Cloud mining is a process of producing a cryptocurrency (Bitcoin, Ethereum, LiteCoin, DASH) by generating a hash of a new block in the blockchain network, which is carried out with the help of special services that lease equipment to miners.

Thus, the client can mine currency without buying expensive ASIC-miners, but simply by signing a contract for the necessary hashrate. The websites providing cloud mining receive a commission for services.

ProviderPros and ConsFraud RiskSupported CoinsCompany Location and Age 
HashFlare Currently most profitable yearly contracts
Low entry threshold (minimum contract price $1.2)
Instant money withdrawal
No automated money withdrawal
Low
Estonia
Founded: 2015
Visit Website
Genesis Mining One of the oldest companies on the market
Fixed-term contracts for 2 years
Bonuses and various discounts
Friendly and fast customer support
Relatively high entry threshold (minimum contract price $30)
Low

Hong Kong
Founded: 2013
Visit Website
Hashing24 Unlimited life of contract
2-step authentication
High cost of the contract
Isn’t available for USA residents
Mines BTC only
Low
Scotland
Founded: 2012
Visit Website
Eobot Large number of coins supported
Very low entry threshold (no minimum contract price)
High-quality security system
No withdraw minimum
Very high cost per unit power
Commissions for the use of functional
Very high fees for exchange and purchase
Medium

USA
Founded: 2013
Visit Website
MinerGate Low entry threshold (minimum contract price $4)
Seems to be "stealing" user Hashrate
Support slow to respond
Anonymous owners
Low profitability
Medium
n/a
Founded: 2014
Visit Website
Mining is getting harder and harder every day. If a few years ago it was possible to make a profit by mining on an ordinary home computer, at the moment it often happens that collective pools and even large farms end up unprofitable.

We can say that the era of mining on own capacities has come to an end. Now, to have remote passive income and mine bitcoins for free, you can not do without the help of large companies that have created a farm in the cloud and can lease specialized equipment to anyone.

That’s why many people who mine cryptocurrency began to think about switching to cloud mining.

So, cloud mining – what is it? This is what we will try to understand today, and also discuss whether it is worth investing in it and if so, where exactly.

What is Cloud Mining?

Cloud mining is the extraction of various cryptocurrencies using specific cloud technologies and services.

The essence of cloud mining is that for the production of virtual coins, you do not use your equipment, but are turning to large cloud services where you can take the computing power for rent.

Data centers of such organizations are located in those countries where electricity is inexpensive, and the climate is rather cool and not humid at the same time.

The power you take is called a hash – a cryptographic code that connects the blocks. This is not equipment or any part of it, but speed.

The more you take these hashes, the more and faster you can earn with this hashing. It is best to buy Gigahashes (GH) or Terrahashes (TH), but it all depends on your desires and possibilities.

This type of work is very beneficial and convenient, not only for the companies themselves but also for ordinary users.

This is because most often in the role of such organizations are the manufacturers of equipment for the mining of bitcoins. Thus, they provide their income, as they use their products.

Ordinary users do not have to spend huge sums to buy equipment, install it and configure it. This is the responsibility of the cloud farm.

Also, you do not have to find a place to install the equipment and pay impressive electric bills. You just take the facilities of the company for hire.

Types of cloud mining

Currently, three main forms of remote mining are available:

  1. Hosting
    Rental of equipment installed at the supplier.
  2. Virtual hosting
    Rent a virtual private server and install on it your software for mining.
  3. Capacity rental
    Rent of computing power without access to a dedicated physical or virtual server (the most popular method of cloud mining).

How cloud mining works

We have figured out what cloud mining is, now we need to understand how this works. The operation algorithm of such companies is as follows:

  1. The company that creates the service buys equipment, installs and configures it.
  2. Then they create a website where the costs of services, information about the company, as well as the terms and conditions under which the contract is signed and the principle of operation of cloud mining are specified.
  3. The user enters the site, passes registration, chooses the option how to mine bitcoins in the cloud, and buys a certain amount of Giga- or Terrahashes.
  4. As a result of this transaction, the company earns profit from the concluded contract, and the user receives a part of the company’s profit from mining in accordance with his investments.

Miners who connect to the “cloud” accelerate the extraction of cryptocurrency and earn on it. Services that rent out equipment earn on commissions and rent charges.

The essence of transactions has not changed. The operation is confirmed when it becomes part of the block.

Search for one block takes 10 minutes, thanks to the huge capacity and a whole group of people that are combined in pools.

Transactions are confirmed in the chronological order of operations in the network. Exchange or cancellation of the transaction is not possible.

