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What is bitcoin cloud mining and how it works?

Amandeep Sonewane | Apr. 2, 2019
What is bitcoin cloud mining and how it works?

April 2, 2019, | AtoZ Markets - Bitcoin mining has remained the expertise for programmers and computer geeks for many years. That is, until the start of bitcoin cloud mining. The reason for this is that as a bitcoin cloud miner, you do not need to own any mining hardware or have any technical experience to mine Bitcoin any more.

Bitcoin cloud mining has expanded the bitcoin mining pool, especially for those who are not technically oriented. However, there are a few things you should know before joining the world of bitcoin cloud mining.

What is bitcoin cloud mining?

Bitcoin cloud mining is a process by which you rent mining power on a remote system, or you lease a physical system in a remote location. Cloud miner just needs your own computer for communicating with the remote mining pool and its data center, and bitcoin wallet address to receive payment.

In the mining world, there are two types of mining - traditional mining and cloud mining. With traditional bitcoin mining system, the user sets up and maintains the bitcoin mining rigs. This also needs good technical knowledge as well as adequate ventilation for cooling and will result in an increase in electricity costs.

On the other hand, with Bitcoin cloud mining, the mining rigs are housed and kept in a facility owned by the Bitcoin mining company. The user simply needs to register an account and purchase Bitcoin mining contracts, which provides hash rates. These Bitcoin mining contracts immediately start to mine bitcoin which could be paid on a regular basis. In here, the user does not have to concern for order, setting up or maintaining bitcoin mining hardware. Nor for a big initial investment. For less than $50, the user can begin bitcoin cloud mining.


  • No electricity costs
  • No equipment to sell when mining ends to be profitable
  • No ventilation problems
  • Reduced chance of let down by mining equipment suppliers.


  • Risk of fraud
  • Opaque mining operations
  • Lower profits
  • Lack of control and flexibility

Types of Cloud Mining

In general, there are 3 types of cloud mining, which are as follows:

Hosted mining: You grant your mining machine to the host.

Virtually hosted mining: In this type, you create a general private server and install your own bitcoin software according to your choice.

Leased hashing power: One of the most popular methods, where you grant some amount of hashing power, without the presence of a computer.

How to determine the profit in cloud mining?

There are various ways of calculating the profit for mining. You have profitability calculators like the ‘Genesis Block’, which helps you to calculate your profit by asking your ongoing costs and your investments. All you need to enter is the cost of electricity and the initial investment in hardware. In the case of bitcoin cloud mining, since your provider is the one paying for the electricity, you can enter the monthly mining bill instead of the electricity.

Risks and rewards in bitcoin cloud mining?

When you do mining for cryptocurrencies there are risks involved, but you can benefit with some profit provided you make the right decisions. When you calculate the result for cloud mining, you’ll notice that cloud mining gives you a better profit for the first few months. But when the level of difficulty rises, you’ll see the loss in 4 to 6 months beyond. You do have the option of re-investing in cloud mining, but this doesn’t make much sense.

Moreover, some miners charge some fees on top of the initial payment, which may get really expensive and hamper your expectations on your returns. And sometimes there are few miners which can be scammed. In bitcoin cloud mining, there are risks and rewards involved and hence you must make the right decisions before investing.

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