Cloud Mining with risks, minimize risks, pros & cons and more.
Bitcoin Cloud Mining
Bitcoin cloud mining is the process where you buy a bitcoin mining equipment from a company and then they run this bitcoin mining equipment for you. For this service, they take a maintenance fee. You need a bitcoin wallet to receive payouts.
We recommend Coinbase as bitcoin wallet.
Bitcoin mining is the process when computer power process transactions, secure the network and keep the system synchronized. The Bitcoin mining process is entirely decentralized, and anyone can participate. The bitcoin mining process provides a reward to its miners in the form of new bitcoins. The number of bitcoins is limited, but the miners will be required to secure the network and the transactions after the last bitcoin is issued.
Cloud Mining Risks
There are several risks you must be aware of before you invest in bitcoin cloud mining. Allcloudminers have listed risks we have identified and also experienced loss from.
- Mining Competition (KNCminer, Mining Sweden)
- Ponzi Schemes (Hashocean, Biteminer and many more)
- Bad business (Zeushash)
- Bitcoin Volatility (KNCminer, MiningSweden)
There is a big competition about the newly mined bitcoins, and therefore, the equipment can run out of profitability since all companies update all the time. If the miners run out od profitability the company shut your mining contract down. Ponzi scheme is an obvious risk and cloud mining is full of them. We have tried to separate them but it's impossible to do 100%. Running a cloud mining company is like running any other company. The operators need to be business people to succeed. There have been examples where the people are really good technicians and operating people but fail when it comes to business. The other risk is, of course, the Bitcoin price. If the bitcoin value dips too much, the equipment will run out of profitability, and the company will shut the mining equipment down. Large cloud mining operators like Genesis Mining and Hashflare could probably handle those risks. Read our Genesis Mining Review and Hashflare reviews for more information.
There are a few things to consider to minimize risks.
- Only invest in well-known cloud mining companies
- Invest small amounts over time instead of one big investment
- Choose a couple of operators instead of one
- Spread investment in different cloud mining contracts
This advice is common to minimize risk with any investment. Look at different review sites and compare presented cloud mining companies. Don´t invest in any company that isn't listed just because they have bought a Google ranking and guarantee a certain profit. Consider to start with a small investment and increase over time. The good cloud mining companies will still be there and offer contracts tomorrow as well. Consider investing in two or three different cloud mining operators, rather than just one. This is common so spread the risks if one operator fail. In addition, also consider investing in different types of cloud mining contracts.
Cloud mining Pros
- Time saving - You don't have to set up the mining park yourself.
- No explicit knowledge - You buy a contract which is as easy as buying anything online. You don't need to have any particular knowledge about the mining process.
- No extra space at home - You don't run the miners at home, so you don't waste space at home.
- No additional costs - You pay the contract and all the maintenance fees are included or deducted automatically from the profit. You don't have to worry about repair costs or higher electricity prices.
Cloud mining Cons
- The risk of fraud - There has been and still are a lot of cloud miner scams on the internet.
- Lower payouts - It´s a bit lower payout than running the miners yourself but, on the other hand, these companies run such huge farms they can cut the costs pretty much.
- No control - You don't have the control over your mining equipment. You pay someone else to have control over it. This can be bad if the company for some reasons runs into problems.
Cloud Mining Calculator
A cloud mining calculator is an important tool. With a cloud mining calculator, you can see the current status of the contracts before you buy. You need to remember that several factors have an impact on the payouts so they are not static. However, the calculator indicates the most profitable contracts for the moment.
Check our latest calculator in our BLOG.