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Cloud mining – what is it?
Bitcoin mining usually requires the purchase of special crypto miners, which, unfortunately, are not the cheapest. However, there is an alternative to traditional bitcoin mining. It is a cloud from which you can also dig coins. More specifically, cloud mining means harnessing the generally shared processing power from remote data centers. All you need for communication is your home computer, optional local bitcoin wallets, and so on. However, there are some cloud mining risks that investors need to understand before buying.
Disadvantages of cloud mining
Well, this mining method has a greater risk of fraud than the traditional form. Additionally, the digging process itself is difficult to understand, especially for laymen. You need to be a great expert and have many years of experience with cryptocurrencies to understand exactly what cloud mining is all about. IT fanatics who love to assemble computers and crypto miners will also not have much fun here, because such equipment is simply unnecessary with this method. Profits are lower – after all, the service providers pay for all the costs of mining. Besides, this form of Bitcoin mining provides much less flexibility and control during the process itself. There is also a risk of stopping mining if the Bitcoin price drops too much (the process will then be completely unprofitable).
Advantages of an alternative form of bitcoin mining
Despite the many disadvantages and risks associated with cloud mining, this method may prove to be ideal for less experienced and dedicated miners. Traditional Bitcoin mining from blocks is associated with huge expenses on electricity, which miners “eat” in excessively excessive amounts. The cloud, however, can save our wallets pain, and an additional advantage is the lack of the need to purchase air conditioning. There is not as much equipment that needs to run non-stop at high speed, so the rise in room temperature and the deafening noise of the fans are also eliminated. The advantage of this method is also the fact that the miner does not have to worry about the delivery of equipment, and later, if mining turns out to be unprofitable, about getting rid of it without losses.
Types of cloud mining
It turns out that the decision to use this mining method can be difficult. Why? Well, there are 3 variants of cloud mining, differing from each other to a considerable extent.
- Hosted mining – it means borrowing a computer used for remote mining from a service provider
- Virtual hosted mining – that is, creating your own virtual server on which the mining software will be installed
- Leased hashing power – the most popular method so far, using the “borrowed” power of hashes, without having a separate physical or virtual computer
Sites to earn Bitcoin
Can cloud mining be defined as Bitcoin earning sites? In part, this is how you can define cloud mining platforms. This is because you do not need to physically equip yourself with a professional Bitcoin miner, which is quite expensive after all. Using the computing power of a computer or laptop, it is possible to mine a certain specific part of Bitcoin. It is not as profitable as classic mining, but still many people in the cryptocurrency community decide to take advantage of the offer of cloud mining services.
How to determine the profitability of such a process?
On the Internet you can find websites offering some kind of calculators that are designed to calculate whether it is profitable to become a miner at all. Unfortunately, they use hardware parameters, and in the cloud mining method, such equipment is not used. And here the problem arises: how to determine the profitability of cloud mining yourself? After all, you can still use such a calculator, because most of them (eg The Genesis Block) ask you to enter data for the power consumption. Most often these are the costs of bills, possibly additional equipment purchase costs. However, the conversion process is not completely straightforward. For “hardware miners” (traditional), you can calculate the monthly running cost by multiplying your electricity bill by the unit’s energy consumption and a conversion factor of 0.744 (the ratio of seconds per month to joules of energy per kWh). Complicated? Definitely. But we don’t have to calculate it, but the calculator, which saves us both time and nerves. However, for cloud mining calculations, the opposite should be done as the provider only provides the monthly running cost. Therefore, you need to calculate the cost of one kilowatt hour, and then enter the data into the calculator. You can calculate this by dividing (not multiplying) the monthly current cost by the conversion factor mentioned above, which is 0.744. The risk, as well as the big profit opportunities, is always there. Before making a decision, you should carefully consider which bitcoin mining method to choose. It should also be considered whether it is profitable at all with the current Bitcoin rate and the quite volatile cryptocurrency market. Use your entrepreneurial instincts and you will certainly “catch up” with a good opportunity.