The process of verifying transactions and adding new cryptocurrencies into circulation is known as mining. This process requires powerful and very expensive supercomputers. They’re not just costly, the process also consumes a lot of energy. These days, you don’t need to go through the stress of buying and running a mining farm. You can simply rent all the computational power you need to mine these coins through cloud mining.
What Is Cryptocurrency Cloud Mining?
Cloud mining involves using virtual data centers (mining farms) to mine cryptocurrencies. Crypto cloud mining platforms lease or sell hashing power to power their mining operations. Users of online mining services don’t have to buy expensive equipment to mine cryptocurrencies and can access all the rewards that come with them.
Pool mining versus cloud mining
Pool mining and cloud mining are two very similar concepts. They both provide a way to mine crypto at a lower cost compared to conventional mining. However, they’re still remarkably different.
In pool mining, you purchase your mining rig and contribute its processing power to a mining operation. This saves costs since you won’t have to go all out to get maximum mining power as you’re pooling your resources with others. However, you’ll still need to buy and manage some mining equipment.
Virtual mining on the other hand does not require you to buy any equipment. The mining platform you’re using provides all the hardware needed. As a part of a crypto mining cloud, you’re simply an investor in the operation and you share the proceeds with other investors.
Pros
Virtual mining is arguably the easiest way to make money from mining cryptocurrency without a need to buy expensive equipment and maintain it. You can invest in a mining platform and go about your day. It’s a great way to earn passive income without the stress of independent mining.
Cons
When you use cloud mining services, you only get a share of the blocks being mined. Some of the profit also goes to the mining firm. Another potential danger is the possibility of concentration of power in the hands of a small number of investors.
How to get started
As mentioned, when you’re cloud mining Ethereum or Bitcoin, you’re not buying any hardware. You simply need to find a company that offers mining services and signup. These companies offer hash rate contracts. You buy these hash rates to become a cloud miner. How much you earn depends on the percentage of the overall mining operations you’re funding with your investment.
Is cloud mining profitable?
Yes, cloud mining can be profitable. However, there are various factors to consider. Your profit depends on your choice of crypto mining platform. Miners that use newer rigs are likely to earn more than those with older rigs. Also, the upfront cost you pay to the miners as well as the percentage of the profit they take varies from one platform to the other.
Like all forms of investment, there are some risks associated with investing in a virtual mining operation. In this case, you’re relying on someone else to mine for you , which means the risk depends on the mining platform you choose. There are several fraudulent platforms out there that will only take your money. You must do due diligence and watch out for red flags if you intend to start mining bitcoin or any other cryptocurrency in the cloud.