Cloud Mining of Сryptocurrency

Mining is hitting big even in regions where the government keeps introducing new regulations. For example, the volume of investments in Russian mining may exceed 60 billion rubles over three years. This forecast was announced by the director of the Industrial Mining Association (IMA), Sergey Bezdelyov. After the introduction of crypto mining into the legal field, the capacity volume involved in these operations will increase by 4 GW. Experts agree that the number of mining centers will also grow rapidly in the coming years. Mining centers are organizations that allow users to mine cryptocurrency without buying and maintaining their own expensive equipment. Specialized services like this offer computing power for rent. Moreover, in this case, you can mine crypto, for example, BTC, basically from your phone. The process of mining coins using rented equipment is called cloud mining.

What is Cloud Mining?

There’re many ways to get cryptocurrency on the internet. You can buy it, get it from so-called faucets, mine on your own equipment, build a farm, or receive a salary in crypto. But there’s another way — cloud mining. Crypto cloud mining is a general term for services that charge a monthly fee in exchange for mining cryptocurrency for users. It is a mechanism for mining crypto without the need to install mining equipment, such as a graphics card or ASIC. You rent equipment from specialized companies, and they, in turn, install, operate, and maintain it, usually in a region with low electricity costs. In return, you provide a fixed rental fee and / or a share of the income you receive each month. You don’t need to buy expensive mining equipment that quickly becomes obsolete or stay at your computer around the clock hoping to make a profit. You also don’t need to pay huge amounts for electricity, which ASICs consume in large quantities.

Sounds tempting, doesn’t it? But looking through all the companies that provide cloud mining services, you can find scammers and simply inefficient centers. That means their mining income will be lower than income from just buying cryptocurrency and selling it later. At the same time, if you google information about cloud mining, you can find an almost unlimited number of offers. There are indeed a huge number of specialized platforms on the market. How do you avoid mistakes in choosing? Let’s figure it out.

The Differences Between Cloud Mining and Traditional Mining

Cloud Mining

As you know, Bitcoin (BTC), the world’s first popular cryptocurrency, appeared in 2009. However, it only started to be mined on a large scale by 2012. It then became clear that traditional mining was unprofitable: the power of a regular computer was insufficient to generate profit, electricity was expensive, and the equipment itself was costly.

At that time, crypto miners decided to unite and connect several computers, graphics cards, and processors to work together. This laid the foundation for cloud mining and the first data centers.

Later, companies began to acquire graphics cards, processors, power supplies, and cooling systems in bulk for even more efficiency. Skilled specialists installed special software. This is how crypto farms were formed, which today specialize in various types of cryptocurrency.

On a data center’s website, users can choose different options at different prices. Usually, the price depends on the mining speed, i.e., hash rate and level of earnings.

To cloud mine, you need to choose a reliable service, register, top up your account, and select the required power. Your mined cryptocurrency can be transferred to an exchange and sold. You can also engage in cloud mining on cryptocurrency exchanges. In this case, there is no need to withdraw the cryptocurrency anywhere. Almost any service has detailed instructions and a profitability calculator. With its help, you can calculate the approximate income from crypto cloud mining. If the company is reliable, it can reach 100% per year or even more if the crypto market grows.

Traditional Mining

It‘s also called hardware mining because the user must purchase their own devices for mining. With traditional mining, you’ll have to pay for a large amount of energy and find a special room. Mining machines are pretty noisy.

In addition, you need to have special knowledge to set up the equipment and not go into the red. After all, the expenses are significant. And the risks are probably no less than in crypto cloud mining – from neighbors’ complaints to fires due to wiring not being able to handle the load.

Types of cloud mining

1. Power Rental.The user rents computing power in a data center and receives a percentage of the mined coins. They do not have access to the equipment or the ability to control it.
2. Virtual Server Rental. In this case, the miner receives virtual servers and independently installs software for cryptocurrency mining on them. They also monitor the mining process themselves.
3. Hosting. The user rents a crypto farm located in a data center. In this case, the company provides access to a personal account where the user can manage the tariff and the mining process.

When it comes to cloud mining, the first option is most commonly chosen. With power rental, the user does not need to know how mining farms are set up and maintained. They just need to make a payment and watch their crypto wallet grow.

Advantages and Disadvantages of Cloud Mining

Advantages

The main advantages of crypto cloud mining are obvious: there’s no need to buy, install, configure, and maintain equipment. There’s no need to spend money on electricity, cooling, repairs, and keeping the equipment in good condition.

You don’t have to worry about noise, overheating, short circuits, and potential fires. There is also no need to constantly monitor changes in the cryptocurrency network and adapt the equipment.

