Is Crypto Cloud Mining Safe?

December 27, 2021

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By Aman Jain. Originally published at ValueWalk.

Cloud Mining has become, perhaps, one of the most popular ways to mine cryptocurrencies today. The reason for the acceptance is that it allows users to mine cryptocurrencies without the necessary – and often expensive and energy-consuming – equipment.

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How? Through the renting of computing power from companies that have it and operating in the cloud.

However, there is more involved than just benefits in crypto cloud mining, as several scams have somewhat affected the perception of this solution touted as coming directly from heaven.

How Does Cloud Mining Work?

Before seizing the benefits from cloud mining, the starting point is to register on a platform offering the services, where users can purchase contracts or shares within the said platform.

These contracts allow the user to employ the mining services and make a profit, and once the minimum withdrawal amount is reached – defined by each platform – users can withdraw the profits to their wallet.

Similarly, on the other end, companies offering cloud mining services make money out of selling contracts and renting the hashing power. According to CoinDesk, users have to “pick a successful mining pool, rent some hardware from it and wait until the mining pool generates money.”

“You also have to pick a cryptocurrency. Bitcoin, ethereum, and dogecoin house the largest mining pools, according to MiningPoolStats.com,” which include Antpool, Poolin, f2pool, and Slush Pool when it comes down to bitcoin mining.

What’s In It For Users?

The main advantage for users mining crypto in the cloud is that they do not have to buy mining equipment since it is enough to have a computer – which also does not heat up and suffers damage due to the enormous energy-consuming work.

Cloud mining represents some significant electricity cost savings. Many cloud mining companies have data centers in Iceland or Georgia, where electricity rates are relatively minimal.

When securing the cloud mining services of any company, users can also start with low fees – e.g. the cost of just one gigahash. Also, it is possible to participate in the best bitcoin cloud mining without maintaining the hardware on your own.

Solving The Energy Issue?

Users can save on energy costs through cloud mining. Since mining teams carry out complex computing operations to validate or reject the information blocks from other nodes, these operations translate into high electricity consumption.

While The New York Times asserts that the activity requires nine years’ worth of household electricity – around $12,000 in terms of a typical home electricity bill, places like Kuwait, Venezuela, and Myanmar are the cheapest for bitcoin mining.

So, people or companies that offer mining services in the cloud have the equipment properly installed. Those who hire said service immediately dedicate themselves to mining cryptocurrencies: This allows users to get up and running quickly with very little investment and overcome these costs.

However, this industry is not to remain at a standstill when it comes down to scouring for solutions.

For example, GMT is a native token backed by computing power; it allows holders to mine bitcoin every day.

The token holders do not have to buy mining equipment contrary to traditional mining —by having GMT tokens, holders have no time limits in mining. It is backed by an actual unit of computing power through the SHA-256 protocol, which means that every time a user buys one GMT they are also acquiring 0,001TH/s that can be used for bitcoin mining —by having GMT tokens, holders have no time limits.

The project developers add equipment and computing power every week, increasing token supply. Then, 20%-90% of those new tokens are burned while the released capacity is distributed among other tokens – it increases the supply capacity of a GMT, thus, growing miners’ reward.

Scam Awareness

At present, many companies offer cloud mining services. While some of these miners have dedicated themselves to consolidating an image of transparency in their business model, that is not always the case. Some companies were created simply to scam those who have jumped on the crypto bandwagon.

Therefore, it is a matter of gathering as much information as possible about the reputation of the companies: Many people have indeed been victims of fraud when renting cloud mining services.

People interested in hiring cloud mining services should get enough advice and search blacklists for people and companies with a botched reputation and reliability – or who have made mistakes that cast shadows on business.

Some red flags to keep in mind are those cloud mining firms using robots on Telegram or WhatsApp. Users should not take this seriously as hardly anyone mines large amounts of crypto using a cell phone, much less using these or other messaging apps.

Industry miners must be aware of mining companies that ask for additional investments to be made, so users get better returns. Further, companies with an aggressive referral scheme should be red-flagged as referrals are very common in companies to give incentives to users.

Is Cloud Crypto Mining Profitable?

Yes, but users have to be very careful since there are Ponzi schemes in many companies dedicated to this —actually and sadly, in almost all of them, which means that they are not trustworthy.

These companies do not actually mine cryptocurrencies but instead use their investors’ money for themselves. Once they get new users, they also take their money and pay the old ones, keeping part of it for themselves. And so always.

Legitimate companies can help achieve profitability, albeit under certain conditions. According to CoinDesk, cloud mining can be profitable, although “There are upfront costs – you’ll have to pay to rent these miners, and mining pools can also take a cut of your profits – but it can be worthwhile.”

“Cutting out the initial expense for a mining rig makes it profitable in some ways. However, it’s always a case-to-case basis when it comes to investing.”