Bitcoin cloud mining

Bitcoin Cloud Mining

Bitcoin Cloud Mining

With bitcoins’ price going through the roof in the last couple of months, the interest in cryptocurrencies is rising, as well as the interest in various ways of obtaining it. It is somewhat known that bitcoin mining is an exhausting process, that it demands both time and financial resources. Other manners of acquiring cryptocurrencies have gained popularity, and some have caused quite a stir in the world of blockchain technology. One of them is definitely bitcoin cloud mining.

Before getting into that process, a future miner needs to understand what is bitcoin and what is bitcoin mining. Bitcoin represents a digital currency and a payment system. The security of the network is maintained by miners themselves through execution of complex mathematical calculations. By confirming validity of bitcoin transactions, miners are increasing the network’s security and for their services they are being rewarded with valuable new bitcoins and transactions fees. Sounds awesome, right? Well, keep reading.

Bitcoin cloud mining | In the mines or the clouds

Becoming a miner encompasses purchasing specialized powerful hardware and software, cooling equipment, paying possible shipping and custom costs, considerable energy consumption and electrical costs, excessive heat, upkeep cost and noises. Even though the number of miners is growing, as well as the hash rates, (computational power to mine faster), the number of bitcoins being mined is always the same due to the difficulty measure. Hash rates and number of miners are proportional to difficulty, so when total hash rates grow, the difficulty to mine bitcoins rises and blocks (records that contain and confirm transactions) are still being found roughly every 10 minutes. That is the reason why someone, especially a beginner, would consider another approach to mining and acquiring bitcoins, such as bitcoin cloud mining.

Bitcoin Cloud Mining Principle

Bitcoin Cloud Mining Principle

Bitcoin cloud mining | A scam or not?

Some claim cloud mining is a long-term scam asking why would someone choose to mine for other people rather than leaving everything to himself. And the answer is, or at least the part of it, that cloud mining company get a faster ROI because of immediate finances from contracts that they can invest in purchasing equipment and other monthly running costs. There is an information on the web that 99% of all cloud mining sites are scams, but that’s simply not true.

However, it seems the whole ¨cloud mining contracts are a scam¨ controversy did not have an effect on one of the most popular cloud mining companies, Genesis Mining. Apparently, the demand is so high, they do not offer any kind of bitcoin mining packages anymore. At the start of November, they had a pre-sale offer that entailed start of mining at the end of February next year. This little piece of information suggests things are going pretty well for cloud mining companies.

There is a lot of fake companies on the market, so if you are thinking about investing in cloud mining, first do your research and evaluate if you are ready to take a risk. But, what exactly is bitcoin cloud mining, and is it the most beneficial way for getting bitcoins?

Bitcoin cloud mining | Cloud mining and smart contracts

Bitcoin cloud mining is essentially renting capacities needed for mining bitcoins from data centers. You pay upfront and agree to a particular smart contract. Choice can be made between packages that differ in hash rates that denote the power of a computer you are renting. Smart contract is a self-executing and self-enforcing agreement which is basically a computer program that executes commands using distributed ledger technology activated by certain events. Your smart contract is then sent to other computers to distributed ledger, cutting out the middleman and reducing the risk of single-party malicious changes. The process is similar to what happens when an update of a bitcoin transaction is made.

Price of the package includes leasing mining rigs (equipment needed for mining), as well as cooling equipment, cost of electricity and upkeep plus a promise of no downtime (time spent not mining due to system malfunctions). Prices and packages vary according to companies, hash rates and time.

Bitcoin cloud mining | Pluses and minuses

The biggest advantage of cloud mining is remote mining in a cloud which means not worrying about storage, costly equipment, possible shipping and custom costs for the equipment, high electricity rates, system malfunctions, loss of mining time due to downtimes, noise and excessive heat, and all the running cost of which you would have to take care of if you would mine yourself. That is why this model of gaining bitcoins may be better choice for beginners that do not want all the hassle that comes with equipment and mining running cost.

However, there are a few downsides to these offers. Low profits due to company having to cover running cost, contract ending, and the possibilities of fraud.

Bitcoin cloud mining | Ponzi

Always remember that if something sounds too good to be true, it probably is. Every investment bears a risk, so the golden rule would be not investing resources that you are not ready to lose. Most of the scams considering cloud mining are Ponzi schemes. Frauds are luring in investors by paying out early investors their revenue, and not even possessing the equipment. After some time, the company disappears, as well as the funds. To avoid that, just stick with us – we will provide you with the most accurate information on where to trade and how to avoid all problems like this.

Bitcoin cloud mining | Calculate mining cost and mining profitability

When deciding which possibility suits you and your preferred running cost and profits better, it is possible to calculate mining cost and mining profitability using online calculators. You simply enter the parameters such as difficulty measure, hash rate and other costs and get a result which should show how much will you profit. You can do the same thing for cloud mining, but instead of electricity or hardware cost you can input your monthly cost of a contract.

If you decide that bitcoin mining and clouds are too competitive, you still do not have to opt out of cloud mining. There is a vast number of other cryptocurrencies with possibly better terms. Or you can simply buy bitcoin and hold it until an optimal time for sale (when bitcoin price is high), or use it for doing business. In any case, cryptocurrency investing and blockchain technology still remains a hot topic with a very interesting and promising future.

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Author: Ben Prescott

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