Most first-generation cryptocurrencies feature the validation process known as Proof of Work, the protocol that validates new blocks that are added to the blockchain. Participating in the protocol through mining is convenient because a reward is given to miners. Therefore, through this mechanism, miners get a specific amount of cryptocurrency.
However, mining has the disadvantage of being particularly expensive because of the powerful machines that the process requires. These are machines with high computing power in addition to powerful servers. To obviate this criticality, Cloud Mining allows you to rent portions of servers and CPUs to mine at a very low cost. Below we will see exactly how Cloud Mining works, the advantages of this practice and, above all, how to protect yourself from fraud.
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What is Cloud Mining
Cloud Mining consists of renting portions of servers and CPUs to get the computing power and mine at a lower cost. With this method you can mine many cryptocurrencies, including the most famous, Bitcoin, without having to buy the powerful machines needed for traditional mining. The miner, in fact, in this case will be able to keep under control the progress of mining through a website or an app directly from the PC or smartphone. Renting the computing power, with Cloud Mining you become part of a pool of miners getting a percentage share of the profits based on the hash power rented.
How it works
Mining cryptocurrencies is a very expensive operation that on the one hand leads to the gain of Bitcoin or altcoin, but on the other hand involves a large expenditure of electricity as well as the purchase of powerful machinery. With Cloud Mining, on the other hand, the miner rents the computing power made available by companies known as server farms to get the reward in tokens. The miner, therefore, pays a fixed cost intended for the rental of the service and participates together with other people in the Proof-of-Work protocol, i.e. that process which, through specific calculations, unlocks the transactions made on the blockchain by users.
It is possible to do Cloud Mining for different cryptocurrencies, besides Bitcoin, by identifying the best platforms. In this guide, we will outline some of the most reliable ones. In general, there are three models of Cloud Mining: the Hosting Mining, the Virtual Host Mining and the Leasing Hashing Power.
Advantages and Limitations of Cloud Mining
Before engaging in Cloud Mining, it is important to evaluate both its advantages and disadvantages. The first advantage is definitely the possibility of mining at a much lower cost. In fact, it is necessary to pay only a fixed cost to access the pool of miners without further expenses in hardware equipment or electricity. With Cloud Mining you earn cryptocurrencies simply by using your smartphone through websites and apps, in a completely passive way.
The disadvantages, however, are mainly two. The first is due to the volatility of cryptocurrencies that can reduce the profits generated from mining. The second, instead, is the risk of running into scams. In fact, there are hundreds of bogus applications dedicated to Cloud Mining. Users in these cases find themselves paying the fee to participate in the extraction but without actually mining anything and, consequently, without earning. One must, therefore, be very careful when selecting the most reliable service.
The best sites and apps
As of today, there are a lot of sites and apps dedicated to Cloud Mining, but not all of them are really reliable and convenient. We have, therefore, selected some of the best platforms for Cloud Mining:
- IQ Mining
- Genesis Mining
How to Protect Yourself from Scams
We have already stressed the importance of finding reliable Cloud Mining sites and apps, but we also want to give some tips on how to identify the most reliable platforms. While it’s true that Cloud Mining presents much lower costs than traditional mining, it’s also true that this mode also presents expenses to access servers and hardware. As a result, you have to be very careful when it comes to paying for a service. Unfortunately, in the cryptocurrency industry scams are not that uncommon, so learning how to protect yourself is essential to take advantage of all the benefits of virtual currencies.
The first step is to check the reliability of the Cloud Mining app or site. To do this, it is important to get as much information as possible through forums, specialized sites, discussion groups and user reviews. It is also important to select the service that has an excellent reputation, and verify that the website contains clear conditions and fees. For beginners, it is also important not to get carried away by the enthusiasm of an easy gain, and if the platform offers several paid plans, it is advisable to start with the cheapest one and then eventually upgrade.
Final Considerations: Is Cloud Mining worth it?
At the end of this analysis on Cloud Mining we can say that it is an excellent alternative to pure mining because it requires a minimal cost to start earning tokens, and especially without buying powerful machines or pay exaggerated bills for electricity. Renting the computing power of mining farms is now the easiest way to mine, and it is becoming more and more common among miners and novice cryptocurrency enthusiasts.
One downside is security, as there are hundreds of scam apps offering this service. However, by identifying the most reliable sites and apps, mining becomes easy and convenient. Even though the latest blockchains are focusing on Proof-of-Stake, with Bitcoin it will be mined at least until 2140, so Cloud Mining can be the winning solution to earn cryptocurrencies in the near future.