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What is Cloud Mining?

It is an alternative to the traditional cryptocurrency mining process. It has gained popularity as a suitable method for creating digital currency for less tech-savvy people.

Cloud mining is a good choice for crypto miners who don’t want to operate mining hardware and related software or take care of the maintenance of the mining infrastructure. While it provides a clear guarantee of cost-effectiveness and many other advantages for miners, the process is vulnerable to various scams.

How effective is it?


The effect it brings is that it is better than the traditional hardware mining method. When mining cryptocurrencies, miners have to invest in mining operations. The only investment on behalf of miners in cloud mining is money. The company will then take over the operations of a mining farm, including mining rigs.

The company allows miners to rent or buy part of their mining power. Those mining providers provide top-notch hardware along with developing mining farms in locations with lower temperatures and cheaper electricity. Therefore, the overall profit is evident in the lower operating costs of mining. At the same time, miners don’t have to worry about anything during the mining process.

How does Cloud Mining work?

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It generates cryptocurrency by leveraging computing power from third-party mining service providers. Users can understand it through the following forms:

  • Miners can participate in mining through a service provider’s mining farm. A mining farm is a place dedicated to cryptocurrency mining. Miners can join the mining farm after purchasing a portion of “hash power” from the mining service provider.
  • Mining providers provide access to mining profits and reward miners according to the amount of “hash power” that they have purchased.
  • All mining takes place, ensuring freedom for miners from energy and computer equipment maintenance costs.
  • Miners can only choose a trusted mining service provider and choose the contract type and duration. Miners must provide upfront payments in digital or fiat currency. The provider can then set up miners with all the resources they need for mining.
  • Miners can choose contracts with “hash power” of 500 to 1000 Giga per second, and the duration is one year. On the other hand, some providers also offer short-term cloud mining contracts with a term of 6 months or 24 months.

Mining model

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At present, there are two most common forms of mining:

Renting “Hash Power”

In this model, miners work by renting out a portion of the “hash power” generated by a mining farm. They have to sign up for a specific cloud mining company plan that will entitle them to a specific share of the mining farm’s profits. As a miner, you don’t have to pay any maintenance or setup fees while renting it from the farm. In addition, each miner’s share of the “hash power” determines the allocation of mining rewards.

Server for Mining

Server mining means that miners will buy or rent mining rigs on the farms of mining service providers. Miners have to pay for the maintenance and setup of the mining rigs, although this reduces the costs associated with electricity. It ensures better mining profitability for miners who have better control over their mining rigs. Miners can leverage their control over mining rigs to redirect “hash power” to mining pools. Most importantly, miners can control the rewards completely in the server mining model.


  • Budget-friendly

Because miners don’t have to buy mining equipment. In addition, miners do not have to worry about upgrading or maintaining mining equipment. Miners don’t need to worry about electricity bills or the heat and noise from mining rigs.

  • No trouble

Miners don’t have to worry about maintaining their equipment because the company that provides the mining service does the same. Mostly, mining service companies use cooling towers and proper location of mining farms in cooler climates to avoid maintenance hassles.

  • Assist

You should also be aware of the benefits of getting tech support from a mining service provider. An individual does not need any specific technical knowledge about cryptocurrencies, mining rigs, or protocols to use mining. All you need to do is open an account with a mining service provider and pay the necessary fees to purchase the desired “hash power”. You can get all the bonuses in your account and check them using your tablet or smartphone.

Risks in Mining


You do not have any ownership rights to the mining equipment. As a result, you don’t have any control over the mining rigs you use for cloud mining. On the other hand, profitability depends on many factors.

Cryptocurrency mining contracts often suggest that the mining provider will provide a specific “hash power” for a fixed time. However, the contract does not guarantee a profit for the miners. Furthermore, the additional fees paid to the mining service provider during the term of the contract can reduce the profit for the miners. Most importantly, you can encounter many cases of scams in cryptocurrency mining.

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