Cryptocurrency mining is not only just about Bitcoin mining. It also includes other digital currencies as well, and their number is constantly increasing. Apart from traditional mining methods, you can benefit from cloud mining. In some methods, you don’t need to have mining equipment that you run in your facility/home, or pay for electricity or deal with the noise & heat.
If you’re a newbie to crypto mining, cloud mining also provides other special advantages, for example, you don’t need in-depth hardware expertise. So let’s figure out the essence of this way, how it works, and the distinctive features that make it different from the standard mining.
Cloud mining happens in the “cloud.” It means that the hardware used for mining is not physically located at your premises, but it is accessed remotely via the internet. Most of the hardware, especially for mining Bitcoins and other popular coins, is now found in specialized data centers. The goal is to facilitate transactions or generate new blocks of coins by solving complex mathematical equations.
Hardware mining of cryptocurrencies needs massive financial investments from a user and might be less beneficial for novice market participants. What is more, with the advent of large data centers built on the use of specialized ASIC devices, the mining process becomes less effective, even if you use powerful equipment at your residence.
If you cannot invest big amount of money in specialized mining hardware and are looking for a different method to run the business or buy hashing power, you always have an option with such platforms as Xive – a proven cloud mining service provider. Such platforms started to gain popularity about three years ago and are still improving their efficiency. The cloud mining method works simply: instead of acquiring equipment and creating your own farms, you just buy power from a cloud mining service. The algorithm for its creation and operation includes:
- Miners, offering a service, buy equipment, install, and configure it (as a rule, this is an extremely big data center);
- They introduce all the information about the firm, its technical capabilities, prices for services, and the conditions for concluding contracts;
- A user who aims to purchase part of the computing capacity registers on the marketplace, chooses mining contracts, and rents these machines for a fixed fee;
- Consequently, the individual receives hashrate directly to his/her mining pool and receives payouts for contributing to the mining process.
Nowadays, there are several cloud mining services to choose from, and many firms are constantly opening as well. When deciding on a service to use, you should always check the firm’s reputation as well as the contract conditions in order to pick exactly what you want.
Benefits of Cloud Mining
Unlike individual standard mining, working with a cloud mining service has a lot of advantages:
- Large initial investments are not needed; of course, ASIC devices are quite expensive, but they are bought by the company you are renting computing powers from;
- There is no load on the home electric grid and the cost of paying for electricity is often included in contract price;
- There is no responsibility for the operation and maintenance of equipment on your shoulders; the firm takes care of these, so you get passive income only;
- You can mine different types of cryptos such as altcois;
- You can receive additional income from referral programs.
Risks of Cloud Mining
As with everything in crypto world, there are some caveats and risks that you have to be aware of before you invest in a cloud mining operation. Primarily, it’s better to work with reputable cloud mining pools to avoid scams.
Cloud mining often receives a bad rap because there have been countless scam pools and rug pulls in this sphere. The fact that you never actually see or handle your mining equipment makes it easy for bad actors to flea with your funding.
In some instances, these firms will use the funds gathered from new investors to pay rewards out to early investors. This is like a Ponzi scheme. The old investors think they are earning the profits they expected so they invest even more. This drive pushes new investment in the platform. Then, suddenly, the pool vanishes with your crypto funds.