“Cloud mining is a concept in which a large institution installs a large mining farm in dedicated buildings with latest and expensive miners and the individual investor leases a part of that mining operation using cloud technology and gets paid in return as per the investment made. There are several advantages and disadvantages of cloud mining and they will be discussed in detail.”
What is Crypto Cloud Mining?
Cryptocurrency mining has been around the day of the inception of Bitcoin. The requirement of extensive computational power and electricity for mining has made mining non-profitable for the individual miners. Today only the institutional miners or mining pools with extremely huge mining shares are able to run mining profitably. As, the mining became difficult and non-profitable for the individual miners, there came the concept of cloud mining in which a large institution installs a large mining farm in dedicated buildings with latest and expensive miners and the individual investor leases a part of that mining operation and gets paid in return as per the investment made. This made the individual investors also a part of the mining operations which would have been otherwise impossible.
Why Cloud Mining? What are the Benefits?
There are a number of benefits of cloud mining and they are discussed here:
Help Save Costs
The mining hardware is becoming expensive day by day and it is becoming extremely expensive for an individual to buy and install the latest miners to be profitable in the mining business. Cloud mining will help in reducing the cost of mining operations as the company hosting the cloud mining operations will be responsible for the mining operations as well as maintenance cost.
Economies of Scale
The concept of economies of scale works well in cloud computing as a huge mining farm will host multiple miners and the cooling equipment as well as the infrastructure cost will be lowered in terms of profits generated due to such large mining operations. This will in turn benefit the individual investors as more profit will be earned.
The cloud mining operations are highly reliable as it is in the contract of the lease that the mining operations will be up and running 24/7 and any failure of the equipment will not affect the individual investors and they will receive their share of profit no matter what.
What are the Disadvantages of Cloud Mining?
There are a number of disadvantages of cloud mining as well and they include:
No matter how much you invest in buying the hash power, it does not make you the owner of the hardware equipment at the cloud mining rig. Thus, the contract and terms will be as specified by the cloud mining company and not by the investor.
Chance of Scam
With many people jumping into cloud mining, people are often scammed by fake mining operations and websites that take the money of investors and return nothing in return.
Companies with Bad Business Models
There are companies that have a bad business model and all they care about is their profit and this can make them adopt practices that will benefit them more than the investors and thus providing low return on investment.
Disclaimer: The article is meant for the educational purpose only and in no way it should be considered as financial advice. Own research on the topic is advisable.
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