What is Cloud-mining and how it works?


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What is Cloud Mining? An Explanative Guide

There are two ways for mining cryptocurrencies, among which one is the conventional method of mining, and the second one is popularly known as cloud mining. So, why should one opt for cloud mining over the conventional mining method? This depends on the technical proficiency of an individual. Mining experts believe that an individual who is not technically proficient should opt for cloud mining. The people who do not want to operate hardware or software can also choose cloud mining instead of the conventional way of mining. 

What is Cloud Mining?

Crypto mining is a process that utilizes a remotely-located data center having shared processing power. A user can sign up for mining plans of the legitimate mining companies to access such data centers. 

It is very important to choose a credible cloud mining provider as there are lots and lots of scams out there. Check our cloud mining review section before opting for any of the cloud mining providers. You may lose your money as well as the mined crypto coins if you sign up for one of the scammy cloud mining sites that have popped in huge numbers since crypto trading became popular. Hence, the first step for buying a profitable cloud mining contract starts with selecting a credible cloud mining service provider. 

Once you have decided on a credible cloud mining company, you will be required to decide on the type of contact and the duration you want to sign up for. Depending on the type of crypto you want to mine, you will be shown plans with multiple prices, hash power, and duration. The most common duration of mining contracts is 1 year. However, 6-month contracts and 2-year contracts are not rare either. 

Types of Cloud Mining

There are three types of cloud mining and these are:

1. Hosted Mining

A user can host a mining rig or machine that is currently being hosted by the cloud mining provider. This type of plan is known as Hosted Mining.

2. Virtual Hosted Mining

In this type of cloud mining, a user establishes a virtual private server. Thereafter, they set up a mining software on their own for mining. This type of mining is known as Virtual Hosted Mining.

3. Leased Hashing Power

One of the most widely purchased cloud mining plans is known as Leased Hashing Power. In this type of cloud mining, a user is not required to have a physical or a dedicated virtual computer.

How Does Cloud Mining Works?

The basic premise of cloud mining is that it involves the mining of cryptocurrencies via the cloud. Cloud computing has proved to be one of the fastest-growing trends in the crypto industry. It involves computing services such as databases, software, servers, and storage that are accessed over the internet, technically known as the cloud. Cloud mining companies charge users on a usage basis. 

Cloud mining is a very straightforward process in itself and it only requires a user to create an account with the cloud mining service provider. A user can visit the website of the cloud mining service provider to create an account. They can select some of the key features that the cloud mining company offers in its mining plans and these include things like hashing power, contract duration, and the cryptocurrency they want to mine. 

What is Cloud-mining and how it works?

Advantages of Cloud Mining

  1. A user opting for cloud mining will find that their electricity costs are comparatively lesser when compared to the electricity costs associated with the conventional mining method. There are no worries about higher electricity bills with cloud mining. 
  2. Constrained by limited space? Hate the constant noise produced by the physical mining equipment? Worry not, as cloud mining has come to your rescue. A user also doesn’t need to be concerned about the ventilation issues that are common in the conventional way of mining. 
  3. Thinking about the value of your used mining equipment? Concerned about where to sell it when the mining process becomes less profitable? With cloud mining, you don’t have to worry about such things as you don’t own any physical mining equipment. 

Disadvantages of Cloud Mining

  1. A cloud mining user doesn’t have control over the mining process and the process itself is less flexible when compared to the conventional way of mining. 
  2. There is a high chance of fraud in the cloud mining segment. The number of scams in this field is rising rapidly and thousands of investors have been defrauded by these scammers who run fake cloud mining sites to lure gullible investors. 
  3. The fees associated with the cloud mining companies are very likely to reduce your profits. These fees are charged on the top of the initial payments that you make upfront to sign up for the mining plan offered by a cloud mining company. Also, don’t forget to read the entire terms and conditions of the cloud mining service provider. 
  4. There’s also a risk that the mining may be halted if the price of cryptocurrency that you have opted for mining goes below a certain figure.


Cloud mining can be the best option for you depending upon your circumstances. However, you must be vigilant in choosing a cloud mining company as there are lots and lots of scams out there. They are waiting to pound on the unsuspecting crypto investors or newbies just getting to know about the existence of cloud mining services. 

We suggest that you check out our cloud mining review section to decide on the most credible options out there. Reach out to us through our social media pages (Facebook and Twitter) or our email ID that is given on our website, if you want us to review any of the cloud mining service providers that are not already covered by us. 

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