Cloud mining is the easiest way to contribute towards mining cryptocurrencies that still technically qualifies to be called mining.
Anyone can do it, there is no requirement for technical knowledge other than knowing how to make an online purchase and using a wallet for cryptocurrencies.
This is a double edged sword, and one that reminds us of the challenges the cryptocurrency space is facing as it strives for mass adoption.
It’s great that there is an easy way for people to participate and potentially see good returns on their investments.
The problem is that the easier the process is, the less knowledge the user base needs to participate.
This means the user base most likely won’t recognise when a service is a scam.
This means most new users will lose money and probably deem the entire space as fraudulent.
That being said, I’m glad you’re checking out this post and I hope that you explore this channel further to deepen your understanding and equip yourself with the kind of knowledge that will help keep your investments safe.
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Ok so let’s get into cloud mining, how it works and how to identify your best options for service providers.
Cloud mining allows individuals to purchase contracts that ultimately contribute towards the cost of running a computer that mines the cryptocurrency.
That’s a pretty generalized summary but I’ll hit you with some details in a bit.
The amount that you pay is often labeled as hash power, and your payouts will reflect how much hash power you’ve purchased.
In case you missed my past video that covers proof of work mining, hash power refers to the amount of computing power used to solve the complex algorithms required in order to unlock a new block of the blockchain.
Essentially when you purchase a cloud mining contract, you are helping to fund a mining farm.
A mining farm is the name for a large facility that is comprised of many computers which do nothing but mine cryptocurrencies.
Basically, you’re sponsoring a fraction of their computing power, helping them to handle the costs of running their facility and in exchange, you get a portion of the coins that they mine according to the contract that you’ve purchased.
Typically you can choose to remotely mine Bitcoin, Ethereum, Dash, Monero and other coins as well, it’s not just limited to Bitcoin.
It sounds super simple and at it’s core it is, but there are some things that are important for you to realise before you decide to purchase any kind of cloud mining contract.
You need to be aware of:
- The time frame of your contract
- The withdrawal fees
- The hash difficulty of the coin to which you want to contribute hash power
- The company that you purchase the contract from
All of these aspects will determine your return on investment, or if you receive any at all.
The time frame of your contract is important to consider because you can easily purchase a short term contract which can expire before you start seeing any returns. Withdrawal fees can also end up taking a big chunk of your profits as well.
The hash difficulty is equally important to be aware of because this determines how effective your hash power will be against it.
An increase in hash difficulty requires an increase in hash power.
Price fluctuations can also affect the hash difficulty as more or less miners shift to follow the price.
As the price spikes, more miners shift to that coin, this increases the difficulty level. As the price slumps, miners disperse, which decreases the difficulty level.
Lastly and most importantly, it’s vital that you do your own research on the company from which you wish to purchase a contract.
There aren’t very many that have stood the test of time. In fact, many have abruptly stopped payments without any warning or explanation to their investors.
Now that you know this, it’s your responsibility to keep this in mind when choosing to invest in any cloud mining service.
The only services that I feel comfortable even mentioning their names are Genesis mining and Hashflare mining.
I have personally used Genisis mining and it has proved beneficial for me. I’ve also heard positive things about Hashflare, but have not used their services myself.
If you’ve done your own due diligence and you still are interested in participating in cloud mining, you can help support this channel and also get a discount yourself by using my referral code for Genesis mining. I’ll also include a link for this down below.
In my next post, I’ll be going over how to use your awesome new ledger hardware wallets with decentralised exchanges, so if that’s something you’ve been wanting to learn how to do, be sure to hit the follow button so you won't miss it!