After the launch of Bitcoin and its massive uproar, a second shock came when it was discovered that this digital currency could be created by anyone. The general name for this process is mining. Cloud mining was derived later.
The reason why this process is called mining is related to real-world mining activities. Real-life miners work to extract precious metals from underground mines. Cryptocurrency miners get their rewards by solving mathematical problems, adding new blocks to the blockchain. In both cases, a certain investment of effort and resources is required.
In the early days of mining, you could mine using simple computer processors. However, the increasing difficulty of networks in Bitcoin and other cryptocurrencies has left processors inadequate and the need for more powerful hardware for mining. This led to the use of graphics processors(GPUs) and later specialized hardware(ASICs).
Mining has become increasingly competitive, leading to the emergence of large mining pools. By joining forces, miners have joined these pools, which aim to solve blocks faster and share rewards more fairly. Today, mining is done through large data centers and specialized hardware. Those who want to learn more about this topic can take a look at our article titled “What is Cryptocurrency Mining?”.
So, what is cloud mining or cloud mining in Turkish? The basis of this term is to obtain cryptocurrencies as a result of transactions. It can be said that it is a method applied to generate returns. It can be considered as an alternative to traditional cryptocurrency mining for those who want to earn passive income. The technical competence required for traditional mining is not needed for cloud mining. This means that anyone can easily mine cryptocurrency.
Cloud mining uses computers or specialized hardware to create cryptocurrencies (e.g. Bitcoin). Bitcoin can be mined in the cloud, as well as other cryptocurrencies. The most important detail here is that users do not need to have their own computer or hardware to perform this operation. If the question “What do you mean?” has popped up in your mind right now, you will get the full details of the subject in the following parts of this article. Let’s get into the details.
How to do Cloud Mining?
The term cloud mining means that mining operations are not done in a physical location, but from a remote data center. Data centers rely on specialized hardware to perform cloud mining. That is, users rent a remote service instead of using their own computers or hardware. This service is of course provided to users for a fee.
By purchasing “hash power” from a cloud mining service provider, one can register for a mining farm, and with this action, anyone can become a miner. In return for the hashing power purchased, the cloud mining service provider rewards these miners and enables them to earn passive income.
Although we have used Bitcoin as an example so far, cloud mining is not just for BTC. Cloud mining can be done with Ethereum, Ripple, Bitcoin Cash, Litecoin and many other cryptocurrencies.
Can You Cloud Mine from Your Phone?
The fact that not everyone has a computer or can access a computer every second of every moment may bring to mind the question “Cancloud mining be donefrom the phone?”. Cloud mining requires the use of computers and equipment in the cryptocurrency production process. However, the situation may be different at the point of getting cloud service.
Some cloud mining service providers may provide users with the ability to monitor and control their services through cloud mining applications available on smartphones. These apps can allow users to rent mining power, check earnings and perform other account operations. So, if there is a mobile app that cloud mining service providers can offer, this service can be tracked on the phone.
Apart from all these, mining can also be done with the hardware of the phone, but this will not be an efficient method as the power of this hardware will be limited and will not be efficient enough, which will cause the return to be obtained to remain quite small.
Which Device to Use for Cloud Mining?
Cloud mining service providers typically use ASIC (Application-Specific Integrated Circuit) based mining devices. ASICs are hardware specifically designed and optimized for cryptocurrency mining. They consist of a control board, power supply, fan, heatsink and case. These devices are designed to provide high performance, especially for mining popular cryptocurrencies such as Bitcoin.
Cryptocurrency mining ASICs are optimized to solve only a specific cryptocurrency algorithm and perform mining operations. ASIC-based mining devices usually have high hash rates. This means they can solve more mathematical operations in a given amount of time and are more effective at mining.
ASICs have an advantage in energy efficiency because they are specifically designed to perform a specific task. They consume less energy than other mining methods. Every cryptocurrency has a different mining algorithm. For this reason, ASICs are often designed for a specific cryptocurrency algorithm. For example, an ASIC designed for the SHA-256 algorithm could be used for Bitcoin mining.
ASIC-based mining devices are often costly. However, due to its high performance and energy efficiency, it has the potential to quickly add costs. It should also be noted that the widespread use of ASICs may lead to increased mining difficulty. This could increase competition for individual miners sharing mining rewards.
What are the Differences Between Cloud Mining and Hardware Mining?
In cloud mining, as mentioned earlier, users do not use their own equipment for mining activities. Hardware mining is driven by users owning their own equipment. This can have benefits as well as drawbacks. Let’s take a closer look at the differences between cloud mining and hardware mining;
Hardware Ownership and Maintenance
- Hardware Mining: In classic mining, the miner buys, installs and maintains their own hardware. This requires the user to perform mining operations on their own physical hardware.
- Cloud Mining: Users do not have to purchase and maintain the hardware required for mining. Cloud mining service providers manage these operations.
Cost and Investment
- Hardware Mining: The cost of mining equipment and energy expenses are usually borne by the user. This entails a higher cost initially, but in the long run can allow the hardware owner to reap more benefits from the rewards.
- Cloud Mining: Users use the service provider’s hardware by renting mining power for a set period of time, usually for a subscription fee. This reduces hardware costs, but may also come with certain benchmarks, such as sharing rewards and paying a fixed fee.
Flexibility and Ease of Use
- Hardware Mining: Having mining hardware gives users more control and flexibility, but it also brings more responsibility for installation, configuration and maintenance.
- Cloud Mining: Cloud mining offers a more user-friendly and accessible option for users. Users can usually start the mining process with a few clicks.
Risks and Returns
- Hardware Mining: Users who own the mining hardware typically receive the full rewards, but also bear the risks, such as hardware costs and energy expenses.
