Different Types of Cloud Mining Explained
Cloud mining is an increasingly popular method allowing anyone anywhere globally to profit from cryptocurrency mining. But what is the difference between cloud mining and traditional crypto mining, and which type of cloud mining is best for you?
Cloud Mining: the Community-Based Approach to Crypto Mining
When it comes to technical fundamentals, cloud mining is not that different from traditional crypto mining: hashing power (computing power provided by specialized hardware called “mining rigs’’) is being used to solve extremely complex math equations. In return for helping to keep the blockchain operational by verifying transactions on the network, miners are rewarded financially.
Cloud mining turns mining cryptocurrency into a community-driven endeavor by allowing people to share hashing power. In other words, thanks to the power of cloud computing you can purchase a fraction of hashing power from a cloud mining service provider, in exchange for a portion of the mining rewards.
Three Types of Cloud Mining Explained
Cloud mining is an umbrella term encapsulating different types of crypto mining. The three main types of cloud mining are hosted mining, virtual hosted mining, and hashpower leasing.
Hosted Mining
Hosted mining can be considered a precursor to more advanced forms of cloud mining. In hosted mining, the investor doesn’t lease hashing power but an entire mining rig.
By leasing a mining rig hosted by a third party, you can avoid having to set up and configure the hardware by yourself. All technical aspects of mining are relegated to experts.
The problem with hosted mining is the fact that it is still quite expensive. The investor has to cover the hosting provider's electricity bills and maintenance costs, which means hosted mining is a feasible option mostly for huge investors willing to pay for the hosting of 100+ or more mining rigs.
Another issue with hosted mining is that many crypto mining solutions advertised on the Internet are mere scams. Sending money to untrustworthy hosted mining providers is very risky — the returns can either be much smaller than promised, or you can even never see any returns at all.
Virtual Hosted Mining
In this variation of hosted mining, instead of purchasing physical mining rig devices hosted and maintained by third-party experts, you buy virtual server space that you can use to configure mining software personally.
The main benefit of this solution is a high level of flexibility. You can choose your preferred crypto mining software and pick what crypto is mined at what time all by yourself. You have the same degree of control enjoyed by actual crypto miners without having to dedicate a separate room in your house to accommodate mining rigs.
The main problem with virtual hosted mining is obvious: configuring the mining software all by yourself is extremely complicated and requires a very high level of IT knowledge. Simply put, if you don’t know how to code, this option is not a good choice for you.
Another problem with virtual hosted mining is that the probability of falling victim to a scam is as high as traditional hosted mining. In the worst-case scenario, you can pay a large sum of money for the hosting, spend days configuring the mining software, and then be left with nothing when the hosting provider decides to run away with your funds.
Leasing Hashing Power
Leasing hashing power is the most innovative method of cloud mining, created to solve the problems present in hosted mining and virtual hosted mining.
In this case, the investor doesn’t have to purchase either a physical or virtual mining machine. You can simply lease a portion of hashing power from the cloud mining provider and receive an adequate fraction of the mining rewards in return.
The main advantage of leasing hashing power is greatly increased security compared to other cloud mining methods. You don’t have to send any funds upfront to a shady company — you can purchase hashpower on a spot market in an easy and familiar process, very similar to buying crypto on an exchange like Coinbase.
Hashpower platforms like GHPEX provide you with flexible and secure cloud mining contracts. In other words, you can always be certain that you will get what you pay for, greatly minimizing the risks common in other forms of cloud mining.
Another benefit of leasing hashpower is its flexibility. Traditional hosted mining still requires you to make a huge initial investment. Leasing hashing power allows you to start earning with crypto mining even with minimal funds.
Outdated mining solutions only allowed people to choose how many mining rigs they want to invest in. Using hashpower platforms like GHPEX enables you to buy hashing power spot contracts and futures and customize the hashpower plan to fit your needs perfectly.
Conclusion
Both physical and virtual hosted mining started as methods of allowing people to participate in crypto mining profits without personally setting up and maintaining mining rigs.
Over the years, problems apparent with hosted mining caused many people to wonder if cloud mining is a scam or not. Leasing hashing was invented to create a more transparent cloud mining environment. Thanks to hashpower platforms like GHPEX, anyone can enjoy profiting from crypto mining in a safe and reliable way.
