Cloud mining is a process for producing crypto coins, without the use of your own equipment needed for this task. Instead, the process is done in a cloud and you only rent the equipment for a price or a part of the profits produced.
It’s a less expensive option that many novices decide to take advantage of. There are also limiting factors that come from using the equipment and the software that are beyond your reach and control. However, being able to earn right away usually swings the decision in favor of cloud mining.
How Does it Work?
Cloud mining uses the facility that’s provided by a third party. It does the technical part of the job for you and allows you to collect the profit without having to invest in the equipment and the maintenance needed to run the mining facility itself.
In return, they charge a fee or they take a part of the profit created by the digital coin once it’s mined. This is an option that allows smaller investors to get in on the game without having to initially purchase any of the equipment. There are numerous providers of this service, and you can use sites like Truely to find the one that suits your needs.
No Heat-Related Bills
The biggest byproduct of a mining factory is that it produces a lot of heat. This can be a safety hazard and it requires you to invest quite a lot in making sure the facility is cooled down and up to the standards. It’s usually too much for a small mining investor to handle.
When the process is completed by a third party as is the case with cloud mining all of these costs are covered by the provider instead of the investor personally.
No Noise
There’s also a lot of noise produced by the equipment involved. It’s another big downside of mining the crypto coins on your own. For most investors, it requires renting space and moving the process away from populated areas. This creates numerous additional costs as well.
If you want to avoid these issues altogether you can always use cloud mining instead. That way the noise and all the other technical aspects are handled by someone else and you can simply collect the profit.
Not Having to Worry About the Equipment
Once you’re done with mining you’re left with a lot of equipment that’s both expensive and complicated to move around. Those who mine using their facilities find it challenging to sell or rent this equipment later on and it can sometimes take months to do so.
This isn’t the issue at all if you’re renting the equipment for cloud mining. It can then be used by the third-party whose services you’ve been using and by other clients and you can move on from the investment even if it doesn’t work out as you’ve planned it to.
Find the Provider With Great Care
You don’t get to choose the software that will be used to mine the cryptocurrency. As a user, you have little control over the process itself and it’s mostly handled by the provider with little input from you. However, you still have the power to choose the provider with great care and deliberation.
This is why investigating the third party you’re planning to use is so important. Take the time to learn about the equipment and the tools they are using before jumping in bed with a long-term partner for your investments in mining.
The Mining Company Can Terminate Your Contract
Sometimes, cloud mining providers can terminate your contract before the term. This happens when the profit isn’t coming in and when something goes wrong on their end of things. It’s rare but it’s important to know that it can happen. It’s a loss for your side of things but it doesn’t have to be a major one.
There are usually contracts that determine when this can take place and what is the payout that the client needs to get from the company when it does happen. Make sure to read these beforehand.
The Fees and Rent Takes a Bite
The profits you can make when using cloud mining, instead of your own equipment, are somewhat smaller. That’s something to be expected and that’s a price to pay for not using your own facilities. There are a lot of costs involved in setting up a cloud mining farm and that’s something you end up covering with fees.
In the long run, you may need to figure out when the cost of the fees and renting may be replaced by purchasing your own equipment. However, this isn’t an issue for most small and medium-size investors for which cloud mining is a better option.
It’s Less Fun
There’s fun to be had, with tinkering, with the technology needed for cloud mining. There’s a reason why there’s such a cross-section between the IT sector and the finance sector. The two are heavily connected at this point. That’s not something you can do when the equipment is owned by someone else.
If you’re in it for the tech more than the profit you won’t very much like cloud mining. However, if your goal is to minimize the initial costs and start making money right away –cloud mining is a superior option.
Is Cloud Mining an Option for You
The answer to this question depends on how much you’re willing to invest in your mining projects right away. If you don’t have the funds to invest in a lot of expensive and complex equipment, then cloud mining is a good way to get into the field.
It’s important, however, to be aware of the limitations that come with using this approach. There’s less profit involved and less direct involvement from the client when it comes to how the work is actually done and what technology is being used. It’s still the best way to go for most novice investors.