What Is Cloud Mining and How Does It Work?

    Tanya Sharma
    Tanya Sharma
    Published on February 01, 2023 04:54 PM

    Cloud mining is a different approach to investing in cryptocurrencies and earning continuous passive income without having to buy mining equipment or gear. This page will explain how it works and the various mining models.

    Source: Unsplash

    Cloud mining is the process of mining cryptocurrency without the usage of mining equipment or infrastructure. Users can mine Bitcoin or altcoins without having to manage their own resources.

    Traditional crypto mining generates cryptocurrency through a computer process. To be rewarded with bitcoin, miners must solve challenging mathematical problems using mining technology. Cloud mining is similar in that miners rent or buy resources from a service provider rather than using their own resources.

    Mining became more sophisticated as more players entered the cryptocurrency field, necessitating greater processing power. As a result, many people who used to mine cryptocurrency on their own computers now find it unsustainable due to high electricity prices and hardware wear and tear. As a result, cloud mining has become an appealing choice.

    What Is Cloud Mining of Cryptocurrency?

    Cloud mining is a method of mining cryptocurrencies such as bitcoin using rented cloud computing power rather than installing and directly running the hardware and supporting software.

    Cloud mining companies allow anyone to register an account and remotely engage in the process of cryptocurrency mining for a small fee, making mining more accessible to people all over the world. Because this type of mining is done through the cloud, it eliminates difficulties such as equipment maintenance and direct energy expenditures. To know, how much energy does Bitcoin mining consume? click here

    Cloud miners join a mining pool in which customers purchase a set amount of "hash power." Each participant receives a pro-rata share of revenues based on the quantity of hashing power rented.

    Miners can typically select contracts ranging from 500 to 1,000 Giga hashes per second, with terms ranging from one to twelve months. 1 GH/s (Giga hashes per second) is comparable to 1 billion hashes per second. Some cloud mining companies, on the other hand, may provide 6-month or even 24-month contracts.

    The provider of cloud mining services should have invested in high-end mining infrastructure and, preferably, established its farm in a place with reduced power costs and a more comfortable temperature. Using this strategy, the farm's overhead expenses are maintained to a minimum.

    This is a great choice for individuals who do not want to become involved in the technical aspects of bitcoin mining. The majority of the time, members can monitor their hash rate and cloud-mining money using their phones. For the time being, certain cloud mining configurations may automatically convert generated hash power to the most profitable mineable currency.

    What Is the Process of Cloud Mining?

    Cloud mining models are classified into two types host mining and rental hash power.

    Host Mining

    The purchase or lease of rigs on mining farms is referred to as host mining. In this situation, you may be required to pay for the rig's upkeep and installation. This method offers the advantage of cutting costs by utilizing sufficient electricity.

    You also have more control over your hired rig(s) and can move hash power to mining pools to increase your chances of discovering a new block. Finally, you have complete control over the money you earn because you just need to pay the cloud mining provider for maintenance and setup fees.

    A bitcoin mining rig is a computer configuration that is used to mine bitcoins. The rig could be a dedicated miner, which means it was purchased, built, and used specifically for mining, or it could be a computer that serves other uses, like gaming, and is only used to mine part-time.

    Rental Hash Power

    Leasing hash power, as opposed to hosting mining, involves renting a piece of a mining farm's hash power. There will be no maintenance or setup fees here. You merely need to subscribe to a plan to receive a percentage of the farm's revenues. When the farm discovers a new block and earns cryptocurrency as a reward, the funds are distributed among users in proportion to their share of hash power.

    Benefits of Cloud Mining

    Cloud mining has various features that make it an appealing alternative for miners:

    • You do not need to be technologically savvy: To begin cloud mining, you do not need to be a tech expert or cryptocurrency specialist. All you need is an internet connection, a computer, and knowledge of the cryptocurrency you want to mine.

    • You can begin with a tiny investment and gradually reinvest your profits to improve your hashing power. To reduce risk, distribute your assets across several cryptocurrencies.

    • Security (through contracts): When you lease hashing power, you usually sign a contract. This means that the provider is legally required to offer you the agreed-upon level of hashing power. This provides miners with a sense of security because they know they will not be duped out of their money.

    Drawbacks of cloud mining

    Cloud mining has some disadvantages that you should be aware of before you begin:

    • Scam risk: There have been some cloud mining scams, so be sure you only invest in trusted providers.
    • Volatility in cryptocurrency pricing: Cryptocurrency values are variable, and cloud mining may not always be profitable. Before you begin, make sure you understand the hazards.

    • You don't have complete control over the operation when you lease resources from a cloud mining service. This can be dangerous if the provider is untrustworthy.

    Passive earnings from cloud mining

    Cloud mining can be an excellent way to generate passive income. This is due to the ease with which cryptocurrencies may be mined. Furthermore, you may usually reinvest your profits in the cloud mining service to enhance your hashing power or lease more resources.

    If you want to create a passive revenue stream from bitcoin mining, cloud mining could be a suitable alternative. Just make sure to do your homework and understand the costs of cloud mining before you begin.

    Those who want to mine Bitcoin for passive revenue, for example, might do so using the following platforms.


    StormGain is an excellent example of a cloud mining service that enables miners to make passive money by mining Bitcoin. Users only need to download their application, register, and begin mining. They have affordable commissions as well as inexpensive trading fees. Your earnings will be determined by your mining speed as well as the trading volumes reached:

    Source: StormGain


    Another reliable cloud mining provider is ECOS. It enables Bitcoin mining and provides a high level of flexibility in cloud mining contracts:

    Source: ECOS

    ECOS also offers a wallet and exchange, so interested miners only need to create an account and download the ECOS mobile app to get started. Mining contracts range in length from 24 to 50 months.

    Is it beneficial to invest in cloud mining?

    Yes, it is conceivable. You'll have to pay to rent these miners, and mining pools will take a cut of your profits. It has the potential to be successful, but other analysts believe that purchasing bitcoin is a superior alternative.

    The market value and power of the miners deployed by the pools will influence your profits. In other words, newer models will have superior specs and will most likely provide larger yields than previous models. For example, if you hold your bitcoin rather than sell it for regular currency such as the US dollar, you will be vulnerable to bitcoin price changes.

    Final Thoughts

    Many experts feel that cloud mining is the future of crypto mining because of its benefits and prospects. However, given the prevalence of fraud and scams, it remains a problem for the time being. This means that before investing in a company's technology, miners must perform extensive research.

    If you want to get professional expertise in the bitcoin and blockchain domains, Blockchain Council offers the best certification courses. The Blockchain Council believes in delivering practical training in addition to academic understanding. These courses are in line with industry needs and are inexpensive.