How You Can Profit From Cryptocurrency Cloud Mining

Crypto mining has gone through a huge transformation in a very short space of time. Back in the day, you might have been able to mine Bitcoin on your personal computer, but today, this just isn’t possible.

Instead, you have to invest in expensive processors to get the kind of computing power you need to make a profit. Crypto cloud mining offers a slightly different way into the industry, though, and it can be a lot cheaper.

What is Crypto Cloud Mining?

Crypto cloud mining takes two concepts we might be familiar with and combines them into one, creating an interesting opportunity for would-be investors.

It all stems from the way proof of work cryptocurrencies like Bitcoin verify transactions and introduce new coins into the system. This process is known as mining, where miners compete to solve complex equations in return for a reward (in Bitcoin’s case, that’s currently 6.25 Bitcoin).

The equations miners compete to solve are incredibly convoluted, which means they require a lot of computing power. The more computing power (hash rate) there is in the network, the harder the equations become to solve, which makes mining something akin to a computing arms race.

crypto cloud mining - processing power

As you might imagine, the more advanced processors you need to mine crypto, the greater your start-up costs are likely to be. Individuals can join mining pools, where people around the world pool their resources to increase their chances of winning the reward, but your share of the payout is related to the computing power you bring to the party.

So, what’s the answer to these ever-increasing start-up costs?

This is where we turn to the cloud. Remember in the 2000s, when businesses would host their own servers, all humming away in some dark room somewhere? Well, that doesn’t happen today because they store all their data on remote servers through the cloud.

Something similar happens with Bitcoin cloud mining. Rather than buying and maintaining their own servers, businesses make use of remote centers that are looked after by specialist providers. Cloud crypto miners can do the same thing, making use of remotely hosted mining rigs and sharing in the profits.

This eliminates the need to invest in expensive processors, allowing people to rent them instead. It also eliminates the technical elements of storing, maintaining, and running the equipment, making it an attractive proposition for certain investors.

Host Mining

There are two different types of crypto cloud mining: host mining and leasing hash power.

Just as there are different “levels” of cloud computing, the same is true with cloud mining. Host mining is a more involved version, where the miner buys or rents the mining rig but they remain hosted in an external facility.

The main benefit of host mining is that you have greater control over your operations. You have full control over the crypto you mine, and you can choose how you want to distribute your hash power among different pools.

Of course, this control does come at a cost, and you can expect greater up-front costs for the set-up and maintenance of your rig.

Leasing Hash Power 

The alternative to host mining is leasing hash power. This is a much more hands-off form of crypto cloud mining and it also has fewer upfront costs.

In this setup, the mining company still owns the rig, but you pay for a share of its hash power. This allows investors to receive a share in the mining profits without making a large investment. However, you don’t have much say about how the hash power is used, or what happens with the crypto rewards.

How Can You Get Started with Cloud Crypto Mining?

Whichever form of cloud crypto mining you choose, you won’t have to go through the same rigorous setup process as if you bought your own equipment. This is beneficial because it reduces the amount of technical knowledge you need, and can also make it easier on your wallet.

Depending on which method you choose, there are three simple steps you will need to take:

  1. Find a cloud mining company
  2. Choose a coin to mine
  3. Choose a mining pool

These might seem like simple steps, but it’s well worth taking your time and doing your research. Like everything with crypto, this is relatively new, and it has a tendency to be a little bit like the wild west.

There are a lot of great legitimate companies out there, but there are also a lot of scams, and you need to make sure you avoid them. If you do thorough research, then there shouldn’t be anything to worry about, so make sure you give this step plenty of thought.

Is Crypto Cloud Mining Profitable?

When we talk about the costs of crypto mining, the first two things you will hear come up are energy costs and equipment costs. When you use a cloud mining service, you immediately eliminate these considerations.

Like anything, it’s a tradeoff. You’re giving up some autonomy and flexibility but you’re getting an easier route into the market. The hosting provider will take their cut, but if you’re with a good company, they will provide a valuable service in return.

There are no guarantees in investing. With cryptocurrencies volatility, this is especially true. You might be investing in the mining side of it, rather than the currency itself, but when you get paid in coins, the link is inescapable.

Ultimately, Bitcoin cloud mining can be profitable. Yes, you’ve got to make good decisions and accept the risk, but it’s the same with any investment.

What Are the Risks of Cloud Mining?

The first risk of crypto cloud mining is the reputation of your service provider. Crypto is a very young concept with little existing oversight. People look to exploit this, and cloud mining is one area they have targeted.

People’s money has disappeared when they thought they were investing in cloud mining services. The important thing is that you’re aware of this and know the red flags. Really scrutinize the websites, check business addresses, critically evaluate reviews, and remember, if something seems too good to be true, then it probably is.

Aside from this, the risks are the same as with any investment in crypto.

The first is regulation. As we’ve seen with China’s crypto ban, regulation leading to upheaval can happen overnight. If your mining rig is hosted in a country that suddenly shuts down mining, then it’s going to have a big impact on your profitability.

The other major aspect is the value of your cryptocurrency. Your costs are generally fixed, but your revenue is completely dependent on the value of a volatile asset. If Bitcoin is valued at $50,000 one month, and $40,000 the next, then this is going to make a big difference on your profit.

You can take some of the uncertainty out of it by holding your cryptocurrency long-term, but you’ve still got no guarantees.

Other Ways to Invest in Crypto Without Buying Cryptocurrency

When you’re just beginning to explore the world of crypto it’s easy to think that the main way to gain exposure is through holding currency. There are plenty of different ways to invest in cryptocurrency without buying currency though.

Invest In Companies that Hold Crypto 

This is a good option for people who are used to trading stocks and shares. You can use the same brokers to buy shares in companies that are themselves invested in crypto. The most obvious example of this would be Tesla.

By investing in these companies you gain some exposure to crypto, but the investment isn’t as reliant on the value of cryptocurrencies as it would be if you held currency.

Invest in the Infrastructure that Supports Crypto 

Rather than getting involved in crypto mining directly, this might mean investing in a large mining company or an ETF that has a focus on crypto companies.

As crypto is so new, there’s a huge amount of innovation going on, as you can see with our Bloq Parks. These innovations will power the future of crypto so it’s a good opportunity to get in early.

Invest in Blockchain

Blockchain is the technology that underpins crypto. It bundles transactions together, creating the blocks that miners compete to mine. This technology isn’t just applicable to cryptocurrencies though; it’s likely to have wide-ranging impacts in lots of industries.

crypto cloud mining - blockchain

You may be lukewarm on cryptocurrencies themselves and still see blockchain as a big investment opportunity, and it is. Blockchain is set to have an exciting future.

Conclusion: Crypto Cloud Mining

Crypto cloud mining is a way of getting in on mining without the large start-up costs of traditional mining. Of course, the tradeoff is that you give up some autonomy, but the ability to have the technical side of things taken care of by an external company is still very appealing.

Like everything with cryptocurrency, it’s a speculative investment – one that can pay off.

The key thing is making sure you do your research and find a hosting company that offers a great service. If you do this, then it might be the right route into mining for you.

Learn more about crypto mining farms!