Cloud mining is one of the latest trends in cryptocurrency mining. Is it really better than building your own mining farm? Read on to learn!
- Advantages of cloud mining
- Disadvantages of cloud mining
- How to choose the right cloud mining service?
- Is reliable cloud mining service relevant in 2020?
- Algorithms of cloud mining
- Money input and output
Advantages of cloud mining
When you choose to work with a cloud mining server instead of setting up your own cryptocurrency mining farm, you get to enjoy the following advantages:
- Worry-free cloud mining. You don’t have to choose, buy, setup and maintain the cryptocurrency mining equipment since the service provider will take care of all these troubles. In fact, you don’t need any deep knowledge of the mining equipment;
- Low barrier to entry. Most cloud mining companies allow mining with minimal entry payments. This way you can start mining with money that wouldn’t be enough to buy even the weakest mining equipment.
- High power. Cloud mining companies and service providers usually have direct contracts with equipment manufacturers and thus can provide the best cryptocurrency mining equipment while keeping the prices competitive.
- Stability. Serviceу providers pay a lot of attention to stability and steadiness of connection and power supply to ensure that their client’s expectations in stability of cloud mining live up to the highest standards.
- Diversification. Combining different cloud mining servers and service providers you can spread your mining powers between several cryptocurrencies and lower the risks connected to exchange rates, server crushes, etc. For example, you can choose one company for Bitcoin cloud mining and the other company for mining altcoins not supported by the first company.
- Scalability. With cloud mining you can always add or drop mining power when you need it just by managing your contracts.
- Coin exchange. Many cloud mining companies offer their client convenient exchange tool to convert altcoins to Bitcoin.
- Flexibility. Most cloud mining platforms have different types of contracts for various cryptocurrencies. They allow you to calculate and choose the necessary power capacity and cost depending on expected profits.
- Referrals. As a client, you can join the referral program and get bonuses for inviting new miners into the pool.
Disadvantages of cloud mining
Just like you would expect, cloud mining has its downsides too:
- Less freedom. Your abilities are limited with your contract and general capacity of the service provider.
- Termination. The platform can at any time cease to provide services in general or in relation to any particular cryptocurrency.
- Fraud. There is a chance that you run into fraudulent services. Platforms that offer free cloud mining or guaranteed 400% profits are probably fraud. This is why you should always check your cloud mining company before working with it.
- Longer payback period due to commissions, service fees and other factors.
- Limited payouts. Cloud mining platforms often have limitation on the sums you can withdraw from the platform within a period of time.
- Hacker attacks. If you keep your coins within the platform, you risk losing your earning due to a hacker attack in case the platform’s defense is weak.
How to choose the right cloud mining service?
Just like with any other service, you should check the provider before bringing in your money. There should be enough information in the public domain. If you can’t find the company’s details, equipment specifications etc., this should warn you. It’s ok if you can’t find the exact address of the cloud mining server, because this is done to protect the equipment from theft. A good idea would be to check the feedbacks and reviews – they should look trustworthy and not be 100% positive. If everything looks too good – that’s a bad sign.
A good sign is when the company shows you the photos and videos. Even better if they have a cloud mining live webcam that shows their engineers and equipment in real time. In general, the more open and friendly the website of the company is, the better.
Is reliable cloud mining service relevant in 2021?
With the cost of mining equipment constantly rising and lack of supply in middle-sized and small cities cloud mining remains the only one affordable and reliable way for many miners to earn. The key here is to choose a reliable cloud mining service provider and diversify your actives to avoid the risks.
Algorithms of cloud mining
Cloud mining today supports all the same cryptocurrencies that are available for mining in a traditional way. Different cryptocurrencies are built using different blockchain algorithms, so if you want to do Bitcoin cloud mining, look for platforms that support the SHA-256 algorithm. There are dozens of different algorithms used in cryptocurrency mining, but the most popular are:
- Scrypt – used for Litecoin;
- Ethash – for Etherium;
- Equilhash – for Zcash;
- X11 – for Dash;
- Cryptonight – for Monero, etc.
Money input and output
Most cloud mining platforms accept payments in cryptocurrency (primarily, Bitcoin) and conventional money. Payments can be made online using the usual payment methods such as credit or debit cards, bank transfer, PayPal, etc.
As for the payouts, they are made in mined coins, but there can be limitations in terms of the minimal or maximal sum of withdrawal or periods of withdrawal. Note that there will probably be a commission for withdrawal which is most often paid in Bitcoin or in other cryptocurrencies at the rate of conversion.