Capacities process the resulting block and connect it to the longest chain. The system rejects any distorted block, so fraud is excluded. Moreover, mining takes place in a common “piggy bank.”

Each user independently chooses what kind of cryptocurrency, the level of power he can purchase based on his financial capabilities.

The lowest complexity of mining networks for electronic currencies is Dash, Litecoin, Etherium, Zcash, Monero. These currencies are now easier to earn on various services.

How to start mining in the “cloud”?

Before starting mining in the “cloud,” you need to study reviews about companies and choose the one that seems most reliable.

It is necessary to understand such concepts as hashing speed, what algorithms exist. After that, you need to decide what capacity you need and for how long you want to sign a contract.

Companies mainly offer a contract for a year, and some offer from 6 months to 2 years or indefinite.

Then you need to pay an advance and sometimes an additional commission. The rest will be taken care of by the company.

Bitcoin cloud mining

Bitcoin is the most popular cryptocurrency, which is the engine of the entire technology. It is thanks to Bitcoin there are more than 150 cryptocurrencies in the world today, and the “Digital Gold” itself is growing every day.

Cloud mining of bitcoins is one of the ways of investments, which is quite successful at the moment.

Due to the growth of Bitcoin, the invested in its “cloud” mining funds exceeded investments in Apple, Tesla, and shares of commodity companies.

But, at the moment, not all cloud services offer to mine BTC at their expense, giving preference to new cryptocurrencies. However, there are exceptions among such services. For example, Genesis-mining.com.

Ethereum cloud mining

Many people consider Ether to be the best alternative to Bitcoin. This altcoin appeared later than his “older brother,” but already managed to gain an epithet – “the future of the cryptocurrency.”

Transactions with the help of Ether are faster, and this despite the fact that the blockchain of this cryptocurrency checks the accounts and balances of used wallets, as well as the “state.” Which opens more opportunities for Ethereum than for Bitcoin.

And this is only one advantage of the brainchild of Vitalik Buterin. Ethereum cloud mining – the second most popular cryptocurrency, can be paid in HashFlare or OXBtc.

Can I make money on cloud mining?

In principle, the earnings process looks quite simple. However, is it possible to make money on this, and if you start investing in virtual capacity, then where to start?

Let’s take a look at the real mining business. Why is it created? To earn. Your profits are unlikely to be taken care of by anyone.

In fact, you pay for the use of equipment, electricity, renting a room, where the cloud farm is located and in reality other costs. It makes sense, but tariffs are increasing, and it is becoming more and more difficult to mine cryptocurrencies. Today they are not as profitable as before.

No, this does not mean that it is impossible to make money on it. It can be done, but the level of costs should be quite large.

With minimal investments, you will get profit only in a few years, and that is too much since changes in the field of cryptocurrencies take place quite quickly.

There are always risks, but let’s talk about something more pleasant. You can engage in any kind of mining and make a profit if:

  1. You buy power only from reliable companies.
  2. You have capacities on your accounts that can be used to mine cryptocurrency.

Obvious fraud in this area is impossible, but there is a high risk to stumble onto an unreliable company, a pyramid or an HYIP (High Yield Investment Program).

It is very simple to recognize them – a new offer may differ in overstated revenues and aggressive advertising.

Although, on the other hand, if you found an offer that no one has heard about, and the return of investments is more than a year and a half, then it is also better to get past it.

What investments will be required?

As we have already said, it will not be possible to earn without good investments. To start earning cryptocurrency using cloud mining, you will need to buy power.

Often, new capacities are quite expensive. If you want to save money, you can buy them from other miners, who for some reason decided to get rid of them. The cost of such hashes will cost 5-10% less than the original price.

Now let’s talk about the quantity. It is best for you to have 20-30 Terrahashes (TH). This will allow you to earn good money.

However, it is worth noting that the cost of 1 TH depends on where exactly you buy it, and it starts from $150.

However, it is worth noting that there are cloud-based services that do not require investments. Here you will be given a small capacity only for the fact that you have been registered.

A lot of money cannot be earned, but for beginners – a great option. On such services you can earn about $5 a month, or even less. But a novice in this field will be able to understand how this works.

