Cloud Mining: The New Trend of Cryptocurrency Business
The cryptocurrency domain, in its entirety, is built on the efforts that miners take to issue a coin and maintain the performance of a system. While till a few years back, it was possible for them to mine and make profit from a home-based system, the evolution of cryptocurrency and the mining process together has made the process complex and less profitable.
This complexity added with the benefits of mining has led to the creation of cloud mining services. The onset is adding another angle to how the cryptocurrency price moves in the market. Let’s dissect the emerging trend in this article.
What is Cloud Mining?
Cloud mining provides a system to mine cryptocurrencies without having to install hardware and associated accoutrements. The cloud mining platforms enable people to open an account at a basic cost to participate in the cloud mining process. By making it practically inexpensive to mine, the system is playing an active role in making mining accessible to a number of people across the globe.
The crux of the process lies in users renting equipment from large companies, in return of commission and profit percentage, to mine cryptocurrencies on the cloud instead of purchasing them. These companies are majorly housed in countries having affordable electricity charges.
The process comes with a series of benefits for the miners, namely:
- Miners don’t need to configure additional equipments
- Most of the cloud mining companies come with a legal status
- The miners don’t have to make investments or perform operation under test mode
- Fees are fixed in advance and are independent of rate fluctuations.
In case you are on the other side of the coin, meaning you are the company offering cloud mining services, you can be the catalyst of several investment opportunities for the cryptocurrency community.
- An investor can buy equipment from your company
- An investor can purchase a hash rate and get passive income from cryptocurrency mining
- An investor can invest in creation of powerful, less energy-taking equipment.
Up until this point, you must have gotten a fair idea of how different cloud mining is from the other popular cryptocurrency mining techniques like pool mining. But let’s detail it further in the next section.
Related : Best Ways to Secure your Crypto Wallet
What is the Difference in Cloud Mining and Pool Mining?
- In case of pool mining, you need to have your mining rig. Then by using the pool’s software, you can contribute your rig’s processing power in the mining operation. A key thing to consider when investing in pool mining is managing and purchasing equipment, running and cooling the equipment, and keeping an internet connection running.
- In the case of cloud mining, you don’t need to have your equipment. You work with a cloud mining company which has the infrastructure to carry the mining process shared with you over the cloud. Meaning you can mine the cryptocurrency from your home, only at the back of an internet connection.
While till this point, cloud mining seems like an ideal mechanism for miners to opt for when looking to start/continue their mining journey in a hassle and investment free environment, the concept comes with some disadvantages as well. Let us look at what they are.
What Are The Cons of Cloud Mining?
You do not get to keep all the blocks you have mined – you’d have to pay the cloud-mining firm a fee for the same. But, when you consider the hassle-free nature of the process and the fact that in pool mining, a small number of hands have the concentration of power, it seems to be a smaller issue.
Majority of the cloud contracts ask for a long term contract, meaning it’s very difficult to jump ships. Additionally, in instances where mining a cryptocurrency becomes too expensive or rather unprofitable, operators might cancel the contract.
If these disadvantages look bearable to you, let us move to the stage where we dissect the types of cloud businesses.
The Types of Cloud Mining Businesses
On a broader term, there are three types of cloud mining businesses – Hosted Mining, Virtual Host Mining, and Leased Hashing Power. But here are the two popular options businesses can choose from –
A. Through Remote Hosting
The crux of cloud mining through the remote hosting facility is that you offer a full set of equipment for rent. A service provider agency would be responsible for the setup and configuration of the mining equipment. The commission that miners pay can be used for covering the costs linked with electricity and maintenance.
The funds, in turn, are used for covering the electricity and maintenance costs in addition to controlling the technical risks and the one that can arrive while transporting the mining equipment.
B. Through Remote Purchase of a Portion of Equipment’s Power
A cloud mining company places the ASIC machines in special rooms with the ideal conditions set up for the process. The maintenance here is done by the blockchain technology professionals. The service development experts choose the details of building, equipping a mining farm and throughout the activity, maintaining equipment’s operability 24 hours a day.
We hope you must have gotten a peek into the cloud mining operations – enough for you to have a base-level understanding of the concept – and what makes them better from their pool and other mining processes’ counterparts. The next logical step for miners now, is to get associated with a sound/legally verified cloud mining firm. Here’s a Techradar list that can come in handy.
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