What is Cloud Mining? With the rise of the Cryptocurrency industry, new income-earning opportunities have arisen which are unique to it. One of these is crypto mining. It propels participants to stakeholder status on various blockchains as they invest their time, computing power, and money in securing and validating their chosen crypto network.
There are various ways to participate in the crypto mining sector. You can opt for a hands-on approach or choose to complete the technical initiatives required for successful crypto mining. In this guide, we will focus on the latter. Here, all you need to know is about choosing a more hands-off approach to crypto mining, or popularly called cloud mining. But first, you should have at least a basic understanding of how crypto mining works in general.
What is Crypto Mining?
Crypto mining involves a sequence of processes designed to secure a given blockchain network in a decentralized manner. Through their activities, miners validate transactions and collectively generate a supply of new cryptocurrencies.
A crypto miner is expected to:
- run a node on the blockchain network;
- Complete specific tasks to find a new block;
- load new transactions on the block;
- Make sure that there is no double spending on cryptocurrencies.
After the completion of these processes, the blockchain network is designed to automatically reward successful miners with new coins. This is the primary distribution mechanism used by the proof-of-work (PoW) blockchain (blockchain that supports mining). Note that the specific task assigned to miners depends on the type of PoW system in use.
For example, using the SHA-256 (secure hash algorithm 256-bit) mechanism requires miners to compete to solve extremely difficult mathematical equations before the Bitcoin network and other blockchains get new blocks. is required. The process demands a high level of computing power, which means that miners who want to be successful must be able to invest a certain amount of insufficient hardware to ensure that they have the potential to run profitable mining operations. have a chance.
Also, note that the blockchain network is designed to continuously adjust the mining blocks to ensure that new blocks are found at a certain interval.
Therefore, whenever there is an increase in the number of mining nodes on a given network, or an increase in the computing power of its existing mining nodes, the mining difficulty of the network increases accordingly. If the reverse is the case, the network self-adjusts to reduce the difficulty of the SHA-256 equation. In most cases, aspiring miners need to invest in specialized and powerful mining rigs.
Keeping this in mind, it is the following to become a successful crypto-miner:
Invest in high-performing mining rigs. A single piece of mining hardware can cost as much as $8,000 and is not enough for a miner hoping to make a profit of one rig.
Possessing the necessary coding and technical expertise to run a full node on a blockchain network.
The electricity bill for cooling and running mining rigs 24/7 can potentially eat up miners’ profits. Therefore, miners should opt for a cheaper power source or choose cold weather locations to reduce the amount of power required by cool mining hardware.
In short, for an independent crypto miner to stand a chance for success, there is a need for sufficient commitment and capital as well as technical skills. Since not all crypto miners can meet these requirements, nor scale them further, other less hands-on mining options offer a viable alternative. This is where cloud mining enters the picture.
Cloud Mining: What is it?
Now that you have understood the basic concept of crypto mining, it should be easy to make sense of cloud mining. As its name implies, cloud mining is the process of using cloud computing power to mine cryptocurrencies. In this case, you pay third parties to do all the work for you. In short, you do not need to buy or maintain special mining rigs, nor do you need to run a blockchain node.
What is Cloud Mining?
With cloud mining, participants usually rent mining rigs or hash power. The latter is a measure of the power of a mining rig and is usually calculated in units of Gh/s and Th/s s. cloud mining provider mining rig with load key