Advantages of cloud mining

Cloud mining has certain advantages compared to its classic version. Such undoubted pluses include:

  • Almost all reliable companies have legal status.
  • A person does not need to monitor and configure the equipment. Also, this method of bitcoin mining does not affect the amount of electricity that you consume, and there is no load on the wiring. In addition, you do not have to hear a buzz from a working farm, and the air will not overheat.
  • The revenues from cloud mining are quite high. On many services, in one year you will be able not only to return but also multiply those funds that were invested in it. And if we take into account the fact that the rate is constantly increasing, then it becomes quite profitable. In addition, some projects allow you to mine bitcoins without investments, albeit in small quantities.
  • Availability. You do not need to invest a lot of money to start mining. On some resources, you can do it without investments.
  • The capacity of the data center will be much greater, so the user will get more from cloud mining than if he were to build his farm.
  • Each person can easily calculate what amount he will receive. It’s easy to do because the indicators of complexity and the amount of compensation are known.
  • You can mine different cryptocurrencies using the same service. Despite the fact that this will slightly reduce your income, you will be able to avoid or at least minimize your risks.
  • You can choose any resource with the most advantageous contract and engage in mining there.
  • Such services often have referral programs. That is, for the fact that you bring to this resource a few more people, you will receive a certain amount or an additional percentage of the amount that this person will earn.

Disadvantages of cloud mining

Despite the fact that there is a rather large number of advantages, cloud mining has certain disadvantages:

  • There is always the possibility that the rate of bitcoin will decrease. This has already happened in 2011 and 2013, and now, according to analysts, there are also prerequisites for this. Cloud mining is a great way to earn money passively, but only if you are going to do it seriously and for a long time.
  • All offers received from sites for mining differ from each other. This is due to the fact that every breakdown in the data center forces to make new changes to the offer so that the amount earned by the company to cover repairs and other types of losses that they suffered.
  • You can always run into scams or pyramid. It is enough for such fraudsters to create a colorful website, launch advertising and promise a fortune. Despite the fact that the services of cloud mining have their advantages, the benefit will depend on whether you have an understanding of what a scam site looks like. The main thing is to remember that if you are promised an income of 250%, you should not invest your money there. To date, no site can produce such income.
  • Websites of companies that have an online wallet can be hacked, and the company itself will go bankrupt. This means that if you do not withdraw all the earnings straight away, then they can go away to someone else. For this reason, it is better not to work with services that cannot transfer money straight away, or they will go for too long.
  • Each signed contract has a validity period that will end exactly after the specified time. After that, you will need to sign a contract again, and the conditions, as already mentioned, change quite often. It is rather difficult to find the offer of termless lease of capacity.
  • You will not be able to change the cryptocurrency that you mine quickly, and all the money that you invest in this business will pay off in 1-2 years.

How to choose cloud mining company?

Today, there is a huge number of cloud mining services. Each company offers its terms of contracts, and the prices for capacities of such companies also differ.

Many of us, of course, will choose the site where the interface is simplest, the cost of the hash is low, the conditions are pleasant, and the promised profitability is the highest. And this will be the biggest mistake.

As in any business, there are also scammers, so to avoid getting caught on their bait, you should evaluate the site you found by the following criteria:

  1. Publicity and feedback. Before you invest your money in this company, you should see real photos or videos, which shows their equipment, find blogs that wrote about this site, read reviews of other people. At the same time, if all reviews are 100% positive, you should not trust those. There will always be people who did not like at least something. But a large number of enthusiastic responses – most likely, suggests that they are bought.
  2. Time. This is a fairly important criterion. Cloud mining is a relatively young business, and not all companies can survive in it. Therefore, the older the service, the better.
  3. Capacities and users. It is best to invest in large companies that have a large number of capacities. If the power reserve is sufficient, the conditions are good, and the company has been around for a long time, then there will be a lot of users.
  4. Multicurrency. Quite an important point. Since the rates change, it is best if the site will allow you to mine cryptocurrencies of different kinds. Another thing is that bitcoin is considered the most reliable, and everyone is trying to mine it. But it’s up to you.

Best cloud mining services

There is a huge amount of cloud mining services, and the question arises – which one is more reliable and more profitable. For those who are looking for reliable cloud mining, here’s the list:

HashFlare

Hashflare is one of the best pools available today. Its level of profitability can reach 200% of how much you paid for the contract. This is the highest of the existing indicators.

At the same time, payments in bitcoins are made automatically, which is also a positive moment. HashFlare is one of the subdivisions of HashCoins, which is engaged in the production of equipment for mining.

Previously, it was possible to conclude indefinite contracts with them, but now the maximum term is 12 months. This service supports such algorithms as Scrypt, SHA-256, Ethath, EQUIHASH, X11.

Thanks to this you will be able to mine Bitcoins, DASH, Ethereum, Zcash, and others.

Most users are attracted by a pleasant price, support, detailed statistics, as well as stable payments. Everyone could try to start mining – it is quite simple – just buy a contract for a couple of dollars. Payment can be made by Bitcoin, Payeer, Visa or MasterCard.

