What is cloud mining: benefits and options
Did you know that you don’t have to buy expensive equipment and create your own farm to mine Bitcoin or other cryptocurrencies? Instead, there is a way to become a miner without huge investments and fiddling with constantly aging hardware and huge electricity bills. This method is called cloud mining. So what is cloud mining? In this article, we will talk about its features, advantages and disadvantages. After reading, you can start investing and mining cryptocurrencies!
What is Crypto Mining?
If we greatly simplify the definition of this concept, then mining is the process of mining bitcoin and some other cryptocurrencies. To be more specific, this is a technology for creating new blocks of virtual coins to ensure their emission.
In the language of blockchain engineers, mining is the support for the operation of a cryptographic network by creating blocks in the Blockchain using the power of computing technology.
The miner uses the equipment’s power to solve a cryptographic equation to find a hash (digital signature) that will close the block. The miner who finds the digital signature receives a reward in the form of 1 unit of cryptocurrency.
The main task of mining is to maintain the operation of the network, guarantee its protection from duplicate transactions and the integrity of the blockchain ecosystem, and the only way to increase the emission for bitcoin and many other virtual coins.
What is Cloud Mining?
Cloud mining is the mining of cryptocurrency using facilities rented from another company. The equipment can be placed anywhere globally: the miner can access it online through the control panel. The company takes care of all the worries about the placement and maintenance of mining facilities.
Cloud mining is available for Bitcoin and other cryptocurrencies powered by the Proof-of-Work (PoW) consensus algorithm. Each provider independently determines the list of coins for mining, offering the user ready-made tariff plans. It remains for the miner to choose the cryptocurrency and the hashing power – for example, one terahash per second for bitcoin mining.
Cloud mining is the easiest way to start mining without investing in hardware. Technically, cloud mining is no different from the classic method of mining cryptocurrency. As a reminder, Bitcoin and many other coins are built on the Proof-of-Work consensus mechanism – proof by work. To confirm transactions on the network, miners spend computing power, and they receive cryptocurrency as a reward.
Digital generated image of data server (source Getty)
History of Cloud Mining
In the early stages, miners used video cards. Subsequently, devices appeared based on ASIC microcircuits, sharpened for the extraction of specific cryptocurrencies. ASICs turned out to be much more profitable than video cards: electricity costs became lower, and the power of devices was higher.
From a lot of enthusiasts, mining quickly turned into a profitable business. The most far-sighted “miners” began to collect mining farms, which united many ASICs. The network’s power, also called hashrate, crawled upwards so that mining bitcoins required more and more expensive equipment.
Independent “home” mining was rapidly losing its attractiveness. It turned out that to get the real income you need:
- Collect equipment for thousands of dollars and pay for shipping;
- Find a place to place ASICs or video cards that are constantly noisy and generate heat;
- understand how to work with the software;
- Figure out what to do with a high load on the electrical network in an apartment or house, or spend money on a separate room for a farm;
- Gain profit at a relatively high cost of electricity;
- Bear the costs of maintenance and replacement of equipment that fails.
Therefore, cloud mining has become the only profitable way to mine cryptocurrencies, which are used by more and more investors worldwide.
Cloud Mining Types
At the moment, the industry can be divided into the following three types of cloud mining:
- Physical farm rental
Renting a configured farm or renting a server as a whole, located in one data center.
- Virtual farm rental
Rent a part of the farm, for the management of which you make the settings yourself.
- Computing power rent
Renting a cloud consisting of tens or hundreds of farms or their parts (at the moment, this is the most common type of remote mining).
Сloud Mining Advantages
Cloud mining has certain advantages over the classic version. These undoubted benefits of cloud mining include:
- Almost all reliable companies have a formalized legal status;
- A person does not need to monitor it and configure equipment independently. In addition, this method of mining bitcoins does not affect the amount of electricity you consume. There is no load on the wiring. Plus, you don’t have to hear the hum from a running farm, and the air won’t overheat.
- Cloud mining revenues are pretty high. On many services, you can not only beat back but also multiply the funds that were invested in it in a year. And if you take into account the fact that the rate is constantly increasing, then it becomes quite profitable. In addition, some projects allow you to mine bitcoins without investment, albeit in small quantities;
- The power of the data center will be much larger, so the user will receive more from cloud mining than if he builds his farm on his own;
- You can mine different cryptocurrencies using the same service. Even though this will slightly reduce your income, you will be able to avoid or at least minimize your risks;
- You can choose any resource with the most profitable contract for you and mine there;
- These services often have referral programs. Because you bring several more people to this resource, you will receive a certain amount or an additional percentage of the amount that this person will earn.
Cloud Mining Disadvantages
Although there are quite a large number of advantages, cloud mining also has certain disadvantages:
- There is always a possibility that the bitcoin rate will decline;
- You can always run into swindlers. To do this, such scammers need to create a colorful website, launch advertising, and promise you mountains of gold. Even though cloud mining services have their advantages, the benefit will depend on whether you know what a scammer’s site looks like. The main thing to remember is that if you are promised an income of 250%, you should not invest your money there. To date, no site can bring you such a profit;
- Each contract you have signed has an expiration date that will expire precisely after the specified time.
Today, cloud mining is the only way to make money on cryptocurrency without investing in equipment and related costs. In addition, by mining in the cloud, you minimize your risks.
Now you know “what is cloud mining” is and can earn money with this technology!