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What Is Cloud Mining?
Cloud mining is the process of mining cryptocurrencies, like Bitcoin or Monero, on an external location managed by a cloud mining provider.
Cloud mining firms allow you to manage and access your cryptocurrencies using the internet remotely. The process is done through the cloud, saving you from resources and equipment costs. It is the perfect alternative for some investors who wish to invest lightly.
If you’re considering hiring cloud mining farms, this is how they work. First, they offer you their service and introduce all the information you need about them. It includes their capabilities, type of equipment, prices, and terms.
Additionally, you must register on the marketplace and choose from contracts to start cloud mining to buy a portion of the computing capacity. After that, you will receive hash rates and payouts for your contribution to the mining process.
When you choose your mining services, make sure to make a background check on them to avoid fraud issues. There may be lots of them, and you wouldn’t want to be scammed. Choose a reputable one with reasonable terms and conditions.
Different Types Of Cloud Mining
Ultimately, there are two models of cloud mining: hosted and leased hash power.
Between the two, hosted mining is more popularly used. The customer has two options in this mining type: buy or lease mining hardware in the firm’s facility. They are directly in charge of their cryptocurrency, but the miner maintains the equipment. Farms are tasked with making the costs of storage and electricity bearable.
Meanwhile, in the leased hash power model, the computing powers of a cryptocurrency are leased from a mining firm. It is required to open a cloud mining company account and decide on the hashing power and contact period. Customers then receive a portion of the firm’s overall profits in mining cryptocurrencies.
Are Cloud Mining Companies Trustworthy?
Scams are not uncommon in the cryptocurrency arena.
Since everything is digitized and done on the Internet, you are exposed to risks. The best thing to do is be cautious and wise in choosing your cloud mining firm. It would be best to first identify what you need on their services to settle their conditions and terms properly.
If truth be told, not all cloud mining companies are trustworthy. Sometimes, their words may be too good to be true, and you may consider this a red flag! You must be extra careful in deciding which company to work with and not be easily fooled by false advertising.
Promised payouts can be paid from new users signing up, which is a Ponzi. By implementing referral schemes that can last quite some time.
Cloud Mining Vs. Pool Mining
In pool mining, all of the pool’s hashing power is combined to contend in the Bitcoin mining algorithm. Anyone can participate and receive awards equal to their donated hash power percentage. The rewards it provides may persuade individuals to join mining pools. How does it work?
You will need to use the pool’s software, so your mining rig can contribute processing power to the mining operation. You also need to buy, run, and cool the equipment here. Maintaining your internet connection’s speed is also a must!
With the increasing number of people participating in cryptos and pools, data centers found a way to revolutionize pool mining. They have seen that many people wanted to join the pool but lacked mining rigs. Through cloud mining, centers began renting their hash power services in the pool, with processes performed in the cloud.
Also, investors in cloud mining merely provide money, that’s all. Then companies will give you your cut. Sounds more convenient, right?
Remember to find a trusted cloud mining company where you can send your money without any worries about being scammed. Once you have sent your money, you can proceed with your daily activities and let them do their work.
In short, mining pools are for individuals with hardware mining resources to gain and distribute profits. While in cloud mining, you pay to hire a mining service and get the rewards. Although it may sound more accessible, the difference is that you entrust your investment with other people’s hands in cloud mining. So it is vital to choose reputable services.