Mining … it’s what makes the cryptocurrency ecosystem go ’round.
Many newcomers to the space learn about this astonishing, novel phenomenon and determine they’d like to get involved somehow. But scores are too daunted by the expensive hardware and demanding technical knowledge needed to go any further.
That’s where cloud mining comes in. Just like other cloud services today (e.g. think Dropbox), when you buy a contract with a cloud mining company, they’ll do the mining for you at their mining farm. You supply your wallet address, sit back, and collect over the duration of your contract.
This dynamic is naturally attractive to those of us who aren’t so tech savvy or would like to avoid having loud and hot mining hardware running in the house.
Cloud mining’s been a bit of a sketchy industry for the past few years, insofar as scams have abounded and many have argued that it’s much less profitable than either 1) investing directly into cryptocurrencies like bitcoin and ether, and 2) investing in your own mining rig.
Even still, some have said they’ve come out in the green with their cloud mining contracts. So let’s give you a few insights into the field, and you can make up your own mind when all’s said and done.
Something to consider …
Cloud mining contracts are set up over certain periods of time. For instance, popular cloud mining firm Genesis Mining slots their contracts out over two years.
That means once you pay for your two-year contract, you won’t be able to back out at any point. That creates a bit of a quagmire if you’re mining coins whose mining difficulty is rapidly increasing, like Ethereum’s difficulty is doing now.
Indeed, users who locked in Ethereum mining contracts this year watched as their daily payouts rapidly dwindled starting in Q2 2017.
The point is that, depending on which coins you sign up for, you have to contend with the possibility that coin’s payouts will get smaller and smaller over the course of your contract. Now, that dynamic might be evened out if coin prices continue to skyrocket, but it’s definitely something to consider now.
Is it worth it?
It depends on your subjective point of view.
Now, would you make more profits by directly investing into cryptocurrencies rather than in cloud mining? Absolutely, that’s all but guaranteed since you’d be investing directly into an asset rather than paying a middleman to render you a service.
If profits over all else is what matters to you, then cloud mining won’t be for you. You’d be better off looking into running your own rig.
But if you’re a novice that loves the idea of mining but doesn’t want to go through the trouble of dishing out time and money and space on a large rig, cloud mining could be right for you.
Cloud mining companies to consider
Two of the biggest firms in cloud mining are Genesis Mining and Hashflare. Give their sites a look if you’re interested, but remember: think very carefully before you pay for any contracts.
Research the companies, look at other user reviews — just make sure you’re comfortable before you lock yourself in to a multi-year contract.