Cloud mining is the process of using a remote data center to mine cryptocurrencies. In this case, you do not do it yourself, but hire third parties to do the work. And you don’t need to buy or maintain special mining rigs or run a blockchain node. Let’s look at the topic in more detail.
There are nuances
In cloud mining, participants typically rent hardware or hash power. The owner must own or manage the farm.
Ideally, the service provider will invest in the best mining rigs and set up a facility with access to cheap electricity. This approach ensures that the costs of running a crypto farm are kept at an acceptable level.
Cloud mining is suitable for people who are not interested in the technical side of the problem. In most cases, members can track their hash rate and earnings using their smartphones. Some cloud mining setups can automatically redirect generated energy to the most profitable mined coin for a given period.
Types of cloud mining models
This model includes the purchase or lease of hardware from crypto farms. In this case, the cloud miner will only have to pay for setting up and maintaining the facilities. The advantages are that the model allows to reduce the costs associated with access to sufficient electricity. In addition, the miner can monitor the rented equipment and redirect the hash power produced to the mining pools to increase the chances of finding a new block. Finally, you have full control over the rewards generated.
- Hash energy rental
Unlike host mining, this type involves renting a part of the hash power generated by the farm. Here, the cryptocurrency seeker does not have to pay either maintenance fees or installation fees. You just need to sign an agreement and participate in the profits of the crypto farm. When an object finds a new block and receives cryptocurrency as a reward, the revenue is distributed among users according to the share of the hash power they control.
Pros and cons of cloud mining
This method of crypto mining is an ideal option for those who want to profit without having to deal with technology. It allows you to reduce the cost of running a mining facility.
However, there are potential drawbacks to consider before choosing a model.
First of all, the high crime rate. Over the years, the sector has become fertile ground for fraudulent schemes. Since investors may not be able to personally assess mining farms, it may be difficult for them to verify vendor claims.
Some providers run pyramid schemes in which early investors receive funds at the expense of newcomers.
This is why it is important to read provider reviews on crypto forums, consider withdrawal limits, and avoid offers that promise insanely good deals.
Another detail to take into account is the potential profitability of the offer. If the amount paid for the rental, purchase or maintenance of cloud facilities does not match the hashing power offered, losses can occur.
Finally, it is important to beware of cloud computing platforms that completely control customer revenue. It is advisable to choose those that offer some level of autonomy when it comes to a personal crypto wallet.