Cloud mining
Bitcoin cloud mining
Bitcoin cloud mining is the process where you buy a bitcoin mining equipment from a company and then they run this bitcoin mining equipment for you. For this service, they take a maintenance fee. You need a bitcoin wallet to receive payouts.
Bitcoin mining
Bitcoin mining is the process when computer power process transactions, secure the network and keep the system synchronized. The Bitcoin mining process is entirely decentralized, and anyone can participate. The bitcoin mining process provides a reward to its miners in the form of new bitcoins. The number of bitcoins is limited, but the miners will be required to secure the network and the transactions after the last bitcoin is issued.
Risks with bitcoin cloud mining
There are two risks you must be aware of before you invest in bitcoin cloud mining.There is a big competition about the newly mined bitcoins, and therefore, the equipment can run out of profitability since all companies update all the time. If the miners run out od profitability the company shut your mining contract down. The other risk is, of course, the Bitcoin price. If the bitcoin value dips too much, the equipment will run out of profitability, and the company will shut the mining equipment down.
Cloud mining Pros and Cons
Pros
- Time saving - You don't have to set up the mining park yourself.
- No explicit knowledge - You buy a contract which is as easy as buying anything online. You don't need to have any particular knowledge about the mining process.
- No extra space at home - You don't run the miners at home, so you don't waste space at home.
- No additional costs - You pay the contract and all the maintenance fees are included or deducted automatically from the profit. You don't have to worry about repair costs or higher electricity prices.
Cons
- The risk of fraud - There has been and still are a lot of cloud miner scams on the internet.
- Lower payouts - It´s a bit lower payout than running the miners yourself but, on the other hand, these companies run such huge farms they can cut the costs pretty much.
- No control - You don't have the control over your mining equipment. You pay someone else to have control over it. This can be bad if the company for some reasons runs into problems.