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Cloud mining is one of the topics in the cryptocurrency market. It is a method of mining cryptocurrencies such as Bitcoin that uses rented cloud computing power. In other words, you don’t need to purchase any special hardware or software to mine; you can earn cryptocurrency by simply renting computing power. It’s that easy! To get started, all you need to do is open an account with one of the cloud mining companies and participate in the cryptocurrency mining process remotely.
Earning money from mining is a process in which you earn a profit proportional to the computing power you invest in it. This blog post on MonoVM will introduce cloud mining, its various models, pros and cons, and the best cloud mining services. So, if you want to earn money in this lucrative market, stay with us.
What is cloud mining?
Cloud mining is a mechanism used to mine digital currencies, such as Bitcoin, so that a market participant can make the most of the growth in the price of the digital currency. In this method, you mine using a cloud VPS without directly installing and running the associated hardware and software.
Cloud mining service providers allow individuals to open an account and participate in the cryptocurrency mining process remotely for a fee. This helps make mining accessible to a wider group of people because it eliminates the hassles of purchasing and maintaining equipment or paying direct energy costs. Cloud miners participate in a mining pool, where users purchase a certain amount of hash power, and each participant earns a share of the profits in proportion to the amount of hash power rented.
How Does Cloud Mining Work?
By outsourcing the technical and hardware aspects to third-party providers, cloud mining can make the mining of cryptocurrencies easy. Here you can see how it works:
- Automating Transaction Verification: New cryptocurrency tokens will be produced as rewards by using computing resources to automate transaction verification. Additionally, this procedure strengthens the blockchain network's integrity and security.
- Powerful Computing for Mining: Cloud mining makes use of powerful computers that attempt to determine the proper value for a block by producing 64-digit alphanumeric codes, or hashes.
- Block Validation: As soon as the right value (hash) is estimated, the blockchain network verifies the block's contents. A fresh block is made available for mining after the verified block is appended to the network. This loop keeps repeating.
- Intense Computational Process: It takes a lot of processing power to mine. For instance, it still takes roughly ten minutes to solve a single block on the Bitcoin network, which now generates more than 500 quintillion guesses every second.
- Verifying the Block's Integrity: If you, as a miner, add a new block to the blockchain, it means you also verify the transactions within it. This involves verifying that the closed block's hash satisfies predetermined standards.
- Rejecting Invalid Blocks: The hash changes if any of the block's data are altered, even in a little way. This indicates that the block will be rejected by the network. By ensuring that every transaction is accurate and unchangeable, this method maintains the blockchain's dependability.
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What are mining pools?
In recent years, with the addition of a large number of miners to blockchain networks such as Bitcoin, Bitcoin Cash, Dogecoin, and Litecoin, the process of mining cryptocurrencies has become highly competitive. As a result, to earn more profit from leading cryptocurrencies in the market, the need for specialized hardware and equipment, as well as high processing power, is greater than ever before.
Additionally, there are other costs, such as installing cooling systems and paying electricity bills. For these reasons, mining cryptocurrencies individually is no longer cost-effective. Consequently, miners have turned to mining pools as a solution. In this approach, individuals combine their computing power and work collaboratively to increase their chances of profiting from mining cryptocurrencies. These individuals form groups and mine cryptocurrencies together.
How do Mining Pools Work?
A mining pool functions as a coordinator for a group of miners. The pool assigns tasks to each group member to be performed by them. The tasks managed by mining pools include overseeing the hashes generated by members, recording and registering the work completed by each member, and distributing rewards. Whenever a miner completes an assigned task, they can request a new one.
There are two ways tasks can be assigned in a mining pool:
- Assigned by the pool: The pool distributes specific tasks to participants.
- Self-selection: Miners choose their work unit.
Mining pools also allow participants to select the amount of work they wish to perform. Rewards are distributed among members using different methods, such as PROP, PSS, and PPLNS models. Note that a fee is required to participate in a mining pool.
Note: mining pools differ fundamentally from cloud mining, and the two concepts should not be used interchangeably.
