Cloud Mining is cryptocurrency mining using hash power or mining devices leased from a third party (cloud mining service provider) without installing mining hardware or software. In short, cloud mining service providers offer users the opportunity to mine without the need to invest in any equipment. Users rent the necessary equipment online. The equipment required for mining is provided and maintained by the service provider. Thus, users can take part in the system without investing in the hardware required for mining.
In our new article, we will answer questions such as “What Is Cloud Mining?” and “What Is the Difference of Cloud Mining?”.
How Cloud Mining Works
Cloud Mining is no different from other types of mining and works with the same mining principles. In Cloud Mining, miners combine mining forces to solve complex math problems using equipment provided by service providers.
The process starts with the user signing the contract, and the user can set the hash rate he wants. Contracts can be short-term, but usually last for 1, 2, 5, 10 years or a lifetime. While users declare that they will pay the monthly fee for the duration of the contract, service providers guarantee the hash power. The process begins right after the contract is signed, and unlike other types of mining, there is no need for any investment or preparation. Cryptocurrency mining equipment is provided by the service provider, and the user pays monthly for the mining devices he uses.
Types of Cloud Mining
Hosted Mining
In hosted mining, users rent ASIC or other mining devices instead of hash power. The service provider doesn’t guarantee hash rates that depend on device performance as in solo mining. The devices are completely under the control of the user. The user can join mining pools, and he pays the maintenance and repair costs.
Hash Power Leasing
The agreement between the user and the service provider is based on the hash power. The cloud mining service provider must provide the hash rate specified in the contract. The user doesn’t pay the maintenance and repair costs.
Advantages
You don’t have to invest in mining devices to mine cryptocurrency.
You can start mining right away, even if you don’t have the technical experience needed for mining.
You can mine cryptocurrencies without issues such as heat, noise, etc. produced by mining devices.
You aren’t responsible for any technical failures in mining equipment or software.
The wear and tear of the devices used over time and the decrease in their performance won’t be an issue affecting the hash rate performance.
Increasing electricity costs will not affect the profitability rate.
Disadvantages
Your mining revenue may decrease due to negative developments in the industry, but you will continue to pay the same amount to the service provider.
You may be exposed to scams. If the service provider goes bankrupt or faces problems, your investment will be directly affected.
You cannot interfere with mining software.
Mining profitability rate is quite low compared to alternatives.
