Pros and cons
Cryptocurrency mining, as in Bitcoin, is an integral part of securing the integrity of a distributed ledger on a blockchain. It is also a way of minting new coins to be awarded to miners who can solve a complex mathematical puzzle before verifying transactions that can be included in a block. Miners must possess high-powered computers called ASICS which are needed to perform such difficult computational tasks.
Due to the dizzying costs of having ASICS computers and related hardware, and its consumption of a lot of electrical energy just to earn bitcoins, cloud mining began to be taken notice of. Cloud mining allows for crypto mining companies that own powerful computers to rent out their computing power to mining enthusiasts that cannot afford to have ASICS computers. This new modality made it possible for mining processes to operate remotely.
Cloud miners register on a company’s platform that sells contracts and rents out computing power. The contract entered upon and the purchase of shares will allow the miner to receive proportional gains which can be withdrawn from their digital wallets. The company, for that matter, must have great air-conditioned hardware installation, a stable energy source, and a highly reliable Internet connection. Its technical personnel is surely made up of skilled individuals that maintain the efficiency of the equipment.
DYOR must be applied in seeking for cloud mining platforms to participate in. there is no harm in diligently Doing Your Own Research before taking risks in staking your investment. While it is true that cloud mining saves you the great expense of acquiring mining hardware and keeping them operational, it pays to be wary when scouting for legit cloud mining companies where a slew of scammers lurks.
It is important then to be knowledgeable in the cloud mining field and equipping yourself with some tips before jumping on the bandwagon:
- Do not fall for platforms that promise too good-to-be-true profits with minimum effort and investment.
- Make a background check about a company’s legality of operations, physical location, address of facilities, and the owners and teams involved.
- Instead of instantly believing in testimonials and opinions found on the company’s website, check out its legitimacy by inquiring through objective and neutral discussion communities first.
- Do the math in the company’s promise of profitability and return on investment before staking yours.
- Evaluate your probable earnings after percentage charges are cut from your gross profit. Charges may include operational fees, electricity, software, air conditioning, and other maintenance expenses. You may lose your earnings once charges come pouring in.
- A company that does not reveal much about its existence is highly probable to be a scam.
There are differences between pool mining and cloud mining in which case, third parties are involved.
Joining a pool mining company means you have to have your own mining rig. You also contribute the processing power of your mining rig to the mining operation through the pool’s software. You have to acquire high-powered mining hardware and the task of managing and keeping operational by providing air conditioning, reliable Internet connection, solid electricity source, and back-up in case of brownouts, etc.
To participate in cloud mining, one may be considered an investor in the mining operation by staking a considerable amount of investment. One may purchase a hash rate for a duration and earn a percentage based on the overall mining operation. One big advantage is that one need not buy or manage physical hardware. All the noise and heat issues are solved by cloud mining. All that is needed to be done is to find one legit cloud mining company, invest in them, and they will do the rest of the dirty works. One can only hope to wait for a return on investment. Usually, cloud mining companies sign-up thousands of investors into their company. Sad to say, 90% of platforms are outright scams.
Cloud mining will not allow you to keep the blocks you have mined but, rather, is shared. A fee must be paid to allow you to play. It is probable that power may only be concentrated to a few. range of contracts vary, and those tied up with a longer contract may find it hard to pull out in time. What is more, once the cryptocurrency being mined is no longer profitable, the company might just cancel the contract.
Yet, a very short list can be provided for top cloud mining companies like Genesis Mining, Hash Nest, Bit Deer, and Hash Flare.
Before considering, think of the adage, “ not your keys, not your coins”, which can translate to, “not your hardware, not your reward.”
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