All cryptocurrencies are created through mining. Mining is the process verifying transactions in a public ledger called a blockchain and new cryptocurrencies created. These transactions are assembled into blocks whereby the miner gets rewarded when he appends a block and solves various algorithms. To create a block, there must be a cryptographic hash that fulfills a particular requirement, and the only way to arrive at that hash is to calculate as many as possible. Mining involves buying, setting up and maintaining mining equipment and a large supply of power. Having powerful equipment gives you a competitive edge.
However, this has been made easy through cloud mining. Cloud Mining involves mining cryptocurrency without having to install the hardware. All mining is done in the cloud. It utilizes a remote datacenter with shared processing power. Cloud mining providers can provide more computing power, and hence are more likely to append blocks and earn more cryptocurrencies. This makes cloud mining more cost-effective.
There are three types of cloud mining
- Hosted mining– involves the lease of mining equipment by a mining company to cryptocurrency users
- Virtual host mining– involves renting an area on the server after installation of software
- Leased hashing power– this is the most common method. The service enables you to pay for hashing power hosted in data centers.
How Cloud Mining Works
The first step is to find a reliable cloud mining company and register an account through the website. You then purchase a contract that ranges from months to years depending on the provider. You choose various plans of hash rates and pay. Mining commences immediately, with the experts doing all the tasks for you. Mined cryptos are sent on a regular basis to your crypto wallet depending on the contract. Most providers have a minimum amount that you can withdraw.
Ethereum Cloud Mining
Ethereum is the second most popular and biggest capitalized cryptocurrency after Bitcoin. Since its inception in 2015, it has increased in value and continues to grow. Its safety and speed in a transaction, as well as its ability to create smart contracts, makes it highly valuable. This makes it one of the best cryptocurrency to invest.
Ethereum cloud mining offers an easy and safe way to mine Ethereum without the hustle associated with buying equipment and high cost of power. It makes mining available to anyone who wants to get some Ethereum. The user pays a certain pool fee or part of the profits to the provider.
There are several advantages and shortcomings associated with Ethereum cloud mining compared to independent Ethereum mining.
- Quiet home free from noise
Mining equipment causes a lot of constant noise and ventilation problems. When you invest in Ethereum cloud mining, you will not have to deal with such issues that come with the mining project.
- No equipment breakdown
Mining equipment is prone to breakdowns and failures. Repairs and maintenance are quite expensive and can cost you a lot. Maintenance costs can take up a large percentage of profits.
- No added electricity cost
Since the user does not manage the equipment, there is no extra expenditure incurred on power.
- You don’t have to be tech savvy
You don’t need to have in-depth knowledge of the mining hardware. It’s a great option for those whose who want to mine but do not have the technical know-how.
- Low cost of entry
You can start cloud mining with just a small investment depending on your financial status as you don’t need to buy the equipment. In addition, you can use to the money you save by not having to buy the equipment, to add to your initial investment.
- Risk of fraud
Cloud mining poses a risk of fraud where you can end up losing your investment to fraudulent companies and imposters. As an investor, you need to carry out prior investigations about the service providers before investing.
- Minimum control
You don’t have the power to change the hardware and software that the providers use.
What to Consider When Choosing Ethereum Cloud Mining Services
Ethereum cloud mining is a profitable venture. However, it’s important to find a reliable and reputable provider. Ensure you read through the contracts and thoroughly ask questions in case you need any clarification to fully understand the contract, and verify the provider credentials. You can also check for reviews and customers’ feedback. You must ensure that these providers have positive reviews, transparent pricing, and a solid reputation among clients. Some providers lure clients by promising incredibly high returns which they cannot deliver. You can also use online cloud calculators to get an estimate of profits that you can make.