As defined by Wikipedia, Cloud Mining is the process of mining bitcoin with the use of a remote data center with shared processing power (Coin Desk, 2015). In this type of cloud mining, users are able to mine bitcoins or alternative cryptocurrencies without managing the hardware.
To easily understand it, Cloud mining is a process done online. It produces or mine a particular type of cryptocurrency regardless of any classy computer hardware requirements. Those who do cloud mining will have a direct access to remote data centers with shared processing powers. This way, the cloud miners does not necessarily need to have their own hardware. They only need a computer with internet connectivity along with their local bitcoin wallet.
Cloud mining is helpful to those who are not a technically minded person and don’t want to run their own software or hardware. It is also useful if you have very high cost of electricity. Cloud mining will outsource to somewhere where electricity costs are much lower.
Different Kinds of Cloud Mining
Cloud mining is mainly categorized into three: Hosted Mining, Virtual Host Mining and Leased Hashing Power (Digital Coins Exchange, 2016).
Hosted Mining is a type of mining wherein the hardware is leased and hosted by the provider. Virtual Host mining comprises private server creation and will install your own software to start mining promptly. And Leased Hashing Power, the most popular method of cloud mining is when a certain amount of the hashing power is leased without the need of a literal physical computer.
Pros of Cloud Mining
Cloud mining is noiseless and you can have a cooler home. Setting up and maintaining the equipment is effortless and it generates lower electricity usage. You don’t have to pay anyone for maintaining it, just your electric bill. If you felt that the miners become no longer profitable, you can either sell it, leave it or wait until it becomes profitable again.
People who are interested in cloud mining just need to register on a cloud mining website first. Once you have created a valid account, you’ll need to purchase some hash power specified by various cloud mining contracts available on the website.
Most Bitcoin offers contracts for a year, however, some can be infinite. There are some providers who offer shorter and intermediate length Bitcoin or litecoin contracts of between 6 Months and 24 months. Once you have set up your contract they will take care of everything. You will receive a regular flow of BTC into your personal wallet. As long as you have acquired some hashing power the mining software will work for you 24 hours a day and 7 days a week no matter what you are doing. You will still earn Bitcoin even if your computer is turned off for days in a more advanced cloud mining.
Cloud mining is a worthy choice for a non-technically knowledgeable person who would want to make a revenue using bitcoin. As long as you do thorough due diligence on the company that you choose and have an adequate diversification strategy to minimize risks.