May 8, 2019 | AtoZ Markets - Many cryptocurrency miners today have questions about the new mining trend, which depends on clouds systems under the name of “Cryptocurrency Cloud Mining”. Hesitating between whether to go this way or stay with the traditional home-based hardware mining?
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In this article, we will be talking about cryptocurrency cloud mining, what it is, how any types are there, the advantages and disadvantages of it, and who it is tailored for.
Brief introduction to cryptocurrency mining: bitcoin as an example
Mining bitcoin means “making” bitcoin. The process is also known as updating the ledger of bitcoin transactions, which is what is known as “blockchain”.
The system generates an equation that needs a guess to be resolved. The user makes a random guess, and if it fits, the user gets bitcoins.
The guessing is handled by the computer, which translates into the need for a powerful computer, as the more powerful the machine is, the more guess it can process per second, which therefore means more chances to win.
Guessing right means as well, in addition to earning bitcoins, having to write the “next page” of Bitcoin transactions on the blockchain.
What is cryptocurrency cloud mining?
Bitcoin cloud mining means transferring the mining process from one’s own mining rig to a cloud system over the internet, to which a central mining rig is connected to perform the mining process for users. This type of service is provided by specialized mining firms. The user needs to register and open an account with the company and buy a mining contract to be able to use the service and mine cryptocurrencies.
Definitely, the user still needs a personal computer to use, but that will be needed for communicating with the remote cloud system only, and will not handle the mining process itself. Local hardware wallets or software ones are still needed for storing the cryptocurrencies generated from the mining process.
Contracts usually come for a year, with the option of making them infinite still viable.
The also come with two options: a 500GH contract or a 1000GH contract and for what term.
Advantages and disadvantages of cloud mining
- Getting rid of the noise and heat generated by the graphics cards in the mining rig at home
- No added electricity costs
- No hardware to bother selling when mining is no longer profitable
- Risk of fraud in case of the wrong choice
- Lower profits as the company needs to cover the mining costs from users
- No details of mining operations revealed
- Less fun (if you’re a geek who likes system building!)
- Contractual warnings that mining operations may cease depending on the price of bitcoin
- Lack of control and flexibility.
Types of cryptocurrency cloud mining
Virtual hosted mining
the user can set up their own mining server and install a mining software on it. This system is regarded ideal for mining cryptos that are not resources hog; altcoin for example needs one CPU only, rather than depending on graphics cards. Still, it is on the other hand not the most lucrative way to make money through mining cryptos, and is not popular today.
This type of cryptocurrency cloud mining depends on leasing a machine owned by a cloud mining service provider. Two options are available here; either the user can leave the leased machine with the provider, or have it delivered to them for direct use and supervision. However, very there are very few companies today that are eager to rent out their equipment to users.
Leased Hashing Power
the client here has to buy a cryptocurrency cloud mining contract from the service provider, without owning a physical device from the provider. This type of cloud mining is the most popular today, and is regarded to be hassle-free. However, the service provider reserves the right to shut down all the mining devices when profitability decreases.
Who should use cloud mining services?
- Beginners who have not enough experience on how to build and maintain a mining rig.
- Those who do not wish to spend on electricity bills for mining 24/7
- Those who find it annoying to live with the sound and heat generated by the mining rig at home
- Miners who want to make the minimal investment and are ready to wait 6-24 months to get a normal reward.
- Patient enough users who can wait from 6 to 24 months for a good outcome, with as little investment made as possible
Beware of cryptocurrency mining scam!
While mining cryptocurrency is regarded to be profitable in general, going with the wrong side to start can turn out to be disastrous.
The internet is stuffed with scam cryptocurrency mining advertisements. Some of them go so high with their promises, the thing that is a clear sign of fraud.
Cryptocurrency forums also have reviews by users who complained about their experiences with some providers, saying they were not paid rewards, while others said the service providers they dealt with just took their money and disappeared.
Service providers who respect themselves and their reputation would halt all the mining processes once the latter cease to be profitable. Scammers would just continue pumping out clients’ money.
Research and networking is a good way to reach to a wise decision. Asking about a service provider and reading real users’ feedbacks and reviews is another good one.