Join Us at Consensus: If you want to invest in bitcoin mining without the hassle of managing your own hardware, there is an alternative. You can use the cloud to earn your coins.
Chinese companies control over 65% of Bitcoins mined
Put very simply, cloud mining means using generally shared processing power run from remote data centres. One only needs a home computer for communications, optional local bitcoin wallets and so on.
However, there are certain risks associated with cloud mining that investors need to understand prior to purchase. Pros Here’s why you might want to consider cloud mining: A quiet, cooler home — no constantly humming fans No added electricity costs No equipment to sell when mining ceases to be profitable No ventilation problems with hot equipment Reduced chance of being let down by mining equipment suppliers.
Cons Here’s why you might not want to consider cloud mining: Risk of fraud Less fun if you’re a geek who likes system building! Lower profits — the operators have to cover their costs after all Contractual warnings that mining operations may cease depending on the price of bitcoin Lack of control and flexibility.
Types of cloud mining In general, there are three forms of remote mining available at the moment: Hosted mining Lease a mining machine that is hosted by the provider. Virtual hosted mining Create a general purpose virtual private server and install your own mining software. Leased hashing power Lease an amount of hashing power, without having a dedicated physical or virtual computer.
This is, by far, the most popular method of cloud mining. How to determine profitability We have previously covered ways to calculate mining profitability. However, the web services offered are designed to work with your hardware parameters, not cloud-mining parameters.
Even so, you can still use these calculators by thinking clearly about the costs involved. Effectively, you are being asked for your ongoing costs and your one-off investments. Therefore, since the provider, not you, is paying the electricity bills, you can enter the monthly mining bill in place of the electricity cost.
The conversion process isn’t completely straightforward, though. In the case of hardware miners, you can work out the monthly running cost by multiplying your electricity charge ie: But, for cloud mining calculations, you need to do the opposite, because the provider gives you an effective monthly running cost.