Everything you need to know about investing in cloud mining
Newcomers to the market often hear about mining, but the problem is that it is now unprofitable to mine cryptocurrencies on your own. The history of mining led to this, and now we are at the stage of cloud mining. This article explains how to invest in cloud mining, who provides this service and how much profit you can expect.
In 2009, cryptocurrencies just appeared, and few people knew about them. Then people could mine cryptocurrencies on a regular computer with a dual-core processor.
But according to the idea of the creator of bitcoin, Satoshi Nakamoto, after every 2016 decrypted blocks, the difficulty of mining increases, which requires higher capacities.
In addition, after the miner finds 21,000 new blocks, halving occurs, i.e., the reward is halved.
Thus, halving and controlled emission (for bitcoin, its size is 21 million blocks) protect the currency from inflation.
Therefore, the difficulty of mining became higher, and the reward was lower. Already a couple of years after the advent of crypto mining, more powerful video cards operating in Crossfire or SLI mode were required.
But even then, miners could recoup their investments in hardware in a few weeks.
Capacity requirements continued to grow, and by 2012 mining even on the most powerful processors had become unprofitable. So the time has come for farms – installations that combine powerful video cards and ASICs, specialized equipment for mining.
Modern block generation farms are powerful data centers, which house rows of racks with the latest versions of expensive equipment. As a result, their creators are forced to optimize energy, cooling, and maintenance costs.
In parallel with technical solutions, miners were combined into pools to increase the likelihood of success when generating a new block. The first publicly available pools emerged in November 2010. In the pools, each participant is looking for their own solution. In case of success, the income is distributed in proportion to the network capacity of each miner included in it.
As a result, pools of miners grew very quickly to the size of thousands of participants, allowing them to receive small, predictable amounts every day instead of random large ones every few months.
Currently, the task of mining bitcoins is complex, both technically and organizationally. Therefore, it is practically impossible to connect to earnings on cryptocurrency mining alone effectively. Investing in cryptocurrency mining at home became unprofitable.
Pros of Home Mining
Now home mining has few advantages, so it is already unpopular:
- You can create your own farm at home;
- You can sell equipment with a bad investment experience;
- You don’t need to pay commissions like in cloud mining.
- Complete control of equipment and mining process.
Cons of Home Mining
But home mining has many drawbacks due to which this industry died one day:
- High cost of equipment;
- The need to customize the mining software;
- The danger of overloading the power supply;
- The enormous amount of heat generated by mining rigs;
- High noise level;
- The constant need to upgrade equipment and increase capacity, as the complexity of the network is constantly increasing;
- Illegal in many countries;
- 24-hour monitoring.
Cloud mining is a method of making money using the computing power provided by data centers. At the same time, the miner does not spend huge sums on expensive equipment and does not configure the software for work. Instead, the user rents the capacity of the equipment installed in remote locations.
This makes it possible to mine for people who live in countries with expensive electricity and those who do not want to delve into the technical details of the classic mining process and customize the software. That’s why a lot of people want to know how to invest in bitcoin and other cryptocurrencies in cloud mining.
How to invest in cryptocurrency cloud mining? Miners, when connected to the cloud, accelerate the mining of coins, and at the same time, earn money. Services that rent out equipment worldwide receive income from commissions and rent, so in theory, everyone remains in the black.
The essence of mining remains the same. Any transaction on the blockchain is confirmed when it becomes part of it. To do this, a new block must be processed (this takes some time). This happens with specific capacities, sometimes pooled to improve the efficiency of processing new links in the chain.
Transactions are always processed in chronological order (as they enter the blockchain). It is impossible to cancel the deal. The equipment processes the block so that it connects to the longest chain. Each malformed block is rejected, so blockchain fraud is ruled out.
Pros of Cloud Mining
The equipment and configuration of software in data centers are carried out by experts who thoroughly understand all the nuances. This allows you to achieve the most efficient mining of coins. At the same time, the profitability of a stationary farm, created by a beginner with his own hands, strongly depends on his knowledge and efforts.
The key distinguishing features of cloud mining from real cryptocurrency farms include the following:
- Lack of significant investments to create a farm.
- You don’t need to invest a lot of time and effort to launch production.
- You do not have to control the supply of electricity, look for the cheapest sources of it and take care of protecting the equipment from voltage surges in the network and power outages.
- It is not necessary to delve into all the technical details of the process.
- The mining of cryptocurrencies can be carried out using several algorithms at once.
- Access to cloud mining is possible from anywhere in the world.
The professional setup of the farm and control over the operation of equipment contributes to increased profitability compared to conventional mining. The user can earn more on his own farm only if he is excellently versed in this area.
Cons of Cloud Mining
Like any other financial activity, cloud mining has certain risks and is not stable. When buying a contract from a company that offers cloud mining of tokens for a year or several months, you must be sure that the coin price does not decrease. It should remain at least at the same level, and it is better to grow. In this case, you can really make money!
For example, a company’s profitability calculator may show that in 5 months, you will start making a profit by purchasing an actual contract. If the complexity of the network increases (this happens regularly in the cryptocurrency world), then in a few months, you may find yourself at a loss.
Consider cloud mining as an option for investing in digital assets, taking into account the specifics and unpredictability of the industry.
How to Invest in Cloud Mining
To start making money on cloud mining, you need to follow just five simple steps:
- Choose a cloud mining service.
- Decide on a cryptocurrency for mining.
- Choose a tariff (contract).
- Register on the site, replenish your account, and activate mining.
- Start receiving payments to your wallet.
The main task when choosing a cloud is to find the most reliable option. There are many scammers in this area: dozens of sites have been blacklisted over the past few years.
To choose a reliable cloud, check the following parameters:
- Black lists. It may turn out that the service has already been involved in fraud.
- Age of the company. It’s good if the site has successfully survived the 2017 hype and hasn’t stopped paying its customers.
- Customer reviews. Check reviews of the company on Google or Yandex. Look not only at the figures of the summary ratings but also at the text of each review. “Linden” comments are distinguished by the lack of specifics and repetitions of the same theses.
- Legal information. Where is the company registered? Are there supporting documents or registration records in open government registries? If there are no answers to these questions, the company is probably hiding something.
- Provider’s public activity. It’s good if there is detailed information about mining farms on the website or social networks: a description of the infrastructure, photos, videos. If the company owners give interviews, participate in conferences, and are generally not shy about publicity, this will also be a plus.
- The quality of the site. Good design doesn’t mean that a company is reliable. But if the site looks frankly bad, it is better to close the tab right away and move on to other options.
- Customer support work. It’s good if there is an online chat to resolve issues. At least the company was not stingy in hiring employees for technical support. If the usual feedback form or tickets are used for communication, but the answers come in a day or less, that’s not bad either.
Nowadays, cloud mining is the most profitable way to mine cryptocurrencies, significantly ahead of independent mining in terms of availability. The main thing is to choose a reliable provider that will consistently pay your profits. Now you know “how to invest in cloud mining” and can do it to earn money on crypto!