Bitcoin no longer needs to be introduced. The cryptocurrency has been in the spotlight for quite a while now and most people understand what it is and how it’s used. Bitcoin is indeed a monetary revolution, and its continual rise in popularity doesn’t look like it’s stopping anytime soon.
While the core concept of Bitcoin is fairly simple, the methods of appropriating it and other cryptocurrencies, however, are far more complex. This complexity kept out the majority of Bitcoin enthusiasts and welcomed only the most computer savvy.
This intricate characteristic of the concept of cryptocurrencies, known as cloud mining, first appeared with the birth of digital assets. Today, it represents an apt mechanism for crypto mining that everyone can learn and use.
Anyone can get started right away. Read on to learn about how Bitcoin cloud mining works and how can you take advantage of this method of accruing digital currency.
What Is Bitcoin Cloud Mining?
Cloud mining is exactly what it sounds like: a method of mining cryptocurrencies using architecture similar to data storage clouds.
Essentially, what this simple definition describes is a process of Bitcoin mining where a remote datacenter combines the processing power of the members of the cloud to generate new Bitcoins. The joint power of processing is often contracted through companies specialized for cloud mining, known as cloud mining companies.
Cloud mining enables users to mine cryptocurrencies like Bitcoin without having to manage their own hardware. Since cloud mining is considered a service provided by a company, there is usually a cost the miners have to pay. This, of course, results in lower returns.
While cloud mining, like any other mining method, has several advantages and disadvantages, it makes the process of mining accessible to a large number of people who would otherwise be kept out by the high cost of entry.
How Does Bitcoin Cloud Mining Work?
Since cloud mining is done through a cloud, it largely simplifies the process of mining cryptocurrencies. Mining Bitcoins at home is incredibly expensive due to the hardware costs and the vast amount of electricity required to operate it.
Therefore, many miners take advantage of the more economical option of cloud mining where they pay a fee to a cloud mining company instead of paying for mining hardware, maintenance and electricity.
Every mining company hosts and maintains their own mining rigs that miners can use. All customers need to do is register for an account and then purchase either a mining contract or mining shares from the company. Similar to how we pay for electricity and water usage, the companies that offer cloud mining services charge on a usage basis instead of a flat rate.
Bitcoin Cloud Mining Advantages
Bitcoin cloud mining has many positive aspects that make it attractive to crypto miners. A few of them are:
1. No Need to Purchase Hardware
Not having to buy any mining equipment is one of the greatest advantages of cloud mining. Not only will you not have to learn how to mine Bitcoin manually, but you’ll also save a lot of time and money when using a cloud mining service.
For those who consider the setup of Bitcoin mining hardware to be the most enjoyable part of the process, you’ll have to decide if the hardware and electricity costs are worth it to you. If they are, then you should purchase your own hardware and mine Bitcoins manually. If they’re not, you should consider cloud mining services.
2. Technical Knowledge Is Not Required
The fact that no technical knowledge is required makes Bitcoin cloud mining preferable for the majority of beginners.
As opposed to the regular mining of cryptocurrencies, cloud mining doesn’t require any knowledge of cryptocurrencies or crypto mining, and the services themselves are very fast and simple to use.
3. No Noise, No Heat, No Operating Costs
Have you ever touched an Antminer? The machine is the most powerful miner currently available on the market. All that processing power produces a lot of heat as it consumes about 1,500 Watts per hour. To dissipate the heat, the miner has a cooling system that emits a loud noise as the fans work to keep the miner cool.
Now, imagine yourself being near such a hot and loud machine all the time. It’s easy to see why mining hardware devices are not designed to be kept at home and are instead meant for an isolated environment with good ventilation.
The amount of electricity required for mining devices to properly run is another aspect of at-home crypto mining that can cause problems. The average household energy supply is around 3 kilowatts. Thus, having a running miner at home can make it difficult to power both the mining machine and the rest of the home simultaneously. Even in cases where the rest of the electrical devices are not affected, the electricity bill will be shockingly high.
Bitcoin Cloud Mining Disadvantages
While there are several positive aspects of Bitcoin cloud mining, there are several downsides as well. A few of them are:
1. High Risk of Fraud
Unfortunately, the cryptocurrency world is notorious for the prevalence of scams, hackers and fraudulent companies. This is partly due to the inability to cancel Bitcoin payments once they’re made and partly because of the lack of regulation in the field.
Many cloud mining platforms have already been called out for not paying their users or selling fake mining contracts. Others have been hacked, leading to the loss of millions of dollars worth of Bitcoin. For these reasons, a series of inspections and checks must be done before relying on a cloud mining company.
As long as you’re involved with cryptocurrencies, there is the possibility of fraud. However, you can lower your risk by doing your research and staying away from disreputable businesses.
2. Lower Profits
Although cloud mining doesn’t influence users’ income significantly, it does take away a sizable portion of profits through the fees associated with being a part of the cloud. In addition to these fees, the process of cloud mining itself generally provides lower revenue than at-home crypto mining.
3. Lack of Flexibility and Control
When you’re paying for cloud mining service, you agree to the terms and conditions of the company offering the service. Since you’ve made this agreement, the flexibility in the mining process, as well as the control over it, is fully in the hands of the cloud mining company.
Contrarily, domestic miners have direct control over their Bitcoin mining operation because they own the hardware devices they use for cryptocurrency mining. Such a characteristic often makes Bitcoin cloud mining services the less attractive option since the possibilities offered by domestic mining are nearly endless.
