If you’re planning to delve into the world of bitcoin mining and you’re not cut out for the rigors of hardware maintenance and management, cloud mining cryptocurrency is the alternative for you.
Cloud mining is a method of mining cryptocurrencies, such as Bitcoin and Ethereum, without the need for any hardware installation or any other related equipment. Cloud mining companies have made mining accessible to investors interested in getting into the cryptocurrency space and see the potential to add altcoins, such as Bitcoin, to their portfolios at a lower cost.
Cloud mining ensures that mining is available to a lot more people without the time and monetary investment of brick-and-mortar cryptocurrency mining. Costs like hardware maintenance and staffing are nonexistent. However, all cloud mining contracts pass on the expense of electricity to investors.
The cloud mining process involves participation in a mining pool while also purchasing a particular amount of “hash power.” Any profit made from mining is then shared with each participant in the proportion of contributed hashing power.
Types of Cloud Mining Models
Generally, there are three different kinds of cloud mining models:
- Hosted Mining
The provider leases a mining machine hosted by them.
- Virtual Host Mining
Install your mining software after establishing a general purpose visual private server.
- Leased Hashing PowerThe most common method of cloud mining. It involves leasing a particular amount of hashing power (without the need for a virtual or physical computer).
Advantages of Cloud Mining
- Users will not need to deal with the typical learning curve required for equipment set-up. Also, the fluctuating electricity bills.
- With cloud mining, users can purchase contracts for several cryptocurrencies at the same time, which can provide some protection when one or more altcoins experience a drop in value.
- Simultaneous auto mining of bitcoins on an extensive range of resources can be carried out with cloud mining. This will lead to the search for profitable contracts that are without restrictions. However, this should be carried out mainly on proven platforms like Genesis Mining or HashFlare.
- Referral programs ensure that users can earn small bonuses from other users that they invite. A fixed amount or minute percentage of profits on the new user’s contract will provide this bonus.
- Unlike the regular production of cryptocurrency, cloud mining ensures that users can scale their capacities in minutes (without additional hardware cost).
Disadvantages of Cloud Mining
- A drop in the rate of bitcoin or other popular cryptocurrency is possible. We’ve seen this happen before in 2011 and 2013, so it’s not a myth. It is better to wait for the best time you think the rate is at its most favorable before withdrawing in fiat.
- The rising popularity of cloud mining means that the likelihood of a scam is considerably high. It is always advisable to use trusted services that have a lot of recommendations.
- Cloud mining services – like almost everything online – are susceptible to hacking.
Overall, cloud mining remains one of the lower cost ways to obtain cryptocurrency. It is a forward-thinking solution for users who are looking to cut out the installation or maintenance processes that come with traditional cryptocurrency mining.