What is Cloud Mining?
Anyone who owns a computer or phone has heard of the cloud. The cloud is really just someone else's computer. Cloud mining is nothing more than mining cryptocurrencies with someone else's computer. The most cryptocurrency that has been mined thanks to cloud mining is, of course, Bitcoin
But what about cloud mining? How does it work? Does remote mining produce anything positive? And most importantly, does it make money?
What is the cloud?
For years, you've been hearing more and more people talk about the cloud, and it's therefore impossible to miss. The cloud is also being advertised more and more, and many companies are moving to the cloud. But what is the cloud?
The cloud has become very popular in recent years because it is also available for ordinary users to use. In the beginning, only big companies or IT nerds could use the cloud. However, it is now increasingly easier to use the cloud, making it very easy for the ordinary user to use it as well.
In fact, the cloud is just a computer or server that belongs to someone else, and which you use. Are you using the Google Drive cloud? In fact, you put your files on the Google server. You can then access these files through an internet connection.
Cloud mining is the remote mining
of cryptocurrencies. You have this done on computers/servers managed by a company or a private individual.
How does cloud mining work?
Cloud mining is very simple: instead of doing all the work themselves, users pay a company to mine for them. In return, they get the crypto coins produced by the mining. It's a classic case of renting something. In this case, it's computing power.
The logic to follow is the same as in the classic mining process. Only here, you don't have to manage any hardware yourself. So that means you don't have to invest as much money in that area. But you also don't have to supervise that everything is working. The company that owns the servers does that for you.
Because everything is done by the company, costs are then billed to the customer. The customer is basically borrowing a server, and they have to pay for it. In most cases, the customer has to pay a small amount every day. This prevents a customer from suddenly having to put an incredibly large amount on the table at the end of the year. That would cause it to scare off potential customers.
Ultimately, of course, cloud mining must be profitable for the customer. Therefore, the costs should not exceed the revenues. Still, mining costs quite a bit of power, so it's more than logical to ask yourself whether cloud mining is actually profitable.
Is cloud mining profitable in practice?
The existing companies that offer remote mining all offer more or less the same arrangement: a fairly high basic investment paid upfront and used to fund a contract for a number of years.
The specifics vary from company to company: contract duration, price, clauses regarding sudden price drops, etc. It is extremely difficult, if not impossible, to make a comparison between all the companies offering cloud mining.
Beware of scammers
It is important that you find the right company that wants to do cloud mining for you. This is because there are an awful lot of companies out there that scam their customers. This is because it is legally very difficult to prosecute the individuals behind these companies, as they are often based in unknown countries.
For example, in 2018, Hashflare had a clause in their contract stating that they would be allowed to unilaterally suspend service. Subsequently, Hashflare's customers were left with major problems. They had already transferred a large sum of money in advance but ultimately received nothing in return. For them, cloud mining was anything but profitable.
Some contracts are also so regulated that making a profit is almost impossible. When these contracts of cloud mining companies are compared with the investments of amateur miners, it turns out that the latter group is much more profitable if they do their work properly. Not only is the break-even point reached more quickly, but also the hardware remains in the hands of the miner. It could still be resold, for example, to reduce losses if necessary. Since cloud mining contracts are neither sellable nor exchangeable by the issuing companies, they have no advantage over a good old-fashioned homemade mining platform.
And the worst part is that these contracts do not take into account the development of hash rates, which tend to grow. Thus, the real long-term profitability is even lower than that announced, and the latter is already unknown. Many users have experienced this and have realized that buying cryptocurrencies and holding them for the long term is immensely more profitable than engaging with a cloud mining company.
Of course, there are also companies that do deliver as agreed. That's why it's important that you always read the contract carefully before you join forces with a party. For example, always read the reviews about the company before you transfer money to them.
In the end, it is much more interesting: either to mine yourself, provided you have enough information, or to invest and buy interesting crypto coins
directly. You can do that, for example, at Coinmerce, since here you also pay low transaction fees. Then you'll save even some money!
You can do that by first creating an account at Coinmerce
, or by logging in directly. Then you click on 'Coins' in the menu, after which you go to a cryptocurrency of your choice, and you can buy it for a preset price (or for the market price).