If you plan to engage in Bitcoin mining without using your own hardware, Bitcoin Cloud Mining is the solution. Unlike the traditional way of investing on hardware and setting up resources for bitcoin mining, cloud provides a remote service to achieve this purpose. A cloud service comes from a remote service center with powerful hardware resources. These shared services have high processing power which helps to earn bitcoins. However, there are both advantages and disadvantages with cloud mining.
Here are points to consider on why and why not to go for cloud mining;
Advantages of Cloud Mining
- No fans murmuring to cool down hardware
- Not necessary to buy additional hardware
- No high electricity usage
- No ventilation issues, with heated hardware
- Less chance of mining hardware failure
Disadvantages of Cloud Mining
- Risk of mismanagement
- Risk of fraud
- Lack of transparency in mining operations
- Lack of hardware control
- Less profits, after paying for cloud services
- Mining services might stop depending on Bitcoin value
Types of Bitcoin Cloud Mining
There are three types of cloud mining using remote services available;
- Leased Hashing Mining
This is when you lease hashing power from a service provider. Leased Hashing is the option used by many users. The bitcoin rewards are shared with the hashing power provider. The Bitcoin value depends on the mining difficulty, demand and supply factors.
- Hosted Mining
In hosted mining, you rent remote hardware from a hardware provider. Rent is paid according to the agreement you have with the vendor during the contract period. You can define the specifications you require for your remote machine.
- Virtual Hosted Mining
Virtual hosted mining allows you to install your own mining software in a remote virtual private server. You can either purchase or hire the power to run your software within the server.
Calculating mining profitability
“Profitability calculators” calculate the profit taking in the housing costs of hardware devices into consideration. In cloud mining, this has no direct relation to your calculations. However, you can put in the monthly up-time costs you pay for cloud mining servers in place of the electricity cost in the Profitability calculator. This way it is possible to calculate the profit made through Bitcoin cloud mining.
Risk factors vs Rewards
Bitcoin mining always have risks. Given you make the right choices at the right moment, you can make considerable profit through Bitcoin mining.
Some cloud mining services make a high yield at the beginning. But, as the difficulty of mining increases, the service will result in losses usually after four months. A high-risk trick is to reinvest the Bitcoins to maintain a good hashing rate. If you can manage the cloud services and avoid falling into scams and frauds, you can yield good rewards from Bitcoin cloud mining.
Here are some of the major Cloud Mining Scams in recent history;
- Hashinvest – A Ponzi scheme which failed the company after new investors stopped investing money.
- Hashpoke – Even though the early adopters got good rewards, the funds dried up making the company to switch off all payments.
- Hashocean – A Ponzi scheme that shut down the system suddenly making a false announcement of a change of data center used for mining.
- Gawminers – A Ponzi scheme led by Mr. Garza who ran away with millions of dollars that belong to investors.
- Biteminer – Low daily returns that made investors not possible to get even their initial deposits back. There were no hardware specifications or operational details of the remote mining devices.
- Cointellect – Cointellect accepted both credit card and digital currency payments. The company suddenly disappeared, and the money have not yet been recovered.