- Cloud Mining: Cloud mining can reduce the service provider’s operating risks, but factors such as contractual terms and market volatility can affect returns.
These differences can factor into which mining method users choose, depending on their preferences, budget and mining experience.
What are the Advantages and Disadvantages of Cloud Mining?
The fact that cloud mining basically requires no commitment may make it perceived by many as a unique method. However, it is necessary to look at this situation from a broader perspective and consider both its advantages and disadvantages.
So what are the advantages and disadvantages of cloud mining? Let’s take a closer look at the answers.
The advantages of cloud mining;
Easy and User Friendly
Cloud mining makes the mining process more accessible for users. Instead of dealing with the complex process of buying, installing and maintaining hardware, users can often rent mining power with a few clicks.
Low Initial Cost
Compared to hardware mining, cloud mining usually has a lower initial cost. Users can rent mining power for a set period of time, usually by paying a subscription fee.
Maintenance and Energy Costs
As with hardware mining, users do not have to deal with operational costs such as hardware maintenance and energy costs. Cloud mining service providers manage these costs.
Users can start using the mining power immediately. Without the hassle of buying hardware and dealing with setup processes, mining can be started quickly.
Disadvantages of cloud mining:
Cloud mining can create uncertainty in returns depending on factors such as market conditions, mining difficulty and contract terms. Because users rent a certain amount of mining power for a predetermined fee, they can react less flexibly to changes in the market.
Cloud mining contracts are usually subject to certain conditions and can have an impact on the user’s return. For example, contracts are usually valid for a certain period of time, and payments within that period or the terms of contract termination are subject to certain conditions.
Service Provider Reliability
Users have to trust the reliability of their chosen cloud mining service provider. Users may be affected if the service provider goes bankrupt or if the quality of service declines.
Cloud mining users are often limited in their ability to control or configure the mining process. Hardware miners may have more control, but that also means more responsibility and complexity.
Is Cloud Mining Reliable?
Cloud mining basically poses no problems in terms of reliability. The main thing here is whether the company is reliable or not. People looking for cloud mining services should consider some of the following important factors.
Service Provider Reliability
The reliability of the cloud mining service provider is of paramount importance. Working with well-known and trusted companies can reduce potential risks. Users should make the right choice by reviewing the service provider’s track record, customer reviews and reliability history.
Users should carefully review and understand the terms of contract of the cloud mining service provider. In particular, the terms regarding payment, prize distribution, service cancellation and other important issues should be known in advance.
Privacy and Security
Since users’ personal information is given to the cloud mining service provider, security and privacy are of paramount importance. It is important to understand the security measures the service provider provides and how it protects user data.
Mining Pool Safety
Cloud mining is usually done through mining pools. The security of the repository can determine how resilient the network is to attacks. Large and reliable mining pools often offer a safer option.
Returns and Risks
While cloud mining offers the potential for returns, it can also be subject to certain risks due to market conditions, mining difficulty and other factors. When assessing potential returns, users should also consider the potential risks.
In conclusion, cloud mining can often be a safe option, but it is important for users to research carefully, choose reliable service providers and understand the terms of the contract.
How Much Does Cloud Mining Earn?
It would not be correct to give a direct price for how much revenue will be generated by cloud mining. To get information on this subject, examining the website of companies that provide cloud mining services is the right method to reach the most accurate result.
It’s just important to remember that earnings from cloud mining can vary depending on a number of factors. Some of these factors are as follows;
Cryptocurrency Market Conditions
The cryptocurrency market is highly volatile. Therefore, the value of the cryptocurrency and market conditions can affect the earnings from cloud mining. As the value of cryptocurrencies increases, earnings from mining can increase.
Mining difficulty is a measure of the total mining power and competition on the network. As the difficulty increases, the rewards from mining may decrease. Therefore, mining difficulty is a major factor.
Cloud mining usually provides services for different cryptocurrencies. Each cryptocurrency has a different mining reward and value. Some cryptocurrencies may be more profitable, while others may offer lower returns.
Mining Package and Contract Terms
Users can choose different mining packages offered by the cloud mining service provider. In addition, contractual terms may also cause variations in earnings.
Service Provider Fees
Cloud mining service providers may charge varying amounts for their services. These fees can reduce earnings.
Cloud mining users generally don’t have to deal with hardware and energy costs, but the fees charged by service providers to cover these costs also have an impact on their earnings.
How to Get a Cloud Mining Service?
People who want to use cloud mining services are expected to complete some processes. Afterwards, the process of earning passive income by cloud mining can begin.
For users who want to get cloud mining services, this process generally proceeds as follows;
Service Provider Selection
The first step is to choose a cloud mining service provider. These companies usually offer various mining packages.
Registration and Account Creation
An account will need to be created with the service provider of your choice. This usually involves setting a username, email address and a password. After creating the account, you are usually asked to add a payment method and choose a mining package.
Mining Power Rental
After creating an account, you will be able to rent a specific mining power for a certain period of time. Mining power is usually measured in “hashrate” and a higher hashrate means more mining power.
Contract and Payment
Once the mining power has been selected, a contract is usually signed. This contract establishes the right to use a certain amount of mining power for a certain period of time. Payment is usually made in Bitcoin or other cryptocurrencies.
After creating an account, renting mining power and signing the contract, mining can begin. At this point, the cloud mining service provider automatically starts mining.
Yield and Payments
As the mining process continues, service providers make periodic payments. These payments vary depending on the amount of cryptocurrency being mined and the terms in the contract. An important point to remember is that cloud mining services involve risk and returns may vary depending on market conditions. It is therefore important to research carefully before using this type of service.