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What is cloud mining?
What do you know about mining? Probably, you understand that this is a process of solving some algorithms by using a powerful computer or a specific rig or as it is sometimes called the farm. The algorithm appears each time someone completes a transaction, meaning, that the person has spent some coins. And a miner has to find this transaction in a form of block and to solve it.
The most important piece of information here is that you need a powerful machine with enough hashing power to solve blocks of data and receive cryptocurrency. This machine will have to work day and night because you don’t find, for instance, a Bitcoin block every several minutes. So, you won’t be mining hundreds of bitcoins a day.
Everything depends on your luck, you can find one unit a month. That’s why you need to mine constantly, and the computer will consume a lot of electricity. In some counties where electricity is very expensive, it’s very difficult to mine. But if someone is mining instead of you in the US, where electricity is cheap, you gain profit. That is how does cloud mining works.
In this article, you will find more about the essence of this service.
Definition Of Cloud Mining
It’s a process of mining without actually mining the coin. How is that possible? Imagine, that you live in Germany, you will be shocked by the bills for electricity if you decide to mine coins. But there is a solution. A registered and legal company offers you to buy a service. The principle of the service is that you pay someone to mine instead of you.
So, cloud mining for dummies is when you do nothing, you just pay for someone’s work, and someone in the US or in another country with cheap electricity, is mining instead of you. You continuously receive digital coins on your crypto wallet.
Breaking Down Cloud Mining
One of the best things about this service is that you don’t have to buy hardware for mining. When you decide to be on your own, you have to make some research, so you can gain a deeper insight into the whole process and what hardware and software are the best.
Hardware is expensive. You don’t buy a simple PC, although some digital currencies can be mined using simple personal computers with relatively powerful GPUs. But in most cases, you need to build a mining rig or farm. Of course, you can buy such a machine, but there are risks.
For instance, you remember the crash of the cryptocurrency market in 2018? Digital currency considerably dropped in price and this has led to huge losses. The idea is that you can’t be sure which currency will be popular in a month. But when you buy an ASIC-miner, you invest a huge sum of money on this purchase. It might pay off only after a while (around half a year), and only if the market is stable.
That’s why it’s better to start with cloud mining. Usually, you can buy a package that will last a month, or two, three, etc., months. You can choose with what hashing power it will be mining. For example, the more hashing power, the faster you gain profit, but the pack is more expensive than the ones with less hashing power.
Compete Risk Free With $100,000 In Virtual Cash
This means that you can gain virtual cash without huge risks. If you buy a monthly package just to try, you won’t be affected if the currency you have chosen drops in price. But if you buy an ASIC, there is always a risk that it won’t pay off.
Pros And Cons Of Cloud Mining
• You don’t have to pay shocking electricity bills.
• You won’t need to repair the hardware – because it can crash.
• No need to set up the rig or to install the software.
• Cloud companies are legal – that's not a scam, but make sure you check the license.
• You can predict how much you gain.
• Simultaneous mining of different coins – if you mine alone, only one currency is available. Or you have to buy two ASICs.
• A possibility to encounter an unreliable company. Make sure that you check their license.
• Hackers might hack the site you are using. To avoid such a situation, choose a company that grants you fast returns of funds. Meaning, that after you gain a smaller amount of money, it will go to your electronic wallet.
• The coin can drop in price. But that is something that any miner should be aware of.
As you can see, there are more advantages of cloud mining. That’s why it’s better to start by buying a package.