Cloud Mining

In this article, we will consider what cloud mining is and what equipment is needed in order to engage in cloud mining, as well as how one can earn from it.

What is cloud mining?

Cloud mining is a process by which cryptocurrency is mined. It is needed in order to create new structural units that help cryptocurrency platforms function. In order to carry out mining, special equipment is needed.

People who are engaged in cloud mining are called miners. For their work, they receive a reward in the form of coins; these can be exchanged for fiat currency.

Cloud mining represents a series of computations with the selection of parameters, which find a hash with certain properties.

Each of the cryptocurrencies uses its own calculation model, but any of the models will be rather lengthy in execution. Due to such computations, the same units are not spent repeatedly, and the received reward motivates miners to use the computing power of their equipment, thereby ensuring the functioning of the network.

Equipment necessary for cloud mining

At the very beginning, mining was done by connecting several computers or servers that were linked to each other. As a result of this experience, it was discovered that this method is quite expensive and unprofitable.

After some time, miners found another, more effective method of mining: they began to assemble special structures called mining farms.

A mining farm is a system consisting of video cards that are connected and have a connection to a personal computer. In one such farm, there are approximately 5-7 video cards, but sometimes their number reaches 10-12. The video cards can be either the same or different. The most important thing is that it should be powerful and have efficient energy consumption, as well as good profitability.

For example, it is more logical to purchase a video card for 100 dollars and receive about 1 dollar per day than to buy a video card for 1,000 dollars that will provide 2 dollars for the same period of time.

In addition to this, attention should be paid to what kind of load your outlets can withstand. This concerns the case when you are setting up a farm at home.

Mining can be done not only with computers and farms. It can also be done with an ordinary smartphone. However, it should be noted that it will not be possible to earn much this way.

History of cloud mining development

Satoshi Nakamoto is considered the first miner in the world. He is also known as the creator of Bitcoin.

At that time, an ordinary central processor was used for mining cryptocurrency. This was done in order for Bitcoin to be fully decentralized. It was believed that personal computer processors could provide this decentralization due to their widespread use. However, this factor made the process vulnerable because, in this way, viruses could make many computers work for a selected wallet, which compromises security.

ArtForz and Laszlo Hanyecz also began mining cryptocurrency using the power of graphics processors.

In 2010, the first mining farm appeared, which was built on the power of the graphics processor. In general, the process of mining with video cards made a revolution in this field. Consequently, mining with processors became less popular.

Manufacturers of graphics cards observed the growing popularity of their products, and the market became flooded with various types of their products. In 2010, a CUDA-based miner for NVIDIA cards appeared, and a bit later, ATI Radeon on OpenCL.

Video cards were bought more and more actively, which allowed cryptocurrency mining to reach a new industrial level.

The year 2012 saw the appearance of the first ASIC projects. An ASIC is a chip that can perform certain functions in a limited and strictly defined manner. Of course, it is not as flexible as a CPU or GPU, but it functions better and much faster, which makes it more profitable to use.

На этой фотографии можно увидеть ребят, которые создали те самые ASIC-проекты, и тем самым внесли большой вклад в криптовалютную индустрию.

At present, bitcoin mining is performed using ASICs, because mining with video cards is no longer as efficient.

Practical side of mining

Recently, mining Bitcoin has become less efficient than mining Ethereum. Therefore, a large number of miners have recently started mining Ethereum in particular.

In one interview, there was a conversation with a miner who mined cryptocurrency from 2017 to 2021. He used farms that connected 5-7 Sapphire Radeon RX 570 video cards and Sapphire Nitro+ Radeon RX 580 video cards.

At the very beginning, the profit from one farm was about 0.02 ETH per day. It is worth noting that the farm operated around the clock. In 2021, the price of Ethereum reached $4,800, after which a decline could be observed.

Due to the growth of the total network performance, the reward for mining became lower; it dropped to 0.008 ETH.

This process is called halving. This process is characterized by mining a required number of blocks, after which the mining reward is halved. All of this affects the speed of issuance of new cryptocurrency and its circulation. Halving is planned to be carried out by the year 2140.

The reward for mining is constantly being reduced. This can be explained by the fact that in recent years, the total computational power has increased, which leads to high resource consumption, equivalent to significant electricity usage.

It can be concluded that in the past, mining was much simpler and more efficient than it is now.

Video cards for cloud mining

The most popular video cards are Nvidia and AMD. There are only two manufacturers of discrete video cards. A discrete video card is a separate chip on the motherboard of a laptop, which is responsible for rendering graphics.

In addition to them, the manufacturer Intel wants to start producing products for this segment. They have introduced the new discrete video card Iris Xe, but at the moment it cannot be singled out among competitors, because this video card does not possess high power, which does not allow for effective mining.

To choose a suitable video card, you need to consider the following characteristics:

Memory. It is desirable that the video card has a large amount of memory. Of course, it is important to take into account the fact that different cryptocurrencies require a certain amount of memory for mining.
Cooling. The video card should have a good cooling system, as this will also affect the productivity of the process. It is preferable to have two or three coolers; this way, the lifespan of the video card will be extended. It is necessary to keep in mind that mining is conducted around the clock.
Energy consumption. Some AMD video cards consume more energy than their counterparts. However, the alternatives are not considered profitable, even taking their performance into account. Here, it is important to weigh all the pros and cons.
Bus width. This affects data processing. The higher the bit width, the more productive the process will be. We recommend paying attention to models with 255 bits or more.

