Since its creation in 2009, Bitcoin has become the most recognisable name in global currency. This coin, created by an anonymous person who goes by the pseudonym Satoshi Nakamoto, cuts banks entirely out of the picture and allows buyers to make purchases without giving their real names, only their wallet address’. As a result, there is almost zero transaction fees, and buyers can purchase from anyone in any country without having to worry about an exchange rate or taxes.
As more and more merchants accept Bitcoin in exchange for goods and services, you’re probably wondering how you can go about purchasing or earning bitcoins. You can purchase bitcoins in marketplaces, more commonly referred to as bitcoin exchanges. There you can buy or sell your bitcoins using different exchange rates.
The more popular method of obtaining Bitcoin is by “mining” them. The buyer uses their own computer to solve complex mathematical equations to create Bitcoin. The more equations solved, the more bitcoins you will earn. There are two ways you can approach this: individually or in groups via the cloud. [Check out our “Art of Cloud Mining” page]
Originally, it was common to mine individually, however with the release of expensive ASIC hardware, the numerous cost & power benefits of cloud mining for Bitcoin now far outweigh any reason to mine by yourself. To give you an idea, a 330mh (mega hash) miner which was once profitable individually will now take years to mine a full Bitcoin on it’s own.
Thinking about getting into cloud mining? We don’t blame you. Read on to learn how to get started in cloud mining.
In layman’s terms, using a cloud mining system means you have a shared processing power to run from remote data centres. Each person in your group or pool contributes their processing power and is rewarded with a ‘share’ for each problem solved. It’s a little bit similar to a needle in a haystack; you will get the result quicker if multiple parties contribute as opposed to seeking by yourself.
The biggest benefit of joining a pool is that you are usually given easier and less complex algorithms to solve. With the shared computer power, your pool can begin solving even bigger problems, which will earn your group far more Bitcoin. The consistency of bitcoins coming in will give you a far better return on your investment.
Mining in the cloud also means that you don’t need to use your own computer turn your house into a data centre. You won’t have to worry about cooling with air-conditioning and fans. Thus, you won’t encounter any electricity costs.
Mining often uses special hardware and equipment, and they’re not cheap. Mining in the cloud means that you don’t have to buy all of the equipment that you would normally need to if you were going at it alone. If you decide to stop mining or it is no longer profitable, you also don’t have to sell off your expensive equipment. You also won’t have to worry about any failures in the hardware that might crop up.
Not all investors, however, want to mine with other people. Some people prefer to mine themselves, and while it’s more of a risk, there are some potential benefits.
Some miners are genuinely interested in system building. They like working with computers and algorithms and would rather go in it alone. Cloud mining means you have to work together. You can’t control everything, and you have to remain flexible with your cloud mining provider.
The profits could potentially be lower if you decide to cloud mine in a group. Your earnings are going to be split between the number of people on your team. Theoretically, your shared processing power will earn you more so you would still walk away with a decent profit.
Now that you know the pros and cons of cloud mining, let’s look at some of the ways to cloud mine.
Hosted Cloud Mining
Rather purchasing equipment and hosting it at your house, you can pay a monthly rate for a Bitcoin ASIC mining system. Now you won’t have to use your own home computer – you’ll have a machine dedicated to bitcoin mining. One example of this is BitcoinCloudMining.com who sell hosted cloud mining packages in a variety of different speeds. See available packages here.
Virtual Private Server (VPS) Mining
You can use a virtual private server (VPS) from a company like Amazon Web Services (AWS) or Rackspace, however, these services are very expensive compared to the return on investment as you are required to pay more in order to purchase more compute power. Without the specific advantages of ASIC hardware, you may not turn a profit on Bitcoin using this method; you may in fact, turn a loss. You should also check the terms and conditions with each VPS provider as using their equipment to mine Bitcoin may be a violation of their Terms of Service (ToS).
Leased Hashing Power
This is the least popular option – companies such as cex.io sell excess gigahash by the unit, but you can only buy it with Bitcoin so this defeats the purposes for many users. You also generally have to pay around $0.25 per gigahash per month on-going for power and maintenance, which can really add-up when you want to beef up to a serious amount of mining capacity!
There’s a whole world of cloud mining for you explore, and with a little practice and some hardware updates, you and your team members could be maximising your bitcoin profits.