Minerland_logo
#
How does cryptocurrency cloud mining work

How does cloud crypto mining work?

  • 8 January 2022
  • 246 View

Decades ago, every major software computer company would maintain basements full of computers that crunched numbers day and night. Rooms the size of gymnasiums would be devoted to the servers that keep the lights on. That all changed in the era of cloud computing. Instead of sacrificing precious underground real estate, software companies began to rent computing power from warehouses full of powerful machines hosted elsewhere. Now let’s talk about how cloud crypto mining works.

cloud crypto mining brings this same principle – outsourcing computational work – to cryptocurrency mining, the process of running powerful computers that mine for coins like Bitcoin, Litecoin, and Dogecoin. Instead of buying expensive computers to mine these coins yourself, you can rent the computing power of a specialized miner from a cloud mining company based anywhere in the world.

What’s more, when you pay for cloud mining services, you’re renting part of a pool of a great deal of computational power, meaning that you’re more likely to beat other, less powerful bitcoin miners that are racing to generate a winning hash that earns them bitcoin.

Cloud mining only applies to proof-of-work systems, like Bitcoin and the original Ethereum blockchain, which mine new cryptocurrencies with sheer computational brute force.

Cloud mining does not apply to proof-of-stake systems, which let those who lock up several coins within the network participate in validating new blocks and earn newly minted cryptocurrency in return. However, many staking services like Ethereum 2.0, Solana, and EOS let you delegate your coins to other validators to earn a cut of the profits, which is functionally similar to cloud mining.

How to start cloud crypto mining

Getting started in cloud crypto mining requires none of the setups that regular cryptocurrency mining does. You don’t have to buy specialized hardware, store it anywhere or pay for electricity bills.

Instead, you have to pick a successful mining pool, rent some hardware from it and wait until the mining pool generates money. You also have to pick a cryptocurrency. Bitcoin, ethereum, and dogecoin house the largest mining pools, according to MiningPoolStats.com.

Antpool, Poolin, f2pool, and Slush Pool are among the largest Bitcoin cloud mining pools that serve retail consumers. Foundry Digital is a large North American mining pool that services institutional investors.

To get started with a cloud crypto mining service, you need to:

  • Pick a cloud mining provider and a coin you wish to mine.
  • Sign up for an account.

Each site is slightly different; fees vary, as do the services and miners offered.

To start on Antpool, a mining pool that accounts for about 15% of bitcoin’s hashrate, you have to create an account, download special mining configuration software and pick a miner. The site lets you sort mining machines by efficiency and profitability. You can rent miners and earn payouts periodically in the currency you’re mining.

Yes, it can be. There are upfront costs – you’ll have to pay to rent these miners, and mining pools can also take a cut of your profits – but it can be worthwhile.

Your profit will depend on the power of the miners used by the pools – newer miners will boast better specs than older models and will likely generate higher returns – and the state of the market. For instance, if you choose to hold onto your bitcoin instead of selling it for regular money, like the U.S. dollar, you’ll remain exposed to the price of bitcoin.

Different coins pose different currency risks. On Antpool, for instance, bitcoin pays out $0.2900 per terahash, while ethereum pays out $0.3044. These small differences can compound if you rent miners with greater hash power.

Is cloud crypto mining risky?

cloud crypto mining is risky insofar that you are relying on someone else to mine cryptocurrency, without ever actually checking they own the hardware necessary to mine bitcoin, or whichever coin you choose.

Lots of fraudulent cloud crypto mining services claim to be mining bitcoin on your behalf yet just suck up your money instead. USDminer is one of many examples. They often operate completely anonymously, making it impossible to know who manages the platform, and promise extremely high rates of return over a short period. Other red flags include:

  • Spelling mistakes on the website.
  • Anonymous testimonials that show stock images of people’s faces.
  • A false company address or complete lack of one.

Sticking to well-known mining pools will greatly minimize this risk.

How cloud crypto mining Platforms Work

Before entering the cloud crypto mining platform for the first time, you need to know how the process typically works. As such, we would advise reviewing the following step-by-step guidelines.

Step 1: Choose a Cloud Mining Site

Your first move is to choose a cloud mining site that meets your individual needs. In addition, the best way for you to do this is to perform enhanced research on the platform. This includes how long the site is operational and what reviews are like in the public domain.

How cryptocurrency cloud mining Platforms Work

Step 2: Create an Account and Deposit Funds

Once you choose which cloud crypto mining platform you’d like to use, you must create an account. In most cases, you’ll need to give an email address and choose a username and password.

Step 3: Choose a Cryptocurrency to Mine

After choosing a cloud crypto mining platform you want to use, and then invest in it. Moreover, cloud mining websites usually give you the choice of mining various cryptos. But, each mining platform has its pros and cons.

Step 4: Collect Your Share until Contract Matures

In the broad bulk of cases, you will be required to invest for a minimum period. Also, it is known as the “Contract Period.” This dictates the length of time you will need to have your initial investment locked up.

