What is cloud mining or cloud mining?

Learn everything you need to know about cloud mining, one of the options that allows investors to have the ability to easily mine cryptos.

La cloud mining or cloud mining It has become, perhaps, one of the most popular ways of mining cryptocurrencies now. This new modality allows users to mine cryptocurrencies even if they do not have the resources to pay for the necessary mining equipment. But rather, that they can rent computing power to companies that do own such equipment. So the mining process is done from a remotely operated data center.

That is, it is not necessary that we have equipment in our homes ASIC Nothing like that. And therefore, neither the high electrical consumption that these imply. On the contrary, in order to mine in the cloud, the equipment owned by large companies is used. And they also have the necessary conditioning for its proper functioning and operation.

The user then rents or contracts a part of that computing power, and receives proportional and commensurate profits with said investment.

How does Cloud Mining work?

The most common way of operating and obtaining benefits from this type of mining is for interested users to register on a platform that offers these services. And make the purchase of contracts or shares within said platform.

These contracts allow the user to use the mining services and make profits from them. And once the minimum withdrawal amount is reached (established by each platform), the user can withdraw the earnings at their wallet.

On the other hand, from the point of view of the companies that offer these services, sell contracts and rent the hashing power helps them minimize risks.

If we talk about a reliable company, it will probably have a great installation with its hardware equipment, air conditioning, stable electrical services, as well as an excellent internet connection. It will also have a specialized technical team for the installation and maintenance of said equipment. And although this may seem very profitable, the truth is that selling these contracts allows them to obtain money immediately to cover all these expenses. Or, acquire new equipment to increase its computing power. Rather than simply waiting for mining to return profits.

Types of Cloud Mining or Cloud Mining

These types of services can be offered from a physical or virtual mining server. Today there are 3 known methods for cloud mining. These are:

Virtual Private Server (VPS)

This mining method requires the rental of a server and the installation of mining software. In other words, the rental of a computer that we access remotely from the Internet.

Rent of computing power

It consists of buying or acquiring a contract with a company to rent part of its hashing power. Generally, users can choose how much computing power to hire or rent. And their earnings will be proportional according to the amount of power they acquire.

Its biggest advantage is that you don't need to have mining hardware to start mining. So it is the most common and used cloud mining method. But beware, due to its popularity there are many companies dedicated to selling this computing power that are a fraud.

Hosted mining

In this modality, the companies pay the expenses of the miners. That is, they take charge of the consumption and maintenance of the mining hardware owned by their clients.

It is not a very common method, but it is gaining followers because many people today cannot afford these expenses. But they have the equipment. But since the companies are responsible for these expenses, they can even obtain preferential rates. Making mining more profitable than for a private person.

Is this type of mining profitable?

Although Cloud Mining or cloud mining platforms can be very profitable, you must evaluate many aspects before taking risks and risking your money.

The main advantage that these platforms offer you is that it does not require an excessive investment to acquire mining hardware. And neither is the expense involved in keeping it operational. But although mining on it can be profitable and help us generate extra income, we must be careful with those platforms that offer “too good to be true” services. Not all of the ones we find on the web are reliable or operate legitimately.

Is cloud mining a scam?

Although cloud mining allows us to mine bitcoins and other cryptocurrencies using equipment provided by third parties, this involves great risk.

Since this mining method became popular, there have been many people who have lost both their investments and their profits. Although, cloud mining was initially presented as an opportunity for the most disadvantaged. Those who could no longer acquire the mining equipment required by the network as the difficulty increased, there were also many who took this opportunity to create false platforms and defraud their users. In fact, today the most normal thing is to find fraudulent platforms and we do not recommend anyone to invest in these platforms if you do not know what is done extremely well.

How to identify cloud mining or cloud mining scams?

Today, the vast majority of websites dedicated to cloud mining do not actually have any mining equipment. Much less do they have complete and equipped facilities for this purpose.

In reality, they just want to capitalize on the popularity of Bitcoin and cryptocurrencies, catching unsuspecting and easy-to-scam users or investors. Many operate through pyramid schemes, which are unsustainable over time. Others simply impose quite high withdrawal fees, so that users cannot access their money in a short time. Which gives them an opportunity to receive and raise a large amount of money and then disappear.

In pyramid schemes, older users can obtain certain levels of earnings. This is because it is the new participants who contribute or deposit money to the platform and cover the earnings of the first ones. In this modality it is very common to see the plans by referrals. That is, the incentive you will receive for attracting more and more new people who invest in the platform. But over time, these schemes become unsustainable and the platforms simply disappear. Taking all the money with him.

Another alarm signal when detecting possible fraud should be the lack of information about the company. If you search Google and opinion forums and you can't find enough or concrete information about a company, better step aside and forget about investing in it. It may not be a scam (yet), but this is an indication that the company is very recent and nobody knows it. And in the worst case, it is false.

Tips to protect yourself from cloud mining scams

Currently, more than 90% of these platforms have become scam or scams. Therefore, you should make sure you know and research well before investing and risking your money. Here are some good tips to take into account when deciding:

1. Forget about those platforms that offer you great profits with little investment and without efforts.
2. Research the company or platform where you want to rent or contract this service. Make sure it is real and operate legally. Also make sure that their physical facilities do exist and that they have no problem revealing their location and who owns them.
3. Do not believe the exaggerated testimonials found on the websites of these platforms. Or in blogs that speak only of their thousand wonders. It is almost always about testimonials and paid opinions. Rather, he investigates thoroughly in neutral and reliable discussion groups.
4. If you find a reliable mining platform, research and analyze if the returnability it offers you is profitable and according to your investment. Do the math!
5. You should also evaluate the percentages you must pay for maintenance and operation of the platform. Beyond what you pay for the rental agreement. These costs involve electricity, cooling, connection, software, and others. And they generally reduce your earnings.
6. If a company or platform does not reveal much or no information about who they are, how they operate or about the mining processes, be careful! It is surely a scam.
7. When purchasing a contract, be sure to review and understand all aspects of it. Many have lost their investments upon learning that their contract is no longer profitable. Because your daily investment payments do not cover maintenance costs.