In recent years Bitcoin and other cryptocurrency mining has increasingly required sophisticated equipment and economies of scale to be profitable. The era of the profitable home miner for Bitcoin and Ethereum is pretty much over and many people who still want to get in on the lucrative crypto mining industry are choosing cloud mining as a solution. Cloud mining basically means hosted mining. You buy the equipment and the hashrate provider is supposed to run it for you. This makes a lot of sense in theory because electricity cost/climate/scale are all major factors in mining profitability. What are some cloud mining tips for those looking to buy hosted hashrate?
Cloud Mining Tips
If you are intent on cloud mining or using hosted mining please keep the following cloud mining tips in mind.
Cloud mining providers are notoriously shady.
Why continue to mine at a profit for a customer when you could fold up shop and mine for yourself? The only reason cloud mining providers exist legitimately is to raise capital for their own mining operation or as a hedge against a huge downturn in cryptocurrency price. The concept for the owners of cloud mining operations is “take a lesser profit now and avoid losing it all if cryptocurrency prices crash”. Unfortunately many cloud mining providers are scams. Cloud mining is extremely risky.
Do not buy hashrate with cryptocurrency!
Never pay cryptocurrency to mine cryptocurrency. In other words do not buy cloud mining hashrate with cryptocurrency. You are likely to never see a profit with increasing cryptocurrency value.Paying 0.1 Bitcoin for a contract that ends up only yielding 0.05 in mined Bitcoin because of a huge increase in Bitcoin price and difficulty is not a good prospect. You would have been better off holding the Bitcoin itself.
Only buy cloud mining with fiat currency and recognize its a gamble. You may make more cryptocurrency mining than you could buy or you may make less. It depends on how fast the difficulty goes up for the particular cryptocurrency you are mining. Cloud mining makes sense if the price is stable.
Do your research into a hashrate provider.
Hashrate per dollar is not the only thing to research when looking into cloud mining. Ensure the prospective hashrate provider has a great track record by checking various websites. Forums such as Bitcointalk.org are an excellent starting place for this but expand your search to Bitcoin service review websites as well.
Read the contract details fully.
Know the contract length, maintenance fee, and the minimum withdrawal amount before buying. If the minimum withdrawal is 0.01 Bitcoin and you buy 100 GH/s of SHA-256 hashrate the chances of getting to withdraw are zero. Use a mining profitability calculator.
Consider simply buying the cryptocurrency instead!
In many cases you are much better off just buying and holding the cryptocurrency instead of cloud-mining. Consider just buying the cryptocurrency and keeping it in safe, offline storage.