A less obvious advantage is the ability to choose a cryptocurrency based on its current profitability.

Disadvantages

There’re a significant number of scammers among companies offering cloud mining services. They can steal money or not pay out rewards. Companies can also change the terms of the contract, raise prices, or even cease operations. In any case, they charge a commission for their services. Because of this, the profitability of cloud mining is lower than mining cryptocurrency on your own computer. You won’tbe able to control the efficiency of the equipment or the cryptocurrency mining process. There is also no way to optimize it.

Criteria for choosing a site for cloud mining

As we mentioned, there’re many scammers supposedly offering cloud mining services. That means choosing a company requires careful analysis. Several factors need to be evaluated.

• If the website claims that cloud mining is the easiest and most effective way to earn money, you should be cautious.
• Company History: Try to find out how long the platform has been on the market and offering its services.
• Legal Status: Ensure that the company is registered and operates within the law.
• Reviews: Study the reviews left by users. But remember: on the platform itself, they may not be accurate. It’s better to look on specialized sites. For example, reviews can be found on Trustpilot.
• Terms: Carefully study the terms: duration, cost, commissions, and expected profitability – ideally, it should exceed 100%. That is, the investment should pay off in the first month. Compare tariff plans and commissions with competitors.
• Transparency of Operations: The company should provide information about its data centers and equipment. It is better if the data centers are located in regions with low electricity costs, and the equipment meets modern standards.
• Customer Support Quality: Evaluate whether you can ask your question at any time on the website or in the app and the data protection.
• Account Funding Methods: For bank transfers, both parties to the transaction must disclose information about themselves, but scammers naturally do not want to do this. Often, “shady” mining platforms have only one acquirer. Be especially cautious with the altcoin Monero. This cryptocurrency is anonymous. It allows scammers to freely move stolen funds.

Cloud mining services are provided by popular cryptocurrency exchanges. And this is probably the most reliable option.

Once the choice is made, you need to register and choose one of the tariffs. You should be able to see the invested money, the amount of power used, and the efficiency of the farms. You won’t have to deal with software settings or delve deeply into the farm’s operation.

Is it possible to work on cloud mining services in 2024?

Absolutely, it’s possible. This method of cryptocurrency mining remains popular due to its convenience and accessibility. However, it is important to follow a few conditions. First, you need to choose a reliable platform, and for this, you should research the market and the ratings of various services. Second, check the terms to avoid hidden fees and unexpected expenses. Third, be prepared for sharp fluctuations in cryptocurrency rates, meaning the high volatility of digital assets.

Investment Risks

Some services may charge high fees, which can significantly affect profits. But that’s only part of the problem. As we mentioned earlier, there’re many scammers in the market who can shut down or stop communicating at any moment. In that case, you won’t just lose your profit, but no one will return your invested funds.

Proven Scam Sites

Of course, maintaining your own crypto farm is not cheap. It requires substantial investments, calculations, and a team of specialists. Therefore, some companies take the path of least resistance and engage in real cloud scams – fraud. They steal someone else’s brand and website design.

New scams appear almost every day. This means that new victims appear regularly. With the growing popularity of crypto, more and more beginners are getting involved in the world of mining. They want to make money but don’t yet understand the rules. Try not to be one of them! To help you, we will name a few proven scam sites. As we mentioned earlier, you can find reviews of mining platforms on the Trustpilot website.

For example, there’re many negative comments about the ECOS Cloud Mining project. Users report losing their funds on this site.

And users describe the ChainMine project as another financial pyramid. There have been many such pyramids. For example, in 2017, it was proven that the cloud mining pool MiningMax was one. Before that, there was a similar story with Bitcoin Cloud Services. And in 2019, with ProMining. Loud scam stories with cloud pools can be heard every year. Usually, scammers act according to the same scheme: they create a site with power rental, offer high profitability and low fees, initially pay out small amounts to gain trust, and additionally offer to use a referral program.

At the same time, scammers constantly create new sites, change addresses, and imitate the designs of well-known companies. This way, it can be difficult to identify them immediately. It’s better to rely not only on reviews but also on your own knowledge of scams.

Top 5 Alternatives to Cloud Mining in 2024

Cloud mining often turns out to be a scam. They promise you unreal profits, but in reality, they just steal your money. That’s why many consider traditional mining, i.e., mining on their own equipment, and other earning options. Let’s look at the most popular ones.

Staking

The process involves locking crypto assets for a certain period. You gain the status of a validator, responsible for verifying operations in the blockchain and maintaining the network. Validators receive rewards in the form of coins for locking cryptocurrency. Typically, this means earning around 5%.

