Cloud mining is the process of mining cryptocurrency without the direct use of mining equipment or hardware. This process allows users to mine bitcoins or altcoins without having to manage their own resources.
related: What is an Altcoin? A Beginner’s Guide to Cryptocurrencies Beyond Bitcoin
In traditional crypto mining, cryptocurrency is produced through a computational process. To be rewarded with coins, miners are required to solve complex mathematical problems using mining hardware. The process for cloud mining is similar, but instead of using their own resources, miners rent or buy resources from a service provider.
As more players enter the cryptocurrency scene, mining becomes more complex, requiring more computing power. For this reason, many people who used to use crypto using their own hardware now find it unstable due to the high cost of electricity and the wear and tear of their hardware. That’s why cloud mining has become an attractive option.
How does cloud mining work?
In cloud mining, third-party providers rent computing power to miners. This means that miners do not need to invest in their own resources, which would typically require a large upfront investment. Cloud mining also removes the need for miners to maintain and update their own equipment.
How it works is that the service provider buys or builds a mining rig and then rents the hashing power to the miners. The mined cryptocurrency is then sent to the miner’s wallet. In most cases, the service provider will also offer a mining-as-a-service solution, which allows miners to outsource the management of their mining equipment.
As for the mining process itself, it is very similar to the way cryptocurrency mining works. Transactions are verified and added to a blockchain, creating new coins. Each time a transaction is validated and added to the blockchain, a new block is created. Miners are rewarded with crypto by adding verified blocks to the chain.
Many cloud mining websites provide cloud services for miners. These include StormGain, BeaMine and ECOS. Most cloud mining sites take a small part of your earnings as commission. Some platforms like ECOS offer monthly plans without any commission.
Cloud Mining Models and Types
There are two common models of cloud mining:
Both these models have their advantages and disadvantages. It is important to choose the right model for your needs before getting started with cloud mining.
hashing power leasing
Hashing power leasing is a popular model for cryptocurrency cloud mining. With this model, you lease a certain amount of hashing power from a cloud mining provider so that you can mine the cryptocurrency. The advantage here is that you do not need to invest money to set up your mining equipment.
The mining provider provides cloud computing power on rent from a mining farm, which means you don’t even have to worry about the maintenance of mining equipment. You just need to pay for the hashing power you want to lease, and you can start mining.
A miner has to register for an account with a cloud mining provider and provide certain details during signup. These include details such as the hashing power required as well as their desired contract duration.
Hashing power is determined by the amount of mining power you need. Choosing the right amount of hashing power is important, as it will determine how much you will pay for the service.
Hash refers to a mathematical function used to mine cryptocurrencies. Hash rate is the speed at which a miner can accomplish this task. This means that you will have to pay more for a higher hash rate. However, a higher hash rate also means that you will be able to mine more cryptocurrencies.
The term of the contract is the amount of time for which you intend to lease the hashing power. Most providers offer short-term and long-term contracts.
Hosted Mining
With hosted mining, miners rent physical equipment from a cloud mining provider. Since the cloud mining hardware will be located in your home or office, you will need a good internet connection. You also need to ensure that it is in good condition for mining by providing adequate cooling and ventilation.
One of the advantages of this model is that you don’t have to worry about the cost of maintaining mining equipment. However, the one downside is that it can be quite noisy. Keep this in mind if you are planning to install a hosted mining rig in your home.
You also have to bear the cost of electricity while using this model. However, many hosted mining providers offer discounts if you opt for a longer contract.
In addition, the replacement of old equipment will not be at the expense of the miner. A provider will usually replace it at no additional cost, provided that the equipment has been used responsibly and is not damaged due to improper use.
Many miners go this route because they want better control of their mining rigs without spending thousands of dollars on new equipment.
Cloud mining to earn passive income
Cloud mining can be a great way to earn passive income. This is because you can mine cryptocurrencies without much effort. Additionally, you can usually reinvest your earnings into a cloud mining service to increase your hashing power or lease more resources.
Cloud mining can be a great option if you are looking for a way to create a passive income stream from cryptocurrency mining. Just be sure to research and understand the costs involved in cloud mining before getting started.
People who want to mine bitcoin for passive income, for example, can use a platform like StormGain to do so.
Hurricane Benefit
StormGen is a good example of a cloud mining service that allows miners to earn passive income by mining bitcoins. All users have to do is download their application, register and start mining. They charge reasonable commissions and also charge low trading fees. How much you earn will depend on your mining speed, as well as trade volume:
ECOS
ECOS is another reliable cloud mining provider. It supports bitcoin mining and offers a wide range of flexibility when it comes to cloud mining contracts:
ECOS also has a wallet and exchange, so interested miners just need to sign up for an account and download the ECOS mobile app to start mining. Mining contracts range from 24 months to 50 months.
Benefits of Cloud Mining
Cloud mining has several advantages that make it an attractive option for miners:
- You don’t need to be tech-savvy: You don’t need to be a techie or a cryptocurrency guru to start cloud mining. All you need is an internet connection, a computer and a good understanding of the cryptocurrency you want to mine.
- You can start small: You can start with a small investment and gradually reinvest your earnings to increase your hashing power. You can spread your investments across different cryptocurrencies to reduce the risk.
- Sense of security (via contracts): When you lease hashing power, you usually sign a contract. This means that the provider is legally bound to give you the agreed amount of hashing power. This gives miners a sense of security, as they know their money will not be defrauded.
Disadvantages of Cloud Mining
Cloud mining also has its drawbacks, which you should be aware of before getting started:
- Risk of scams: There have been some scams involving cloud mining, so make sure you invest only in reputable services.
- Crypto Volatility: Cryptocurrency prices are volatile, and cloud mining may not always be profitable. Make sure you understand the risks before getting started.
- Limited Control: When you lease resources from a cloud mining provider, you do not have complete control over the operations. This can be a risk if the provider is not reputable.
How to start crypto cloud mining?
If you’ve decided that cloud mining is right for you, there are a few things you’ll need to get started:
- Computer with Internet connection: You will need a computer or other device with an Internet connection to access your cloud mining account.
- Account with Cloud Mining Service: You need to create an account with a reputable cloud mining service provider.
- Bitcoin or other cryptocurrencies: To mine cryptocurrencies, you will need some bitcoin or other cryptocurrencies to get started. You can use it to pay for your resources or reinvest them in your operations.
- A Crypto Wallet: You will need a cryptocurrency wallet to store your mined coins. Be sure to choose a wallet that supports the coin you want.
Is Cloud Mining Profitable?
This depends on a number of factors including the type of mining you are doing, the cryptocurrency you are mining and the size of your operations. Fees and commissions charged by your cloud mining service provider will also need to be taken into account.
So, can you make money from cloud mining? Yes, generally, you can expect to earn more from cloud mining than from traditional mining. That’s because you’ll save a lot of money because you don’t have to buy expensive hardware, cooling and ventilation equipment. You’ll also save on electricity and maintenance costs.