Benefits of Cloud Mining
The advantages of cloud mining focus on reducing what you need to pay! So, you will save lots of money. Here are the pros of cloud mining in detail:
You don’t need technical knowledge
If you do not have much knowledge about the process of mining digital currencies, the best and perhaps fastest way to earn money from cryptocurrencies is to use cloud pools. By joining these companies, you don’t need any specialized knowledge about cryptocurrencies.
In this method, you don’t need specialized information about ASIC equipment, the best mining pools, how to connect to them, or how to use encryption and protocols. It is enough to choose one of the cloud mining service providers, buy one of their shared plans, and manage your account.
No need to buy mining hardware equipment
Due to the increasing difficulty of cryptocurrency networks, especially Bitcoin, strong hardware equipment is needed to increase the probability of success. Checking equipment information, installation, and configuration requires technical knowledge.
Since this method doesn’t use ASIC or GPU equipment, there is no concern about the deterioration of the devices' quality or how to maintain them.
No need to pay for maintenance and repairs
Have you ever seen Bitcoin mining hardware up close while it is working? These devices consume an average of 1,500 watts per hour of energy, which generates significant heat and noise. Currently, it is impractical to maintain these devices at home; you would need to purchase air conditioning equipment for a space outside of your home.
You may be interested to know if Is VPS good for Crypto Mining?
Risks of Cloud Mining
Along with the benefits that cloud mining brings, there are also challenges, and anyone considering cloud mining should be aware of its risks and limitations before entering this field. Here are some of these challenges:
- Potential for fraud: The cloud mining sector is plagued with operators who promise unrealistic returns, often relying on new investments to pay off previous participants, similar to Ponzi schemes.
- Lack of transparency: Some cloud mining services operate with minimal disclosure of their operations, creating uncertainty about the legitimacy and sustainability of their business models.
- Increasing mining difficulty: As more participants enter the mining space, the computing power required to mine successfully increases, which makes the chances of making a profit lower than before.
- Contractual restrictions: Many cloud mining contracts include clauses that may terminate the contract after a period of sustained unprofitability, a common risk in the volatile crypto market.
Is Cloud Mining Profitable?
Today, cloud mining is one of the best ways to earn passive income and profits. Because it can be achieved with minimal work and cost. In addition, people who use cloud mining services can increase their hash power by reinvesting the profits earned or renting more resources and achieving greater profitability over time. If you are looking for a passive income, cloud mining can be a good option for you, especially when the price of cryptocurrencies is on the rise.
For more information, click on this blog post: The Ins and Outs of Cryptocurrency Mining.
Note: Before using cloud mining services, you should do extensive and proper research and make sure that you are not dealing with a scam. You should be well informed about the limitations and costs that may exist in this way and then make your decision.
Different Models of Cloud Mining
There are 2 models of cloud mining each offering specific benefits. Here we talk about models of cloud mining in detail:
1. Hosted Mining
Hosted mining is a popular option for those who prefer to own their mining rigs but want to avoid the hassle of setting up and maintaining the equipment. In this method, you purchase a mining rig and outsource its operation to a specialized center. These platforms allow you to monitor the performance of your equipment from anywhere via sophisticated software or web interfaces.
2- Lease Hash Power
In this method, miners lease hash power from service providers. This hash power can originate from multiple ASICs or other company-owned machines. Miners select a subscription plan based on the required hash power and pay the corresponding fees. Payments are usually made monthly, although some providers offer annual payment options at discounted rates.
Cloud Mining vs Hardware Mining
Cloud mining requires renting hardware and software from a mining company. This method is suitable for individuals with limited investment who want to enter the mining field. Cloud mining is possible by registering with a platform that offers these services. After registering with one of these platforms, you can start mining, but you cannot withdraw your earnings until you reach the minimum withdrawal threshold set by the service provider.
