Cryptocurrency CloudMining What is it

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Cryptocurrency CloudMining: What is it?

Mining of cryptocurrencies is a costly process. Especially if you consider the most valuable asset we have – time. The reimbursement is slow, profit uncertain.

If you have access to cheap electricity such as in Iceland or inner Mongolia, where electricity costs are among the lowest in the world, your profit will be much higher. You should pay a lot of attention when choosing the equipment and plan the entire operation. In short, mining cryptos is not a venture for everyone. But if you are one of those who would like to mine, do not worry. You don’t have to buy hardware worth millions. For quite recently, there are services that will allow you to participate in mining called cloud mining.

The word „cloud“ does not obviously mean a cloud on the sky but a technological cloud (i.e. a cloud of services in the communications network) a sort of hardware provided by a third party to meet our needs.

What is Cloud Mining?

The concept is simple. There are entities that provide the computing power of their excavators as a service, for which they are remunerated. Buyers are “paired” with sellers and receive computing power from them, that “mines for them”.

In the specific case of HashFlare we simply buy a cryptocurrency contract that we are interested in. We choose the amount of computing power that interests us for a minimum of one year. After that, we pay and enjoy the regular income of selected coins at our portfolio address. So you don’t have to keep any excavators at home. All this is arranged by a service provider who receives for the effort from us a monthly fee.

Advantages of cloud-mining

The difficulties described at the beginning are irrelevant when we have a CloudMining contract. Problems with planning, financing and implementation of the cryptocurrency mining operations are often accompanied by low availability of equipment. Graphics cards, on which a large part of cryptocurrencies are currently being mined, have become very expensive recently due to bitcoin boom. There is huge interest not sad information for video game enthusiasts, but also causes trouble for anyone who would like to start mining at the present time. In short, the entrance threshold is quite high.

We can’t say, however, that it is unprofitable. If we have access to cheap electricity and we can find the equipment at a more favorable price than the market price, we can earn. Profit depends on how we carry out our venture. CloudMining should be treated as a deposit investment. We can calculate that, if the exchange rate of coins does not change, the money invested will be returned to us only after half of the contract. However, with the increasing market capitalization, it is very likely that thanks to the increase in the rate, our contract will bring profit earlier. In comparison, individual graphics cards or ASICs (Application Specific Integrated Circuits) can repay themselves in a few months if we have convenient conditions. Obviously, it involves more risk. Such dependence occurs in most financial games – profit is directly proportional to the risk.

Investments similar to CloudMining – BitConnect

BitConnect’s objective was to create an independent financial network using its own cryptocurrency and cryptocurrency stock exchange. It offers a program of “loans” in which we invest bitcoin, and the system invests them on the stock market for us and generates profit. Sounds too good to be true? So it probably is. We are forced to choose an investment period, which ranges from 120 to 299 days. During this time, we cannot withdraw our money. Sounds disturbing? Even more, doubts will arise because more people are “gaining” who invite others to this system than the investors themselves. These are the features of the financial pyramid.

Paradoxically, the company wrote about how “dangerous” CloudMining is. But can we trust the subject through which thousands of people have lost their savings?

Let’s explain how things are like in reality. The first difference is that with a service like HashFlare, we get a constant payment in the form of cryptocurrencies, for which we have a contract. They are decentralized and do not belong to any company, as in the case of BitConnect. Profit here is more realistic, both in the assumption and in the actual execution – people using HashFlare receive what they have earned.

Summary: CloudMining – Does it pay off?

To sum up, CloudMining is a much more trusted investment than Ponzi schemes such as BitConnect. Of course, every investment involves risk, but with CloudMining we are sure that we are the architects of our future and that we will not lose our money due to fraud. (Obviously unless we choose a scam broker).

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Risks of cloud mining

As mentioned above, CloudMining also involves some risks such as:

  • Fixed-term contract. Most of the contracts offered by CloudMining companies are fixed-term contracts (for 1 year etc.) You pay for computing power one year ahead, no matter what happens in the meantime. So if you start with such a method of crypto-mining when one bitcoin costs USD 20 000 and, six months later you see the value of bitcoin fall to USD 5 000, your profit will shrink to 25% and (instead of earning some profit) you will have to compensate the loss.
  • Growing demands. Along with the changes in the rate of the coin, your profit from mining will be affected by the number of miners. If, in theory, the number of miners of specific crypto, let’s say Dash, grows from 1000 to 2000 within a single day the reward for each miner will be a half.
  • Scam organizations. Unfortunately, scam companies pretending to mine crypto occur in the world of cloud mining, as well. They just grab annual fee from their clients and use it for paying out the rest of the users (…telling them that their remuneration comes from “mining”).
  • Risk of “acts of God”. Because the hardware used for mining cryptocurrencies is just physical machines working non-stop nobody can rule out the possibility of something going wrong. The company campus may burn down or be affected by water, theft or another disaster. If such a case it is the matter of how the company settles its obligations with its clients. Therefore, before you sign a contract it is advisable to ask about this alternative.

The fact that mining in the cloud is easier than the traditional way is true. Remember – easier said than done. Before you start, you should thoroughly calculate and do research. You will see a lot of people discouraging you from this method. Anyway, the final decision is in your hands.

Author

More about the author J. Pro

Unlike Stephen (the other author) I have been thinking mainly about online business lately. I wasn’t very successfull with dropshipping on Amazon and other ways of making money online, and I’d only earn a few hundreds of dollars in years. But then binary options caught my attention with it’s simplicity. Now I’m glad it did because it really is worth it. More posts by this author

What is Cloud Mining?

