What is Cloud Mining, its advantages and disadvantages

What is Cloud Mining

Cryptocurrency mining is really not just about mining Bitcoin. It also includes other cryptocurrencies. In addition to traditional mining methods, you can benefit from cloud mining. Therefore, there is no need for mining equipment, you also do not have to pay for electricity or deal with noise & heat.

If you’re new to cryptocurrency mining, cloud mining also offers other special advantages, for example, it does not require specialized hardware expertise. Let’s find out the nature of this method, how it works and the special features that make it different from traditional mining.

How does Cloud Mining work?

If you are mining ordinary cryptocurrencies, you need to have knowledge of mining machines, mining algorithms. Next, you need to take care of the mining rigs: maintaining the machine, calculating the amount of electricity consumed. And when doing this, you’re exactly a true cryptocurrency miner.

With cloud mining, you need money to invest, and a basic understanding of the mining company you want to join. In this way, you are more of an investor, than a miner. A mining company is considered to be the service provider.

When investing in this mining method, you will work with a service provider. Cloud mining works on a contract basis. You pay the company and hire some of its hardware.

Based on the hashpower you hired, you will earn profit according to the rate agreed on the contract. The higher your hashpower and contract period, the higher the cost of mining. This is because the higher the hash power, the higher the power consumption during mining. Cloud mining contracts usually range from 6 to 36 months. Some platforms may even offer longer or shorter contract periods.

Cloud Mining advantages

With this mining method, you will save time, costs and effort for the following:

• No need to buy Bitcoin and Altcoin mining machine
• No need to pay electricity directly
• No need to rent a warehouse, or prepare workshops, prepare infrastructure for mining machine
• No need to worry about repairing and upgrading mining machine
• No competition with new specialized machines

Cloud Mining disadvantages

However, besides the advantages, cloud mining still has certain risks and limitations. That is:

• It is difficult to control profits, because profits depend on the development of the company
• Investors cannot directly control or participate in the process of Bitcoin mining
• Profits are low because investors will have to pay mining service costs to companies
• Mining services have certain costs and many costs incurred
• The risk of losing everything due to scam.
• Investors must pay in advance without owning any hardware or machines
• Investors cannot change the mining software

Today, there are many cloud mining services to choose from and many companies are constantly opening. During the decision-making process of which service to choose, you must always check the reputation of the company as well as the contract terms to choose exactly what you need. Hopefully, the general information about cloud mining from NEEBank will be useful for those who are in need of mining with low investment costs.

Read More:

The differences between Hardware Minin and cloud