Mining Bitcoin is a great way to earn some extra money and become a part of the innovative cryptocurrency industry. However, the process itself has become too complex and too costly for most investors. Alternatives have come up to allow small and mid-size investors to get in on the game.
Cloud mining is one of the alternatives that has gained a lot of traction lately, when the equipment has become too difficult to maintain and too expensive to buy, at least for most investors.
How Does It Work?
Cloud mining is basically renting the services of a mining farm for a fee that’s paid before any coins are actually mined. There are numerous providers of this service, and you can use aggregate review sites such as Truely to find the one that suits your needs the most.
The provider sets up the farm, provides the equipment, and maintains it while the investor is only financing the process and does so upfront. That way the whole mining happens in a cloud away from those who benefit from it. There are many benefits of investing in this fashion when compared to getting your own gear.
It’s Less Expensive
The initial investment is needed to set up a Bitcoin mining facility. This is because it requires a lot of complex and difficult to find equipment and because the equipment itself requires a lot of maintenance and day-to-day work.
It’s also essential that the equipment is placed far away from the populated area so that it’s safe and that it doesn’t disturb anyone. As you keep mining more and using more sophisticated equipment – this becomes more of a burden. There are no such concerns with cloud mining.
Cloud Mining is Passive Income
Unlike other side gigs, cloud mining is truly a passive income source. Once you set up the account and pay for the service, there’s nothing more for you to do as the investors. Most investors keep track of how much Bitcoin was mined on their cloud and withdraw it after a while.
Once the Bitcoin is withdrawn to your e-wallet, it can be used as a currency or you can sell it or even borrow it with interest. However, all of these options happen when the coins are already mined and your investment has paid off.
Legal and Tax Issues
One of the reasons cryptocurrency is so popular is because it’s a novelty that the tax authorities haven’t caught up with. Even though this is an exciting proposition, it’s also a cause of concern, since an investor doesn’t really know how they’ll get taxed.
When it comes to cloud mining, these legal issues are handled by the mining provider and investors don’t need to be bothered with them. It’s a huge advantage for a small-time investor that would feel the pinch of hiring tax experts and lawyers. All of those costs are included in the initial investment.
Less Environmental Impact
There’s a significant environmental impact that’s produced by mining cryptocurrency coins. That’s because of the excess power being used and the excess heat produced in the process. Dealing with those isn’t easy or even possible for a single investor.
Providers that offer cloud mining services on the other hand have more resources on their side. They can also mitigate the effects they have on the environment by investing in other projects that reduce those impacts. Small investors that care about these issues will feel better by letting a complex and wealthy business put their weight behind it.
Running a cloud mining account is simple enough and it doesn’t require any knowledge about the industry on the part of the investor. It starts by setting up the account in the same way you would for any other online service. The account is connected with a payment method that doesn’t have to be in digital currency and you’re all set up.
Once you’ve completed these steps all that remains is to open the dashboard every once in a while and track how well you’ve done. It will showcase how many coins you’ve mined and how much you’ve earned overall.
This isn’t An Option for Everyone
Even though there are many benefits to investing in this manner, cloud mining isn’t an option for everyone. For some investors, half the fun is in setting up the facilities and using the gear. When using cloud mining, this isn’t an option and your involvement is limited at best.
The same goes for choosing the software used in the process. For the most part, you can investigate the software used by the company you’re interested in and decide on using their services based on the reviews you’ve found – but not much more than that.
The Cloud Mining Provider can Terminate Your Contract
It’s important to be aware of the fact that cloud mining providers can terminate your contract before it’s finished. This usually happens when the currency has lost its value and it doesn’t pay off to run and maintain the equipment. It’s not the desired outcome, but it doesn’t mean you’ll be left empty-handed.
The contracts state the obligations the cloud mining company has towards its clients. For the most part, there are payouts that you’re entitled to, but these once will be much smaller than you would have earned if the contract has run its course.
Is Cloud Mining Worth it?
There’s never a clear and simple answer to this question, about any investment, but if you’re a small and mid-size investor – cloud mining is worth it. The expenses that come with renting and maintaining the cloud mining equipment are too much for most investors and outsourcing these to the cloud makes a big difference.
The process is also clean and simple and it doesn’t require too much involvement on the behalf of the investor. It’s a good way to start and find your way into the industry if you can’t set up your own mining facility early on.