Bitcoin may be the ultimate crypto coin for most diehard cryptocurrency miners, but it’s just not as easy to mine as it used to be. Because of this, many traders and miners have turned to altcoins as the future of mining and generally making it big in crypto. In fact, altcoin cloud mining seems to be the wave of the future, and a surefire way to make at least a decent living mining around the clock. But what is cloud mining and is it really as profitable as many miners are now claiming?
Let’s find out.
How Cloud Mining Works in the Crypto World
Cloud mining involves using a special cloud service in order to mine, versus purchasing a ton of mining gear you may not even need in a few months if the coin you’re mining falls in price or crashes altogether.
Cloud mining offers a new way to earn coin. The cloud service companies are typically the manufacturers of product equipment (think processors). Without the high price of gear, this helps the miner to save a ton of money on the day to day expenses, maintenance, and rig costs.
A cloud mining company buys or produces mining equipment, selling the equipment’s capacity to miners, while they deal with the high energy costs and maintain the equipment. Essentially, for a small fee, many of the drawbacks of traditional mining fall on the shoulders of the cloud mining company, not the miner.
Most of these companies will charge a small percentage for their services, which includes the costs of equipment maintenance and energy fees. But most miners have found that this alternative is much more affordable than their own private setup, although some seasoned miners disagree.
Because these companies do most of the heavy lifting, they’re pretty popular, offering an affordable way for beginners to learn the ropes of mining without the high cost of computer gear and other related mining equipment.
The Wave of Altcoins
For cloud mining, all you’ll need is a fast processor, PC, and a digital wallet.
But before you dive right in and start mining, there are a few things you need to know about altcoin mining, so you’ll have the best chances of making more coin, while also learning about some important mistakes many newbie miners make in the beginning.
What Cloud Mining Has to Offer
So, what are the benefits of cloud mining versus traditional coin mining?
To start, you won’t have to deal with a loud setup, higher energy costs, and the constant sound of several fans and cooling systems running. This also means if mining is no longer profitable, you won’t be stuck with a lot of gear you don’t need. And let’s face it, a traditional mining setup, complete with a dedicated rig, can cost thousands of dollars, at least for the serious miner.
But cloud mining can also come with its own risks, such as the potential for fraud, lower profits, unreliable mining operations, depending on the current price of the altcoin, and, of course, the lack of control over the market. But this is something every miner has to deal with, regardless of the type of mining they’re dealing with.
Find the best crypto markets to trade at on our full Guide on the topic.
Are there Any Risks Involved in Cloud Mining?
As we briefly touched on, there are some risks that come with using a cloud mining service. But if you want to avoid high initial costs, it can be the best option for you.
Like with traditional mining, there will always be some level of risk involved. If you know what you’re doing it’s totally possible to make a decent profit, but for beginners, the first few months can be somewhat rocky.
To start, there’s always the possibility that the coin you’ve invested so much time mining can significantly drop in price in a matter of hours. Since the market is so volatile, this should be expected. Nonetheless, it can be devastating for the miner.
Since the rise of cloud mining, there are also a variety of scams popping up. These scams usually involve non-existent cloud mining facilities who will take your coin once they have access to your setup. Which is why we don’t recommend signing up with a new or relatively unknown mining company. Instead, do your homework and only sign with a reputable company that’s well-known in the crypto market.
Theft can also occur with companies that offer an online digital wallet. If the company isn’t tight on their security, it can leave you vulnerable to hack attacks in which your account is compromised and hackers access your wallet and steal your coin. And as you know, once your coin is gone, there’s no way to get it back.
Yet another issue with cloud mining involves changes to a specific coin’s mining complexity. Remember, back in the day, mining bitcoin was simple, fast, and easy. These days, earning with bitcoin mining is a very complex process. Once the altcoin you’re mining takes a page out of bitcoin’s mining book, you may find that your profits drop significantly. This often results in ditching a particular coin in search of a new coin to mine. However, these newer coins are never as profitable as the established coins, such as dogecoin or Litecoin.