Bitcoin mining remains a quite popular activity since the cryptocurrency reached its all-time high of almost $20,000 in late 2017. Aside from traditional ways of getting crypto, customers can approach special companies offering cloud mining services. Here is a list of the major advantages and disadvantages of this virtual way of making crypto.
What is Cloud Mining?
It is the process of making Bitcoin, Ethereum, Litecoin, Zcash, Dash and other cryptocurrencies, using special cloud services that accumulate power in their data centers and farms. This is a new model of earnings, which creates groups (pools, farms), with one goal: to generate more income, compared to conventional distributed making crypto, at the expense of equipment being managed by the contractor, who solves all the issues of the technical and software character.
Going into detail, an entity that offers a cloud service has one or more farms scattered around the globe. All the ASICs and devices for
mining Bitcoin or altcoins are placed inside of them. So, if a company sells a total power of a PetaHash/s (or 1000 TH/ s) on its site, it must have a corresponding number of machines to deliver a total hashed power of a PetaHash/s.
What are the Benefits?
First of all, you don’t need to have any special knowledge of cryptocurrency, protocols, or ASICs. All you need to do is simply create an account, pay your fee based on the hash rate you wish to purchase, with the knowledge that the higher the hash rate, the greater the revenue. Earnings will be transferred directly to your account, from which you can then withdraw them. Besides, you don’t need to purchase hardware or worry about devaluation and updating of the fleet.
The facilities produce a lot of heat and noise and therefore need to be placed in a suitable room for them, which is characterized by good ventilation and isolation from the living zone. It goes without saying, that ASICs also require a large amount of electrical current. Usually, the domestic energy supply contracts start from a minimum of 3 kWatts. However, with one or more ASICs of 1.5 kW each, it becomes unsustainable to feed housing and rigs simultaneously for small contracts.
What are the Drawbacks?
The fact that you don’t have to control anything and you stay practically “ignorant” of everything that is going on negatively impacts revenues, which are often quite low. A part of the mined coins is in fact retained by the farm for the expenses. Besides, over time with the increasing difficulty of extracting Bitcoins or, as happened in the last 12 months, with the fall in the value of the currency, situations may arise in which mining brings little profit.
There are many fraudulent companies today. This is partly due to the lack of regularization of the sector, partly because once a Bitcoin payment is made it is impossible to cancel it. The sector has often been at the center of attention because of various fraudulent platforms that sell fake contracts or do not pay their users. Precisely for this reason, those who are really interested in cloud mining must carry out a series of checks, relying solely on the best cloud platforms.
Finally, a very important aspect concerns the kind of coins you can mine. Cloud mining is usually limited to the main famous coins. This is a good thing because you are going to mine only well-established and therefore reliable cryptocurrencies. However, on the other hand, you can often make excellent profits by extracting new coins, when the difficulty and spread are minimal.