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Author : Bitconnect
Cloud Mining. This article is going to discuss bitcoin cloud mining services and their profitability, the profitability of bitcoin mining in general along with the main factors that affect the profitability of a bitcoin mining venture, and evaluating the risk, when compared to buying bitcoin or trading bitcoin. What is cloud mining? Cloud Mining at https://www.bitcoinmining.com/best-bitcoin-cloud-mining-contract-reviews/ are services which claim to host bitcoin mining hardware which mines bitcoins. Someone then purchases a certain amount of mining power from the company who then pay out a certain amount based on the bitcoins mined. The idea is that the investor need not host mining hardware themselves, but can still profit from bitcoin mining at https://en.bitcoin.it/wiki/Mining Are cloud mining services legit? This can be a tough question to answer, as there are some who host actual hardware, and some Ponzi type schemes at https://bitcoinmagazine.com/articles/exclusive-possible-500000-bitcoin-cloud-mining-ponzi-scheme-uncovered-1433546738 There are some companies, such as cex.io at https://cex.io/ which do pay out. You purchase a certain amount of hashing power, which can either run for a year or a lifetime. The return you get is based on many variables, such as the difficulty of mining, bitcoin price fluctuations (if you choose to cash out). There are also companies that operate as a Ponzi scheme at https://bitcointalk.org/index.php?topic=878387.0 and do not own any actual hardware.
An example of this is a company called bit prompt. The methods used in a Ponzi type scheme involve paying previous investors with the money of new investors and pose as running mining hardware. Once new investors dry up, the last people to invest loose out and the scheme ends. Typically, the scammers take a large cut of the money invested over time. The problem, even with cex.io at https://cex.io/ is the lack of transparency. You cannot select your own mining pool to point your purchased hashing power to, and it is possible if the mining difficulty increases beyond a point where it does not cover the daily fee from the cloud provider that it voids your hash power, even a ‘lifetime’ hash power purchase. Also, if the company were to become insolvent, you have very little to show for it, apart from the earnings you already withdrew. Rental hashing power. There is a second ‘cloud’ based alternative which involves renting hashing power and should not be confused with the above long term investment cloud mining. This is where you can rent mining gear to submit attempts to solve a block to any pool of your choice. These are typically more transparent in what you get for your money. These are commonly used by people trying their hands at mining, or timing it right to profit from their rental. Services such as Nicehash at https://www.nicehash.com/ and Mining Rig Rentals at https://www.miningrigrentals.com/ are rental services. You can also find individuals renting out their gear on eBay, but typically you will not make a profit with these.
Nicehash and Mining Rig Rentals work by having users putting up their mining power to their pool, when someone rents the gear it diverts it to the renter’s pool. The rental provider then takes a small cut and the hardware owner gets a cut of the rental paid by the renter. When it is not being rented the hardware owner is earning from the pool. Rental services are also used for solo mining, there is where you point the hashing power to a solo pool or node and mine to your own address. This is typically done by renting large amounts of hashing power for a short time, for example a few hours or days and hope to solve a block and score the entire block reward. An ‘investment’ of 1 bitcoin could easily turn into the 12.5 bitcoin block reward, but if you do not find a block you do not get any bitcoins from solo mining, so it is akin to gambling. The probability of finding blocks / earnings during mining change with the difficulty of mining. This is one way to see how bitcoin mining works cheaply, you could buy bitcoin online in a small quantity and rent a small amount of power for say a week to see how the pool pays out among other things. Factors affecting profitability. There are many factors affecting the ability to profit, at http://www.coinwarz.com/calculators/bitcoin-mining-calculator either through cloud mining or owning your own hardware. The following factors need to be considered: Difficulty rising and falling.
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