Our next article about beginnings in mining, this time we are going to explain cloud mining.
Best and only way to mine if you don’t want to buy hardware is cloud mining. The easiest way to explain it, is to look where the hardware is placed and who maintains that hardware.
Traditional mining depends on your gear which requires your knowledge in the subject. Despite the fact that you need a cooling system, which gives you higher electricity bills. With cloud mining it looks slightly different, you only “lend” hash power from mining rigs that are owned by companies, so you don’t have any hidden costs like electricity.
How does it work? Cloud mining works by using shared processing power “owned” by those companies. The customer simply needs to register an account and purchase cryptocurrency mining contract. Immediately after you’re taking part in mining.
However, you need to fully check company and know risks related to that type of mining, because there is a lot of “scams”.
Pros and Cons
Few things that you might like, thinking about cloud mining:
- No hardware around your place,
- No added electricity bills you need to calculate (including higher electricity use for cooling),
- No need to know hardware specifications.
There are also few points that can be considered as cons:
- Risk of fraud,
- Lower profits,
- No control or possibility of changing the way you mine (especially if you’re hardware geek and you like to upgrade your equipment).
Cloud mining types:
- Physical mining server – leasing mining hardware from provider
- Virtual private server – installing your software in virtual server
- Leasing hashing power – paying for the amount of hash power, without any physical or virtual “hardware”.
How to identify a scam
In fact, cryptocurrencies are a new industry, and as everywhere there are scams.
From coins to mining rigs and cloud mining. There is a lot of “companies” that will try to steal your money depending on your lack of knowledge.
How to identify a scam? So, in fact, it is hard to recognize a scam, those “artists” getting more clever every day.
A legit cloud mining company will have public mining address. It is evidence that the company is mining their available cryptocurrency on a network. Remember that some scam companies will have borrowed or faked address, that’s why you always need to do a background check.
- First of all, check references, for almost every page in the web, there is someone who used it, and probably posted something about it.
Tricks that scam companies use:
- Company registered in big cities like NYC or London to give illusion of big prospering business.
- They are avoiding to show proof of their equipment even if asked.
- Use client funds instead of using initial funds to make payouts. Again, an illusion of legit and prospering company, just to generate more customers.
- A lot of advertising that doesn’t show their equipment, only shows how much can you gain while working with them.
As I said earlier, check their background, look into them. After all, you’re investing your money so be careful with them.
Your reward to risk hazard
Every type of cryptocurrency mining can be risky and profits can outshine costs and potential danger. Thinking about starting mining, either regular or cloud, you need to consider every aspect of it.There is also a lot of calculators that will help you with a decision.
Remember that important thing is to check “company” that lend you hash power, always check forums and their background.
Another thing, every company will show you maximal profit, but you need to remember that difficulty level of Bitcoin increases with every block, so probably you will start making a loss in few months.
Protip: Invest only when you are familiar with all pros, cons and possible risk. Remember not to invest more than you can afford – calculate!
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Last modified: January 10, 2018
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