Cloud mining features

For the development of the cryptocurrency industry, miners are necessary to improve the mining process. From the very beginning, miners purchased powerful computers and equipment, with the help of which cryptocurrency tasks were solved and blocks were generated in the blockchain system. Miners not only spent a lot on equipment but were also forced to pay large bills due to high electricity consumption.

Cloud mining is the rental of third-party computing power. This method has become an excellent alternative to the previous one, since mining cryptocurrency with it is much simpler and more profitable.

To mine cryptocurrency in this way, you need to pay for the rental, after which you will gain access to someone else's video cards and processors. This way, you can engage in mining without buying equipment. This option is considered very attractive for miners, but it should be approached with caution: cloud mining has its own specific features, which we will also examine in more detail.

Operation of cloud mining farms

In order to better understand what cloud mining is, it is necessary to learn about mining farms. They play a major role in the mining system.

Cloud mining farms are powerful pieces of equipment interconnected with each other, and this equipment can be rented remotely. Thanks to a data center, you can utilize this equipment for cloud mining.

What a company needs to do to have its own data center:

It needs to purchase a range of equipment: power supplies, processors, cooling systems, video cards, and so on;
Create a cryptocurrency farm. To do this, a number of devices that will be used for mining must be connected together;
Generate digital currency;
List the services they want to offer on their website;
Begin creating contracts for users who participate in such mining. The company will take a percentage of the mined amount;
Start entering into contracts with miners.

After launching a mining farm, the company can begin offering its services to miners. In summary, cloud mining is an agreement between a user and a company in which the user is given access to the company's computing power, and new blocks are generated in the blockchain as a result.

We would like to draw your attention to the fact that the higher the rental tariff, the greater the reward the miner will receive. Part of the commission taken from miners goes toward maintaining the cloud farm and staff salaries.

Types of cloud mining

There are several types of cloud mining, depending on the equipment being rented. Let us list these types:

Host Mining. With this type of mining, you need to purchase your own equipment, which must be installed in an external data center. You will only pay for energy consumption and rent.
Virtual Hosting. You rent a virtual server, and you will need to configure the software yourself.
Hash Power Leasing. You rent computing power used by someone else’s farm without having physical access to the equipment.

The last option is the most popular, as it does not require any specific knowledge or experience. All you need to do is sign a contract and start collecting your rewards.

Advantages and disadvantages of cloud mining

Преимущества и недостатки облачного майнинга

This method of mining has both its advantages and disadvantages. Let us consider them in more detail.

Advantages of cloud mining:

Does not require expensive equipment, which can be difficult to install;
No expenses related to equipment maintenance, as these are handled by the owners of the computing power;
No large electricity bills, and no noise from equipment running around the clock;
The cloud mining farm operates 24/7, so mining can be carried out without interruption;
Does not require large investments, since renting is much cheaper than buying the necessary equipment;
It is possible to accurately calculate the approximate profit;
It is not necessary to mine on only one platform; you can do it on several at once;
You can mine different types of cryptocurrency;
There is an opportunity to conclude various types of contracts: both short-term and long-term;
Rewards can be earned through a referral program.

For cloud mining to meet your expectations, you need to take into account the disadvantages of this method.

Disadvantages of cloud mining:

A large number of fraudulent schemes. It is important to check reviews from users who have already used the services of a particular cloud provider;
Some servers do not provide reports on the operation of their mining farms;
Fraud on the part of the company. Sometimes they promise higher rewards than what is actually earned in the end;
There is a risk of hacker attacks, since such services are among their favorite targets. As a result, users can lose their funds;
The cryptocurrency industry is quite unstable, so if the value of the asset you need drops, you will not earn the expected rewards;
In some cases, it is not possible to mine several cryptocurrencies at the same time. Sometimes you need to wait until one contract ends in order to sign another and start mining a different digital currency;
You can withdraw your earned capital only when there is a certain amount in your account, which is not always convenient;
You cannot manage the rented equipment, since it is not your property;
Not all cryptocurrencies can be mined. Mostly, Bitcoin, Ethereum, and Litecoin are mined.

Remember, if you sign a long-term cloud contract, unfavorable risks will increase. This is because the asset price may change, and it may seem to you that you did not receive the income you expected.

Reasons for the popularity of cloud mining:

Cloud mining is quite easy to use; it does not require specific knowledge, the purchase of equipment, or experience, which attracts users;
Increased efficiency thanks to the power of mining farms;

This service is appealing because of its accessibility. There are many online platforms offering various services at different prices and on different terms.

Best coins for cloud mining

The cryptocurrency that is mined using cloud mining does not differ from regular digital currency.

To make the right choice of cryptocurrency for mining, it is important to consider not only its price but also the expenses associated with the mining process itself. We recommend referring to websites that provide information on the rewards for mining particular assets and using this as a starting point.

We would also like to point out that mining is a long-term endeavor, because earning income in this way requires patience.

Cloud Mining

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