Can You Profit from Cryptocurrency Cloud Mining?
There’s often a high-priced barrier to entry before people can buy their own cryptocurrency mining rigs. Along with this, and the high cost of electricity, a single rig may not be enough to profit consistently in a competitive market. For these reasons and more, many people are looking to get into cryptocurrency cloud mining as an alternative.
What’s cryptocurrency cloud mining? We’ll get to it in just a moment.
First…
The Challenges With Mining
Everyone who’s heard of cryptocurrency or has already invested in the market knows the basics of what mining is all about. It makes the entire space tick, as mining computers are the validators responsible for upholding the blockchain ledger. However, gone are the days when a simple hobbyist could boot up their home computer and try to mine during idle time.
Because of the increasing Bitcoin price and Ethereum price, high rollers began getting into the space, using more high-powered and specialized computers. Today, we have massive cryptocurrency mining farms operating 24/7 in areas where electricity is significantly cheaper.
These large operations have strong computing power, creating better opportunities when solving cryptographic puzzles. Since they can compute with more power, they solve more equations and get better rewards.
However, the average investor doesn’t have enough capital to fund their own large-scale operation. Investing directly into publicly traded cryptocurrency mining and mine hosting companies may be the best way to take advantage of the space.
Because of the liquidity of many stocks, investors can easily invest or divest without the risk of being locked into a situation where they need to acquire infrastructure, pay labor and electricity costs themselves.
Now, what is Cloud Mining?
Simply put, cloud mining is a way to mine cryptocurrency by renting computing power from third party sources, like mining pools. Because of the expensive nature of crypto mining, mining pools were created.
Numerous operations and individual miners banded together to increase their cumulative computing power, while hoping to cut overall energy costs. Pools can solve more blockchain equations and potentially profit more from the rewards than individual miners normally can.
However, the inherent issue with this system is in trying to maintain an organizational structure, which can be troublesome.
With a cloud mining company, an investor gives the money to the miners, who will then be responsible for handling operations. They will buy equipment, maintain it, and operate it on your behalf. Your funds will be a part of a larger pool of investors who help sustain an expensive operation. For your investment, you could also get returns, depending on how much you’ve invested.
However, unlike investing in publicly traded cryptocurrency mining and mine hosting companies, you may find your capital locked up in “lease” agreements with cloud miners. With stocks, you can generally sell your position in the company whenever the time is best, or necessary, for you.
Types of Cloud Mining
There are two basic types of cloud mining services potential investors can choose from. They are:
Hash Power Leasing
Hash power leasing is the most common type of cloud mining. You buy has power from the operation and get returns by the end of the contract. It’s an option for those who don’t want to worry about the technical aspects. However, this can reduce some of the potential returns you get. as the company may charge a fee for maintaining the operation. And, like many lease structures, you could be locked in for a while.
Mine Hosting
Those who have more knowledge about mining can choose to rent an entire rig, or multi-rig structure. It’s a more expensive ordeal, but you have more control over your setup. If you know how to maximize mining, you could get most of the rewards and pay little to no additional fees.
But, you’ll be more active in monitoring and maintaining the setup, which can be time consuming and complex. However, there are publicly traded mine hosting companies where you can purchase rig or multi-rig structures (or stock) and they’ll do all the architecture and maintenance work for you.
The Advantages of Cloud Mining
When you invest in a cloud mining service, you’ll choose one of several plans. These are priced depending on their hash rate and the type of crypto coins they mine. Cloud miners of the more popular coins, like Bitcoin or Ethereum, may be more expensive to join.
Buying into services with the potential for higher hash rates, which means more computing power, is also more expensive no matter which cryptocurrency is being mined. But higher hash rates could potentially produce higher returns.
Because of these contract-bound purchases, buyers may feel a sense of security. They can read and learn more about what they’re getting into before buying. They’ll know roughly what to expect when it comes to potential profits and payout structures (depending on the currency mined and its current price). They’ll also learn to understand a bit more about how mining works.
Apart from that, here are some other advantages to getting into cryptocurrency cloud mining.
- Open to all: With cloud mining, you don’t need to understand all the technical details of the craft. Even people who don’t know much about crypto could potentially profit by putting their money in a cloud mine. If you’re simply interested in making money in crypto, and don’t’ care much for the technical aspects of the blockchain, it could work for you.
- An alternate investment option: Crypto mining provides you with another avenue to potentially earn money. You could see returns over a fixed period without thinking much about running a mining operation.
- Variety: You can choose from the different cryptocurrencies you like or split your investment across multiple ones. Cloud mining allows you to control how much you invest and which blockchains you put your money into without having to self-purchase expensive and specialized equipment.
How Much Can You Make?
The money you can make will depend on the investment you put in, how well the cryptocurrency is performing in the open market, and how efficient the cloud miner operates and the fees they charge.
There are zero guarantees you’ll ever make money utilizing cloud mining or mining crypto yourself at home. However, you could potentially make a decent return on your investment if you find the right provider.
Considerations
You cannot blindly enter into any service if you want to invest in cloud mining. You’ll have to consider the following factors before making a decision:
- Is the company transparent with earnings? The company must share how much they’re earning, or else they’ll have the freedom to change your payout, or perhaps even withhold it, as they see fit.
- Will the cost justify the rewards? Make sure that your chances of experiencing a return on investment are legitimate.
- Will the hash rate generate enough power to mine the target crypto? If they’re offering low hash rates, you could be spending money without getting anything in return.
Putting It All Together
Cloud mining is an alternate investment option for those who want to get into crypto mining. The rewards could potentially be fruitful. It’s seen as a set it and forget it type of an investment for those who don’t want to get technical. However, as we’ve discussed there are risks.
Whatever you invest in, make sure that you’re getting into something with potential. Remember that even mining can be a volatile business. Cryptocurrency prices go up and down within a day. Research cloud mining services thoroughly before finalizing your decision. And, importantly, don’t go in blind. Get familiar with the market.
Considering the potential returns, it’s possible to make money in cloud mining. However, always remember that your money could be locked up in “lease” agreements, and you may not be able to access it when you need it.
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