How To Mine Bitcoins: Cloud Mining

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Due to the latest rise of Bitcoin price, I know you want to try this cryptocurrency to gain some cash.But upon searching starting to mine bitcoin is not cheap, So if you want to invest in bitcoin mining without the hassle of managing your own hardware, there is an alternative. You can use the cloud to earn your coins.



Put very simply, cloud mining means using (generally) shared processing power run from remote data centres. One only needs a home computer for communications, optional local bitcoin wallets and so on.

However, there are certain risks associated with cloud mining that investors need to understand prior to purchase.

Pros
Here’s why you might want to consider cloud mining:
  • A quiet, cooler home – no constantly humming fans
  • No added electricity costs
  • No equipment to sell when mining ceases to be profitable
  • No ventilation problems with hot equipment
  • Reduced chance of being let down by mining equipment suppliers.

Cons

Here’s why you might not want to consider cloud mining:
  • Risk of fraud
  • Opaque mining operations
  • Less fun (if you’re a geek who likes system building!)
  • Lower profits – the operators have to cover their costs after all
  • Contractual warnings that mining operations may cease depending on the price of bitcoin
  • Lack of control and flexibility.

Types of cloud mining

In general, there are three forms of remote mining available at the moment:

Hosted mining

Lease a mining machine that is hosted by the provider.

Virtual hosted mining

Create a (general purpose) virtual private server and install your own mining software.

Leased hashing power
Lease an amount of hashing power, without having a dedicated physical or virtual computer. (This is, by far, the most popular method of cloud mining.)


How to determine profitability

The web services offered are designed to work with your hardware parameters, not cloud-mining parameters.

Even so, you can still use these calculators by thinking clearly about the costs involved. Profitability calculators often ask for your electricity costs, and sometimes the initial investment in hardware. Effectively, you are being asked for your ongoing costs and your one-off investments.

Therefore, since the provider, not you, is paying the electricity bills, you can enter the monthly mining bill in place of the electricity cost.

The conversion process isn’t completely straightforward, though. In the case of hardware miners, you can work out the monthly running cost by multiplying your electricity charge (ie: Php per KWh) by the power consumption of the unit and by a conversion factor of 0.744 (the ratio of seconds per month to joules of energy per KWh).

But, for cloud mining calculations, you need to do the opposite, because the provider gives you an (effective) monthly running cost. Hence, you need to calculate an equivalent cost per kilowatt hour to feed into the mining calculator. This is done by dividing (not multiplying) the monthly running cost by the 0.744 conversion factor mentioned above.


Risk vs reward


When engaging in any type of cryptocurrency mining there are risks, but profitability is possible if you make the right choices. In this article, we’ve given you some pointers on how to decide which way to go.

In your test calculations, you will likely see that some cloud mining services will be profitable for a few months, but, as the difficulty level of bitcoin increases, you would probably start to make a loss in four to six months and beyond.

A possible remedy to this situation is to reinvest what you have made into maintaining a competitive hashing rate, but this is highly speculative.

As mentioned above, the risk of fraud and mismanagement is all too common in the cloud mining space. Investors should only invest in cloud mining if they are comfortable with these risks – as the saying goes, never invest more than you are willing to lose.

Investigate social media channels, speak with former customers and ask pointed questions of operators prior to investing. Ultimately, you should practice the same kind of due diligence that you would for any investment.

Disclaimer: This article should not be viewed as an endorsement of any of the services mentioned. Please do your own research before considering investing any funds via these services.


In the Philippines you can register at Coins.ph to create your bitcoin wallet and cash in to convert it to bitcoin and wait for the price of the bitcoin to rise and cashout your investment

Note: You just need to verify your account using your government issued IDs to increase your daily and monthly limit for cash-in and cash-out

You can register an account HERE

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