Interested in mining cryptocurrency but worried you aren’t tech-savvy or skillful enough to do it? Then cloud mining can be a great option for you. Cloud mining enables you to engage in mining crypto and generate a passive income regardless of your technical or financial background.
What Is Cloud Mining?
Cloud mining is the mining of cryptocurrencies without directly managing the hardware or software. It employs a remote shared data center with collective processing power.
Here, the mining rigs, heavy-duty computer systems that allow cryptocurrency network programmers to verify transactions over their chosen network, are supervised by a mining company instead of an individual. The users just have to sign-up on the cloud mining platform and buy mining contracts or shares to initiate the cloud mining.
How Does Cloud Mining Work?
Traditional ways of mining cryptocurrencies controlled by individuals usually involve huge investment of financial capital and computing power. With cloud mining, however, third-party providers can rent out the computing power to the miners, thereby eliminating the need for huge upfront investments into resources. Cloud mining also eliminates the need for miners to maintain or update their equipment.
In cloud mining, the third-party service providers buy or build a mining rig. The users or miners rent out the hashing power. Hashing power is the power that the computer or hardware uses to run and solve different hashing algorithms. These algorithms generate new cryptocurrencies and allow transactions between them and this process is called mining. The mined cryptocurrency then is sent to the miners’ wallet. Most of the service providers also offer mining-as-a-service that enables the miners to outsource the management of their rented mining equipment.
For the mining process, the transactions are verified and added to a blockchain, thereby creating a new block. Miners are then rewarded with cryptocurrency by adding verified blocks to the chain.
Forms of Cloud Mining
There are two primary forms of cloud mining.
- Renting Virtual Hash Power
- Renting Physical Mining Farm
Renting Virtual Hash Power
Renting Virtual Hash Power involves miners paying third-party service providers and renting out cloud computing power. The hash power refers to a measure of computational power used while mining. Simply put, it indicates how many calculations can be performed per second. Hence the miners do not need the physical hardware or the need to maintain them.
Renting Physical Mining Farm
Renting out a physical mining farm enables one to acquire physical mining equipment from cloud miners. Depending on the need, one can purchase physical equipment from multiple cloud miners. This form of mining requires a ventilated environment to keep the physical hardware cool and maintenance of the same.