In addition, the reputation of this company is absolutely impeccable, that is, the level of reliability is the maximum, and this is the main thing when choosing a service for cloud mining.

Genesis Mining

Another very popular site that works since 2013. Almost all capacities of this company are located in Iceland, while the head office is in Hong Kong.

The project is quite ambitious, as can be seen in the video from the data centers below. In addition, all reviews about this service are very positive.

You will be able to mine Bitcoin, Ethereum, as well as other popular cryptocurrencies. The contract can be concluded for a maximum of 2 years, which is quite convenient, given that the conditions are constantly changing.

Also, payments are made daily, and there are no hidden commissions. Thanks to this you can be sure that even if the site is hacked, you will not lose a large sum since everything will be already transferred to your wallet.

Hashing24

Hashing24 – one of the best sites for cloud mining, which can be found in almost any list and rating. It works quite stable and allows you to get a good profit.

The site has a special online calculator, with which you can calculate your earnings. At the same time, you can withdraw from 0.002 Bitcoins or more.

The company appeared in 2012. It has located its computing power in Georgia and Iceland, and offices in Ukraine, Thailand, and Scotland. Hashing24 collaborates with BitFury, a member of the Blockchin Alliance.

However, this service has several disadvantages. The first is that it only works with the SHA-256 algorithm, which means that you will not be able to mine anything other than Bitcoin. However, if you do not need anything else, then there are no problems.

The second drawback is that the site uses the capacities of third-party data centers, although this does not affect quality or reliability.

Top 5 Most Profitable Cryptocurrencies

When choosing which currency to mine, you should pay attention to the probability of obtaining a profit – the most promising coins are those that are developing now and can bring profit in the future when their value will begin to grow rapidly. Let’s take a look at the 5 most profitable cryptocurrencies at the moment:

Bitcoin (BTC)

This is the first digital currency created in 2009. Bitcoin is mined using SHA256 algorithms. Its rate is not stable, and the complexity of mining has significantly increased, but it is still profitable to mine this cryptocurrency. Renting of capacities, which mine Bitcoin, is the most expensive because this is the most expensive cryptocurrency.

Ethereum or Ether

This cryptocurrency is the closest follower of Bitcoin, created as its alternative in 2014. The Ether mining algorithm is simpler than Bitcoin’s mining algorithm, so the cost of contracts for cloud mining is lower.

The drawback of the currency is the volatility of the exchange rate, as well as its exposure to inflation. But due to the growing demand for Ethereum, the price for it also grows and, accordingly, the income of miners increases.

Monero

This cryptocurrency was created in 2014 as a fork of Bytecoin when it became known that 80% of the maximum emission of this currency was achieved.

A distinctive feature of Monero is the increased anonymity of transactions. In 2017, this currency was included in the top 10 cryptocurrencies with the highest market capitalization.

Its popularity among the miners is growing, and the forecasts of experts regarding the profitability of mining are also optimistic.

Dash

The currency takes the 6th place in the rating of cryptocurrencies by capitalization, which amounted to 2.5 billion dollars in September 2017.

The low entry threshold and good growth prospects of Dash cryptocurrency make it attractive for miners who want to start cloud mining of cryptocurrencies without investing large sums.

Litecoin

The emission of this currency began in 2011, and its creators sought to bring its price in the market of cryptocurrencies to the market value of silver.

The complexity of mining Litecoin increases slowly, and by market capitalization, the currency takes the 5th place. According to the Association Litecoin, the reward for the block production will halve since August 2019, but for now, the profitability of cloud mining of this cryptocurrency continues to grow.

To protect yourself against losses in the event of a depreciation of the cryptocurrency rate, invest in different contracts for cloud mining.

How to determine profitability

Those who think about investing in cloud mining primarily want to know about the profitability of investments and the payback period.

The size of profit is primarily affected by the complexity of mining, and it increases by 7% every month. That is, over time, the returns on investments also falls.

But if we consider that the services of cloud mining show profitability of 80-200% per year, even with a small drop in the level of income, investments will be profitable.

Depending on the selected contract, the payback period also changes, so when renting capacities for Bitcoin mining on different services it is 7-11 months, and under contracts for Ethereum – 5-7 months, and for Dash – the investment pays off on average in six months.

Conclusion

To date, cloud mining is the only way to earn on cryptocurrency, without spending a lot of money on equipment and associated costs. By using cloud mining, you minimize your risks.

However, despite such positive forecasts, you should carefully approach the choice of the services in which you will invest your money. Also, do not trust sites that promise you a huge profit, because they are often scammers.