Cryptocurrency Mining For Dummies

Cloud mining operations are mining farms — data centers dedicated to mining — that sell or lease hashing power to cryptocurrency miners. The essence of the service is that a third-party hosts mining equipment and provides access to the rewards associated with the equipment.

Cloud mining has many advantages and disadvantages. For one, the user must trust the cloud provider in a space ripe with scams and frauds. The user is not in control of the equipment or how it is used.

The advantages, of course, are not having to fill your home with computer equipment, not having to deal with the noise, the heat, the power consumption, and the upkeep of the mining equipment, and so on. Essentially, you outsource the work.

Pool mining versus cloud mining

So what’s the difference between pool mining and cloud mining? In both cases you’re working with a third party:

  • With pool mining, you need your own mining rig, and through the use of the pool’s software, you contribute your mining rig’s processing power to the mining operation. You’ll need to deal with buying and managing equipment, running the equipment, cooling the equipment, keeping a solid Internet connection up and running, and so on.
  • With cloud mining, you are essentially an investor in a mining operation; all you provide is money. Cloud mining companies sign up thousands of individuals to invest various sums into the operation and who take a cut of the proceeds in return. All you need to do is find a reputable cloud-mining operation (be careful!), send them money, and go about your daily business while they manage everything.

Pros and cons of cloud mining

In cloud mining, don’t get to keep blocks you mine (you have to share them); you have to pay the cloud-mining firm a fee to play (but think of all the hassle you avoid!), and like pool mining there is the danger of concentration of power into a small number of hands.

You may also find switching more difficult, as some cloud contracts require a longer term commitment; you may not be able to jump ship quickly. Also, on occasion, if mining the particular cryptocurrency becomes unprofitable (as sometimes happens), the operator may cancel the contract.

Carefully do your homework and research on cloud mining firms prior to investing any significant amount of money into these services.

A brief guide to cloud mining

In cloud mining, you essentially fund a portion of a mining operation, and the cloud miners do the rest. You are, in effect, an investor in the operation.

These companies offer hash rate contracts. You buy a certain hash rate, for a certain period of time, and you then benefit proportionally based on the percentage of the overall cloud mining operation that you have funded.

A huge advantage of these services is that it’s totally hands off — no equipment to buy or manage, no space to find for the equipment, no equipment noise, no heat to deal with. Cloud mining service solves those issues for you.

However, cloud mining can also be somewhat risky. Many are not profitable for the durations specified in the contract and can leave purchasers of these services losing money, in some cases, over the long run. Users may have been better off simply purchasing the cryptocurrency that their mining contract mines. (That, of course, is often also true of pool and solo mining.)

Other risks include outright scams. A common mantra in cryptocurrency mining circles is “not your keys, not your coin.” In the case of cloud mining contracts, one might say, “Not your mining hardware, not your rewards.”

The following services rank near the top of trustworthy cloud mining operators. However, caveat emptor, buyer beware. For all services, you must do your due diligence, find out what the community is saying about them, and ensure that they are, or still are, trustworthy and reliable):

This list is brief as many experienced miners only feel comfortable about only a few cryptocurrency cloud mining providers, as many of the rest are not trustworthy and do not offer the services they advertise.

However, that doesn’t mean the preceding services always provide profitable mining contracts. It just means they do in fact deliver on the services that they offer and they provide the hash rates advertised for the period promised. But that doesn’t mean profitability at all times.

Cloud mining contracts profitability varies widely between services.

Note also that there’s overlap between pool mining and cloud mining. Some pools will not only use your hash power, but will also sell you hash power. After you’ve set up your account with Honeyminer, for example, the pool will try to sell you more hash power

In effect, you’re connecting your processors to the pool’s node, but you are also providing cash to the pool to purchase more computing power, which they will then manage for you.

Cloud mining is just one option available to cryptocurrency miners. Always do your research before you begin any cryptocurrency mining endeavor.

Cloud Mining

DEFINITION of Cloud Mining

Cloud mining offers a mechanism to mine a cryptocurrency such as bitcoin without having to install all the hardware and related paraphernalia. There are companies that allow people to open an account with them and participate in the process of cloud mining for a basic cost. However, the process makes mining accessible to a wider number of people across distant locations.

The process of cloud mining makes you a participant in a mining pool and involves buying a certain amount of “hash power.” Each participant has a rightful share of the profits in proportion to the allotted hashing power. Since cloud mining is done via cloud, it negates issues such maintenance of equipment or energy costs.

BREAKING DOWN Cloud Mining

Cloud mining facilitates the process of mining via cloud. Cloud computing is one of the fastest-growing trends wherein computing services such as servers, databases, software, and storage are accessed via the cloud (or simply over the Internet). Such companies charge on a usage basis just like we pay for our water or electricity usage.

On the other hand, mining is the backbone of the cryptocurrency model such as bitcoin. It is the process by which transactions are verified and added to the public ledger, known as the blockchain. It is also the means through which new coins are released. The combination of the two opens the world of mining to people at distant locations with little or no technical knowledge and hardware infrastructure. Broadly, there are three types of cloud mining models: a) Hosted Mining, b) Virtual Host Mining and c) Leased Hashing Power

The process is very simple and only requires a person to open an account with a cloud mining company via its website and select certain things like the contract period and hashing power. However, the presence of fraudulent companies or imposters cannot be refuted, and thus one must be sure of the cloud mining company.

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