount of Bitcoin was actually more valuable than the ETH I was getting each day from my "1 Year Ether Mining" contract which I paid more than $300 for about 3 weeks earlier. At 9MH/s my daily payout for the same day, July 1 was 0.0571087 ETH or roughly $0.65 US Dollars.

Even with the Bitcoin halving looming I was pleasantly surpised with the ROI from my Bitcoin cloud mining contract. Post-halving, I still figured I stood to make about $18 profit over 1 years time, even if the price of Bitcoin stayed the same (and I was sure it would increase). A 16% profit isn't too shabby when you are doing literally zero work. With those numbers in mind and the belief that the value of Bitcoin would increase at least marginally over the next year, I felt comfortable investing some more money to increase my Bitcoin mining hash rate with Genesis Mining.

Once the halving occurred, I logged back in to my cloud mining account to recheck the daily payout and found it had dropped to 0.00035009 Bitcoin or roughly $0.23 US Dollars. That's almost a 70% decrease.

I went from a 16% profit to about a 24% loss for the year based on the current Bitcoin price.

There are many other factors that come into play such as how long will the "lifetime" contract actually last. Genesis Mining will only continue mining Bitcoin so long as it's "profitable" and that could reasonably be anywhere from 1 to 100 years depending on difficulty and market prices.

As of this moment, just before midnight on July 16, 2016 I do not believe that a Bitcoin cloud mining contract is a good investment, even through a reputable company such as Genesis Mining.