Likewise, this operates on fixed-rate bonds so that you will receive your interest payments throughout the term—besides your original deposit amount on the contract maturity date.

cloud crypto mining: Pros and Cons

Like most cloud crypto mining, there are some pros and cons that every user needs to know. Therefore, this review gathers the pros and cons of cloud mining that you need to know before considering cloud mining.

Pros
  • Mine cryptocurrencies without needing any hardware.
  • No requirements to consume electricity.
  • Invest a small amount or as much as you wish.
  • You can see a return on your investment from the start.
  • You can select the cryptocurrency that you wish to cloud mine.
  • Receive a share of the mining earnings proportionate to your investment.
Cons
  • Lots of shady cloud mining sites.
  • Potential gains are super-low.

Choosing Which Cryptocurrency to Mine

Now that you know how cloud crypto mining platforms typically work, you need to think about the specific cryptocurrency that you wish to mine. Unfortunately, this is not easy, as there is no one-size-fits-all answer to the best coin to mine. Instead, there are lots of variables that you need to admit.

This includes:

Short-Term Potential of the Coin

First of all, you need to look at how cryptocurrency performs in the open marketplace. For example, if the coin has been on an upward trajectory for several weeks or months. Then, its strength may be worth jumping on.

You will be receiving your cloud crypto mining profits daily, which will be paid with the cryptocurrency you are mining. But, the real-world value of the coin will have a direct impact on your ROI, especially if you are planning to sell your coin as soon as they are paid.

Long-Term Potential of the Coin

If you are more interested in your investment’s long-term viability, it might be best to choose a cryptocurrency that you think stands a good chance of increasing in value in the future. In doing so, you’ll be keeping hold of your cloud crypto mining profits with the plan of selling the coins several years down the line.

Ultimately, if you’re sure of the potential of your preferred crypto, you stand the chance of obtaining coins at a discounted price through cloud mining.

Competitiveness

During the first few years of Bitcoin, it was possible to gain mining rewards with a basic CPU device. This was because there was virtually no competition between miners, meaning that everyone stood a good chance of winning that all-important block reward.

However, Bitcoin is now a multi-billion asset class. A select number of well-resourced rigs dominate the mining space.

As such, it might be worth taking crypto that operates in a less competitive mining field. In effect, the less valuable the respective coin is, the more chance your cloud crypto mining operation will have inconsistently winning the block rewards.

Project Yield

Most cloud crypto mining platforms will give you a breakdown of the proposed payout on your chosen crypto. This is sometimes shown as a dollar value for every KW/s or Mh/s. However, this makes it hard to know exactly how much you’re likely to get. So, we prefer sites that give projected yields in interest terms.

Take note, and there is never any guarantee that you will realize the projected yield published by the cloud mining site as market conditions change on almost a daily basis.

How to Choose a Cloud Mining Site

Choosing a platform to use in your journey to profit from cloud crypto mining is the usual challenging part of the process. Moreover, this industry operates in an unregulated manner. So, your money is not 100% safe.

Nevertheless, here are some factors you need to see before entering a new cloud mining site.

Reputation and Track Record

Notably, cloud crypto mining platforms are not regulated, but plenty of data is available in the public domain. So, firstly, check the launch of the cloud mining site. The longer it’s been operational, the better.

Then, it would help if you check websites like Reddit to assess public opinion of the cloud mining provider. If there are constant complaints from past investors about the site, you should probably avoid it.

Supported Coins

You also need to consider the type of cryptocurrency you wish to fund your cloud crypto mining account with. If the platform does not support a coin that you currently hold, you will need to go and buy it.

Therefore, this is possible to increase the cost of your investment when you factor in the exchange fee. So, evaluate what coins are available before opening an account.

Mining Equipment

You can consistently win block rewards on a cloud crypto mining platform, owning a fully-fledged mining rig setup. If it doesn’t, you won’t stand a chance of earning any money. At the fore of this is the hardware devices that the platform owns.

As we noted earlier, miners are often required when the Blockchain difficulty level increases. As such, verify the cloud mining site setup crucially, if what hardware it owns.

Location

The location of the cloud crypto mining platform plays a vital role in your decision-making process. For example, you want to choose a mining operation based in a country with cheap energy prices. This is to ensure your yield is not eaten by ever-growing electricity consumption.

Similarly, you’ll want to take a cloud mining platform that is based in a crypto-friendly location. If it’s not, there is always a chance that the local authorities will close the operation.

Conclusion

Many experts conclude that cloud crypto mining, with its powers and opportunities, is the future of crypto mining. However, it remains a challenging sector with the flow of frauds and scams for the time being. That means miners need to do extensive research before investing in a particular company.

In the modern situation, to earn money, we have to take the risk connected with it. So, Cloud mining is the home for those investors who are willing to invest and are suitable for taking risks related to it. It’s like only that much that you are capable of overcoming in case of loss.

One response to “How does cloud crypto mining work?”

  1. Yanga Jili says:

    Crypto mining it’s…..good article

Leave a Reply

Your email address will not be published. Required fields are marked *