Hardware mining is a more advanced option that requires owning hardware equipment, software, air conditioning, and stable electricity services. Additionally, the hardware must be suitable for the mining process, with sufficient speed and durability. Furthermore, you will need access to maintenance specialists to ensure proper and continuous operation of the equipment.
|
Hardware mining |
Cloud mining |
|
Requires purchase, installation, and maintenance of special mining equipment. |
No need to purchase, install, or maintain equipment. |
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High electricity costs must be paid. |
No electricity costs are paid. |
|
Requires a place to store equipment. |
No need to provide a place to conduct mining operations. |
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The entire profit (reward) earned goes to the individual or individuals mining. |
Only a portion of the reward earned goes to the individual. |
Tips to consider before choosing a cloud mining platform
According to studies, about 90% of cloud mining platforms are currently known to be scams. Therefore, before investing and risking your assets, you should make sure that you have complete information about these platforms and the experience of other users with them. If you don’t want to fall for one of these scam schemes, keep the following points in mind when choosing a cloud mining platform:
- Completely forget about platforms that offer high profits and low investment!
- Research the history of the company you choose; make sure that it operates legally and does not share its users' information with other companies.
- Do not believe their tempting words about earning thousands of dollars in profits.
- If you find a reliable platform, calculate how much profit you will receive for the fee you pay.
- If a platform does not provide you with much information about the team behind it and how it operates; do not trust it.
Best Cloud Mining Services
There are different websites and software as cloud mining service providers. You should know the most popular options to make the best choice and stay safe from common scams. Note that you should review websites and software introduced in this section for their credibility. Also, you should use these options with the necessary knowledge and complete confidence. The most popular cloud mining services are:
1- Ecos
This company is one of the famous brands in the cloud mining field. It was founded in 2017 and supports coins such as Bitcoin, Bitcoin Cash, Ripple, Tether, and Litecoin for mining. Its service rental payment is also daily. Although ICO is considered a low-risk option in the field of cloud mining, it is still necessary to do enough research.
2- Storm Gain
Storm Gain, founded in 2019, only supports Bitcoin cloud mining. Storm Gain is one of the most trusted and popular cloud mining services. Payment for this service must be made every 8 hours.
3- Pega Pool
This company is one of the newly established companies in this field, which started its activities in 2023. It only supports Bitcoin and its service fee is paid daily.
4- Genesis Mining
Genesis Mining is one of the oldest companies in this field, founded in 2013. It only supports Bitcoin and its service fee is paid daily. You should know that this company is not currently considered a low-risk option and you should be more careful about the risks of fraud.
5- Be Mine
Be Mine was founded in 2018 and only supports Bitcoin. The company does not have a specific payment schedule for its service.
6- Binance
Binance, which is also a well-known exchange and was founded in 2017, also has its cloud mining service platform. In addition to Bitcoin, the company also supports mining coins such as Ripple, Bitcoin Cash, and Litecoin. Payment for services on Binance must be made every 8 hours.
7- Bit Deer
Bit Deer is another old company in this field, founded in 2013. Using their services, you can mine coins such as Bitcoin, Dogecoin, Litecoin, and other proof-of-work coins. The service fee is also paid daily.
8- Awesome Miner
Awesome Miner is a cloud mining service provider that can be used as software on Windows and Linux operating systems. Using this software, you can mine Bitcoin and several other proof-of-work coins and even monitor the temperature and other parameters related to mining equipment. Also, with just one click, mining pools can be installed and launched through this software. However, due to the existing complexities, it is not recommended for new users. New users should switch to this software after acquiring the necessary knowledge and skills.
9- Easy Miner
Easy Miner is easy to work with. It also has a relatively high level of security. This software supports cloud mining of Bitcoin, Litecoin, and some other coins on the market.
10- CGMiner
Developed in 2011, this software is one of the oldest Bitcoin mining software. With its further development, it is even possible to mine coins such as Dogecoin and Litecoin. CGMiner is an open-source software. Using this software, you can easily control mining equipment remotely. For example, adjust the speed of existing fans.
Conclusion
Cloud mining can be a good source of passive income. It can be used as a second job. But don’t forget that you should start this with full awareness and knowledge. Today, the number of companies providing cloud mining services is increasing; on the other hand, the probability of investors getting involved in a scam project is expanding. Therefore, if you do enough research this method can provide you with good profits. Since there is no need to pay for manning equipment and electricity bills in cloud mining, this activity can be hassle-free and bring good profits without much effort. Finally, we stress once more how important it is to approach the field of cloud mining with an open mind and to exercise caution to avoid falling victim to the many scams in this industry.