Liquidity Pools

These allow you to earn by providing your assets on decentralized platforms. Exchanges use these assets to conduct cryptocurrency transactions at fixed prices. Investors who provide their assets receive a percentage of the transactions.

To understand which pool to choose, you need to know your share of investments from the total supply of each pool. Choose the one where your share will be higher.

Yield Farming

The essence of farming is that on decentralized exchanges, users receive LP tokens — altcoins used for additional earnings on trading platforms — as a reward for investments. Through farming, exchanges motivate investors to keep their savings in liquidity pools. Users themselves receive from 2% to 500% per year for staking these LP tokens. It is clear that investors are attracted by high profitability: it can reach up to 100% per month.

Cryptocurrency Deposits

In essence, they resemble bank deposits, but instead of fiat money, you store cryptocurrency. For this, you also receive interest.

There’re no risks in this case, and you don’t need to do anything, but the income is small: from 0.5% per year, very rarely up to 20%. You can open a deposit on a centralized exchange.

Digital Currency Lending

This is a loan: investors themselves provide money to buy cryptocurrency on exchanges, and they get their money back with interest.

However, intermediaries are needed for such transactions: the exchange itself or crypto platforms. The borrower must also provide collateral. These funds will be held by the intermediary, and if the client cannot repay the loan, the intermediary will return the deposited amount to the lender. Only with the presence of an intermediary and collateral will lending be a safe and mutually beneficial procedure.

Frequently Asked Questions about Cloud Mining

Is it safe to use hashrate marketplaces?

On one hand, hashrate marketplaces also allow you to rent computing power for mining cryptocurrencies like Bitcoin, Ethereum, and others. On the other hand, there’s a high risk of fraud. Information about actual mining and income distribution among users is not always transparent. Therefore, before registering on a hashrate marketplace, you need to carefully study the terms, documentation, and read reviews. The same applies to other platforms. Hashrate marketplaces can be an attractive option for cryptocurrency mining, but it is important to understand the risks and choose the platform carefully. Do not invest more than you can afford to lose, and do not expect quick and easy profits.

What does cloud mining without investments mean?

Cloud mining implies that you pay for a contract (a fixed amount) and also pay for maintenance, i.e., the operation of mining equipment. Therefore, this process is impossible without investments.

Any companies offering ’cloud mining without investments’ are scammers. They create flashy websites, boast a large number of positive reviews, and attractive headlines.

Do not trust such sites.

How to calculate the possible profit?

You need to find out how mining difficulty has changed over the past year and what the growth rate has been over the last three years. It is usually 13-15% per month. Then enter this data into a calculator.

Experts often say that other earning methods are more profitable. Why? The fact is that the maintenance fee is usually calculated in dollars per unit of power. Mining income accumulates in cryptocurrency, and maintenance is paid in fiat. Therefore, if the crypto falls, the revenue may not be enough to cover current maintenance. In this case, the company will terminate the mining contract without refunding the invested funds. If the price of crypto, on the contrary, rises, it would be more profitable to buy and hold digital money.

What are mining hotels?

Mining hotels are a kind of ’real estate’ in the world of cryptocurrency mining. Essentially, these are specially equipped premises designed for placing mining equipment.

The user rents a place for their equipment, and the hotel provides all the necessary conditions for mining: high-speed internet, stable power supply, cooling systems, security, and equipment monitoring.

Mining hotels do not promise users specific income and do not offer to rent unrealistic capacities. For example, 1Mh/s on Ethash, when modern graphics cards have a mining speed of 12 Mh/s.

The price will always depend on the equipment, quantity, and consumption. Mining hotels also sell equipment and rent out ASICs and rigs. This is where most of their profit comes from.

Why don’t cloud mining companies mine cryptocurrency for themselves?

As we mentioned earlier, mining on your own equipment requires significant investments. It is not possible to recoup costs quickly. Renting out capacities speeds up the process. Companies not only make a profit but also increase their capacities.

Is it possible to get only Bitcoin and Ethereum through cloud mining?

Most cloud mining platforms indeed offer only a few popular cryptocurrencies, such as Bitcoin (BTC) and Ethereum (ETH). They generally have more attractive profitability. Mining other cryptocurrencies can be too complex or expensive, not covering costs. Additionally, some platforms may offer to mine cryptocurrencies that do not exist or are not profitable. This is how they deceive investors.

How do cloud services make adjustments to conditions?

Imagine you have been successfully mining cryptocurrency on a platform for a long time, but one day the site warns about reducing daily payouts several times for some reason. This is a very real situation, and you need to be prepared for it. There’re also other situations: when the income does not change, but the contract duration does. For example, a user signed a lifetime contract and invested a lot of money in mining. But the contract term was reduced to a year. In both cases, the user loses money.