Different Types of Cloud Mining
There are three different types of cloud mining available for use at the moment:
1. Hosted Mining
Hosted mining is a process in which the provider builds a mining machine and later leases or sells it directly to a customer.
The hosted mining process can play out in multiple ways, but generally involves a customer purchasing mining equipment from a hosted service or purchasing mining equipment to be sent directly to a mining farm or hosted data center. For the storage and electricity costs associated with the hosting, the customer has to pay a pre-set price.
With hosted mining, a person can mine Bitcoins or other cryptocurrencies without having to worry about electricity, storage or maintenance costs of operating the mining device.
2. Virtual Hosted Mining
Virtual hosted mining involves the creation of a general-purpose virtual private server. Once this server is put in place, a user can use it to install their own mining software, which can be in the form of an application or program for mining purposes.
3. Leased Hashing Power
Leased hashing power is undoubtedly one of the most popular and widely used cloud mining methods. As the term itself explains, the process entails leasing a set amount of hashing power, without being in possession of a dedicated computer.
How to Choose a Bitcoin Cloud Mining Service
Needless to say, the process of choosing a cloud mining service provider should be taken seriously. As already mentioned, the crypto industry is extremely susceptible to fraud, so you should always stick to the main selection criteria, shown below:
1. Existence Duration
Cloud mining is a new but promising business sphere. The sector is incredibly competitive as new companies emerge on a regular basis. For this reason, you should choose to collaborate with a time-tested cloud service. These companies not only have the necessary mining equipment but also have the experience and knowledge of how to stay afloat in the rapidly-changing cryptocurrency market.
The more open the company is to its users, the better. When considering cloud mining services, the smart choice would be to pick a company that provides detailed information about their data centers, employees and production process.
Various photos, commercials, useful recommendations and video recordings all contribute to a positive image as well. Look for signs that prove the legitimacy and the openness of the company instead of focusing on the services and prices offered.
The profit that you’ll to make through the Bitcoin cloud mining service is directly dependent on the production capacity of the data center. Focus on expansive services that enable you to easily scale your mining as your profits grow.
Best Bitcoin Cloud Mining Services
Now that you know what to look for, here are some of the best cloud mining services currently available:
Operating since 2015, HashFlare is a well-known cloud mining company. The platform offers a solution for customizable pool mining, which enables users to decide which pools they want to connect to. With the feature, users can find the most profitable combination of miners to maximize returns.
Similar to most Bitcoin cloud mining providers, HashFlare offers two types of mining: SHA-256 and Scrypt. With transparent commissions and fees, the company makes it very easy for users to keep track of how much money they’re making minus the fees. HashFlare pays off within 24 hours, which is great since users can quickly see a return on their investment.
The pricing comes at a competitive rate. However, here’s an important note: At the time of writing, HashFlare’s mining options are listed “out of stock” on the company’s website, indicating that they’re temporarily sold out. Until the company resumes its services, you might want to try another option.
As one of the oldest providers of cloud mining services, the team at Genesis Mining has a lot of experience in the field. The platform has a simple interface and offers an easy way to start mining Bitcoin. These characteristics are why Genesis Mining can be considered among the best cloud mining service providers available.
Furthermore, the company handles the largest volume of Bitcoin cloud mining. Based on the amount of hashing power and the coins you’re interested in mining, Genesis Mining offers different packages with different prices.
Genesis Mining is more expensive than many other cloud mining companies, but the experience and the support the team offers definitely justify the price.
Eobot is, by far, the most unique Bitcoin cloud mining service on this list because it offers a different kind of solution for your cloud mining service needs.
With this service, users are able to buy fractions of a cloud instance. For each of the cloud instances that are running SHA-256, users receive 1.0 gigahashes per second. Due to the difficulty level of Bitcoin mining, this is the preferred hashing level. For lower-difficulty cryptocurrencies like Litecoin, Cloud Scrypt reaches 1.0 megahashes per second.
Since Eobot allows you to start out small, the platform is a good option for beginners. Anyone can get started with as little as $10. By providing users with mining updates every minute, Eobot makes it a lot easier to keep track of both the mining process and the profits users are making. The website also offers a calculator, which can help users easily do the math to measure their earnings per cloud instance.
Developed by BitMain Technologies, the creators of the Antminer line, Hashnest is a well-known mining service offering cloud mining contracts. Hashnest currently has more than 600 Antminer S7s available for rent, but since BitMain Technologies owns them, Hashnest is quickly restocked if they need more miners.
Hashnest, as mentioned, is popular for their contracts, one of which is known as PACMiC V5. An acronym for Payback Accelerated Cloud Mining Contract, these contracts have a goal of cutting down the time for payback significantly. This contract alone gives Hashnest an advantage over other cloud mining services as it allows users to see their investment paying off faster than ever.
Important: Do Your Research Before Signing On
Apart from the legitimate cloud mining companies like the ones we’ve mentioned here, there are also companies that we want to warn you about.
A fraudulent cloud mining service provider can steal money from their users very easily. It’s best to do your research to avoid them completely.
Bitcoin cloud mining is certainly a great concept, but it’s also one you should be very careful about getting involved with. Starting out with cloud mining is the easiest part as the most crucial things you need to do are prior to the beginning of the process.
We highly recommend doing your own research, gathering as much information as you possibly can and reading about various Bitcoin cloud mining services. Don’t rush into making decisions about a specific service because it can ultimately cost you a considerable amount of time and money. Take your time, look for references, research and finally, don’t invest more than you can afford to lose.