There is a lot of confusion and controversy that surrounds mining cryptocurrencies over the cloud. There was a point of time when cloud mining was really popular.
Here, we take a look at what the concept of cloud mining is, how it functions, what are the benefits and risks, as well as a quick look at two of the most trusted cloud mining companies.
Mining for Bitcoins has now become a full-time profession for many people. Ever since the Bitcoin Boom of 2016, a lot of people have started investing in mining and have set up massive rigs. However, mining isn’t for everyone.
Not everyone can afford to invest so much on setting up a rig for mining Bitcoins, and then wait for months and often years to break even. What if we tell you that there’s a way that you can mine for cryptocurrencies without having to set up a rig or purchase even a single hardware or software. This is possible with the help of cloud mining.
Let us take a look at how cloud mining works.
Basically, the concept of cloud mining is that you pay for the hardware and electricity, but not in its traditional sense. All you have to pay is a fixed rent. The payment you make is only considering a short amount of time. If you wish to rent a Bitcoin Mining rig and mine for 5 months, you sign a ‘contract’ for 5 months where you don’t have to pay for the cost of the entire mining setup, but just a rent for five months.
However, most contracts are for a year. Some websites even offer an ‘unlimited’ contract.
The mining begins immediately as soon as you make payments and you will be sent regular payouts in your Bitcoin wallet address.
Difference between Cloud Mining and Traditional Mining
In case of a regular mining operation, you own all the hardware. In case of a cloud mining operation, the hardware is owned by the cloud mining company.
In case of a traditional mining operation, the miners do need some amount of technical know-how. However, in case of cloud mining, all you need to know is the kind of contract you are signing.
The user does not need to take care of electricity charges, cooling down of devices or damage to the devices, etc as all of the hardware belongs to the cloud mining company.
As good as it sounds, cloud mining is often a double-edged sword. We will look at the negative aspects in a bit. For now, let us take a look at the need for cloud mining:
Cloud Mining is needed simply because of one reason - mining for bitcoins is not practical if you cannot invest massive amounts of money. This statement might not have held true a couple of years ago, but considering how hard it has become to mine bitcoins now and how many people are now on the bandwagon, it is becoming increasingly difficult.
Most industry experts would suggest that it is now better to Buy Bitcoins and trade than to mine for them. However - Cloud Mining offers one alternative. You do not have to invest in high-end equipment and you can outsource the entire mining operation.
Even if you have enough money to invest in mining hardware, sometimes the cost of electricity might be higher than what you’d want it to be, causing a major additional expense. With the help of Cloud mining though, you can outsource it to a country or a region where the electricity costs are not as high.
Sounds too good to be true? It sort of is. While there are a few cloud mining companies which are legit, there are a number of fraudulent websites and Ponzi schemes being run in the name of cloud mining. Users who wish to mine cryptocurrencies over cloud mining must be aware of where they are entering.
Mining for bitcoins is in itself quite risky because of the unstable nature of the markets. Cloud Mining takes this risk to the next level. While market fluctuations are one factor, another primary reason why people do not trust cloud mining is that about 99% of the mare Ponzi schemes and extremely risky to invest in.
As per most industry experts, miners and traders, most companies which claim that they will mine cryptocurrencies online do not even have a mining rig. Naturally, a majority of these companies never send a single payout and shut down after they gather a significant amount of money.
What raises another major red flag is those companies which offer an unlimited time mining contract. This is because the mining efficiency reduces year after year and if this promise was to hold true most of these companies would be running on a loss.
Sometimes some cloud mining companies would spread viruses which spread across millions of computers and use their processing power to mine for them!
Also Read: How to buy Bitcoin
If you would Google for ‘Cloud Mining Scam’ you’d find hundreds of thousands of search results advising you against such a mining system. However, if you still want to invest in cloud mining, we strongly recommend the following -
Look Up for Reviews:
Found a cloud exciting mining scheme that is too good to be true? It’s probably a scam. It is best to look up for reviews of a particular mining company before going for their services.
Equipment Manufacturers Can Be Trusted More Than Random Companies
If an equipment manufacturer is offering this service, it can be even more trustworthy because you know for sure that they have the equipment they are talking about. This is because there are many scam cloud mining companies which don’t even have the mining rigs with them.
Don’t Invest Beyond What You Are Willing To Lose
Consider cloud mining as a risk - perhaps even consider it as a bad debt. The money you invest is as good as gone, but if you are lucky and invest in the right cloud mining schemes, you might just get a return.
Which are these ‘right’ cloud mining companies, you ask? Here’s two of them:
Safe and Legit Bitcoin Cloud Mining Companies:
A Hong Kong based company, which has been around for quite a long time now, Genesis Mining is one of those rare legit names in the world of cloud mining. The company has been a trusted name and the founders have often been present in many Bitcoin conferences in the past.
Genesis Mining offers the users with three kinds of plans when it comes to mining Bitcoins over the cloud. These are all lifetime plans and involve a one-time payment.
Gold: 100GH/s for $19
Platinum: 2,000 GH/s for $340
Diamond: 10,000 GH/s for $1600
Another major name when it comes to cryptocurrency cloud mining, Hashing24 has also been around for a while. One of the biggest reasons why it is really trustworthy is that it has officially partnered up with the Bitfury, which is a major name in the world of cryptocurrencies. Bitfury runs its own pool and manufactures its own hardware too.Similar to Genesis, Hashing24 also offers lifetime contracts.
Hashing24 allows you to select custom plans based on your budget which is one of it’s biggest benefits.
To conclude, Bitcoin cloud mining is dangerous territory because of the risk of scams and Ponzi schemes. It is best advised to tread cautiously!