Bitcoin had an early rise to fame as the top cryptocurrency out of the multitude of crypto coins currently listed on various exchanges. As the first-ever decentralized ledger currency, BTC became popular with the highest market capitalization of US$280 billion at the time of writing.
BTC Cloud Mining
Bitcoin cloud mining employs a remote data facility that comes from hardware. Virtual currency users can mine the coins or other digital currencies without learning hardware management. However, the service entails a cost that reduces the miners’ revenues.
The (hashing system) allows users to buy mining capability from data centre hardware. With the cloud, consumers of this virtual currency can earn coins without using mining software and hardware, electric power, and bandwidth. Miners execute everything in the cloud avoiding many problems that come along the way. BTC mining offers many advantages as well as disadvantages.
The cloud mining platform ensures an excellent and cost-effective alternative to affordable entry cost and fewer hazards. On the contrary, conventional approaches require complicated procedures such as the configuration of complicated and expensive hardware as well as equally costly maintenance.
Three types of Bitcoin mining consist of the following:
- Hosted mining accomplished through mining equipment hosted providers
- Virtual hosted mining using VPS and installing mining software
- Leased hashing power which means renting hashing power without any dedicated physical or virtual PC
The use of cloud mining allows buyers to manage their BTC transactions. Vendors cannot charge additional or hidden fees since consumers will notice discrepancies immediately. They need to inform consumers before adding charges.
Through cloud mining, the host firm can own BTC mining hardware and operate it from a warehouse. All the user needs to do is pay the provider and lease out this hardware. Likewise, Investors get a share of payments from the cloud mining operator from income produced by the rented hash power.
This mining platform does not require expensive equipment, additional electricity costs, and ventilation issues. Besides, mining investors do not have to worry about the likelihood of problems often caused by suppliers of mining equipment.
People who engage in crypto mining know the hazards, but they can generate profits by making the correct choices. By performing tests, investors will discover specific services turning out lucrative although losses usually occur between four and six months as the level of difficulty goes up. Refrain from investing if risks seem unmanageable.
To deal with this concern, any investor can reinvest and maintain a reasonable hashing rate although the whole thing remains speculative. Determining productivity will require the use of calculators like the Genesis Block that will ask for details such as electricity expenses and upfront investments.
Security issues abound in storing valuable data remotely since information can get mixed causing problems specifically for business owners. Cloud mining for Bitcoin also increases risks of fraud and hacking. Users still need to download the application on computers or compatible devices before controlling files locally using such gadgets.
Lately, this cloud-type of mining became tainted with scam incidents since anybody can quickly build a website and allege the company operates an extensive Bitcoin mining enterprise. The facility can even put a semblance of legitimacy by paying clients initially. Once remittances from unsuspecting consumers come in, the company stops compensating customers.
Buyers also need to wait for prolonged pay-back terms with the probable termination of operations if the foreign exchange rates drop sharply. Aside from lower profits for miners, operations can stop without prior notice due to the volatility of the BTC market price.
Choice of Cloud Mining Providers
Despite some downsides, cloud mining remains a more dependable method for consumers with lack of sufficient knowledge and experience in the world of virtual currencies. In choosing a mining company, conduct background checks and due diligence on providers on the Internet. Check the firm’s license and read customer reviews in detail. Examine the provider’s website to determine capabilities and features. Compare prices carefully before making a final choice.
In my search for a provider, I came across one called HashFlare and it seems to be one of the preferred mining companies. The HashFlare team seem to have built a good reputation in the cryptocurrency industry during the past three years so I’m going to give them a crack.
Update: 12 Feb 2014 – Whilst Hashflare seems to be paying out BTC fine, the amount you get compared to an equivalent hardware miner less power consumption seems to be a lot less. That and the drop in BTC value since writing this article does make cloud based mining a little less attractive now.
I’ll report back in a few months’ time on how cost-effective this exercise is. If you are looking at some exchanges to dabble a little in cryptocurrencies, take a look at BTC Market and Binance or Kucoin for the bulk of the alternative coins.
But remember folks – whilst the process is like trading shares, this is an unregulated territory and there are no safety nets should the bottom fall out. So, if you are new to this, only experiment with funds that you are prepared to lose 100% off. I cannot stress this enough, it’s scary to hear stories of people taking out mortgages to play in the crypto markets. For their sake, I hope they understand the risks involved.