Cloud mining: where to start and how not to become a victim of fraud

As the cryptocurrency market develops, probably every person interested in this topic has thought about buying mining equipment. After all, you can start with just one video card, however, the profit from this method of extraction will be minimal.

A pretty good alternative to conventional mining in 2021 is the so-called cloud mining, in which you do not need to purchase any equipment. Instead, the user is offered to conclude a contract for the lease of a certain amount of capacity for the extraction of a particular cryptocurrency.

However, there are both advantages and significant disadvantages in cloud mining, which we will talk about in this article.

• What is cloud mining
• How to start cloud mining
• Pros and cons of cloud mining
• How to choose cloud mining
• The best cloud mining
  • Cloud Mining: HashFlare
  • IQMining
    • SHA-256
    • SHA-256 PRO
    • Ethereum
    • Equihash
  • Genesis Mining
• Cloud mining without attachments
• Ethereum Cloud Mining
• Bitcoin Cloud Mining
• Reviews about cloud mining
• Is it worth doing cloud mining

What is cloud mining

Cloud mining is this type of cryptocurrency mining frees the miner from the costs of equipment and electricity, as well as from other, less costly, but more time-consuming difficulties, according to the type of equipment setup.

Companies engaged in the provision of their equipment for rent usually have large data centers using ASIC miners and card farms for mining. They offer Bitcoin mining and the sale of all altcoins. It all depends on the service you have turned to.

How is it beneficial for the companies themselves, you ask? The answer is simple – they buy equipment directly from such giants as Bitmain, and often with big discounts. In addition, each company sets its own commission, which can be daily or monthly. Again, it all depends on the service. Thus, the cost of mining and the maintenance costs of mining equipment are reduced significantly, which allows both the tenant and the landlord to earn.

And since every year it becomes more and more difficult for an ordinary user to start mining cryptocurrency on a home computer using a GPU, cloud mining services are gaining more and more popularity.

Because of this, it is not so easy to rent equipment from trusted companies – new capacity positions are bought up almost immediately after they are added to the site.

Read more: Mining on the phone: is it really possible to mine cryptocurrency like this

How to start cloud mining

To start mining cryptocurrencies through cloud mining services, you will need to follow a few simple steps:

1. Decide on the service provider. You should not rush to make a deposit on the first site that offers favorable conditions - first you need to study as many similar services as possible, compare the proposed conditions, try to find out the reliability of the options under consideration by evaluating them according to a number of criteria (reputation, reviews, etc.).
2. Register on the website of the selected service, paying attention to the terms of service with which you agree.
3. Select the tariff plan on the basis of which a contract for the lease of computing power from the service will be concluded. At the same time, it is necessary to focus on the supported cryptocurrency algorithm, the hashrate value, the cost and duration of the contract, payment terms (advance for the entire term or monthly payments), the presence and amount of equipment maintenance fees, minimum limits on profit withdrawal, etc. If different tariffs are offered for the same cryptocurrency, it is worth evaluating each of them according to the cost/profit ratio in order to choose the most profitable one.
4. Fulfill the conditions for payment of the selected contract and start using the purchased service. As a rule, the cloud mining process is started without user intervention, since the service provider is responsible for setting up the equipment. If the tariff is not fixed, settings for changing the amount of computing power used will be available in the user's account, which will allow you to adjust the amount of costs.

Pros and cons of cloud mining

Pros

• No need to monitor the equipment and configure it;
• A good passive income on cryptocurrency, which allows you to get about 200% per annum, and with the growth of the exchange rate and more;
• The capacity of data center pools is significantly higher than a home mining farm, which means that the reward for the extracted block is greater;
• Profitability can be predicted even in a bear market. If when buying shares on the stock market or tokens on the cryptocurrency, you can go into negative territory, then when renting equipment you get a profit in any case – the amount of remuneration is fixed;
• You can mine different coins on the same service;
• Some companies offer referral programs, which allows you to have additional earnings;
• You can increase the power of "your" equipment in just a few clicks;
• The earnings of cryptocurrencies begin from the first day, however, first you will have to "work" in order to recoup the investment;
• You can rent cloud mining capacity for just a few dollars, although there may not be a profit from such small volumes. And you need to understand that income in most cases is proportional to the leased capacity.

Read more: Mining farm for cryptocurrencies. How to build a farm

Cons

• The first and probably the most important disadvantage is the rather high probability of running into scammers, especially if you do not study the market. The demand for cloud mining of cryptocurrencies has also generated a bunch of scammers selling non-existent capacities in the same non-existent data centers;
• Profit still depends on the exchange rate of cryptocurrencies. In case of a repeat of the fall, as in 2011, 2013 or 2018, there is a possibility that the profit from renting equipment will come to naught;
• There is a possibility of hacking the site where you rent equipment. Online wallets provided by these services, as a rule, have lower protection than exchanges or even "hot" wallets;
• Increasing the difficulty of mining a particular coin that you choose will entail a decrease in income or the forced purchase of additional capacity.

How to choose cloud mining

It is important to approach the choice of a cloud mining service provider with all seriousness, since there are more and more tempting offers in this area every day, some of which are deception.

In order to reduce the likelihood of losing their investments in cloud mining, the companies in question should be evaluated according to a number of such criteria:

• Information openness. Availability on the website of data on the placement of production facilities, video and photo reports on the work of offices and data centers in social networks. networks, disclosure of the identities of team members - all this increases the level of trust in the project. If nothing is known about the "internal kitchen" of the service, most likely, it simply does not exist;
• The promised level of profitability. If you are offered sky-high percentages of profit in the shortest possible time, this should suggest thoughts of deception. You should choose only those cloud mining services that offer plausible profitability;
• The time of existence. Cloud mining services that have been operating for several years are likely to continue to work further, fulfilling their obligations. But if the site has appeared recently, you should be wary of it;
• The range of cryptocurrencies available for mining. The more coins the service in question supports (especially the recently launched one), the higher the probability that scammers are behind it, since huge data centers and considerable initial financial investments are required to accommodate multidirectional equipment;
  Reviews. If they are entirely positive, they are present in abundance on the network, but they are written in the same manner or in the form of intimate dialogues between different users about how much they have earned with such and such a company, it is likely that they were bought by it to simulate a good reputation. It is worth looking for real comments on forums, in groups in social networks.networks, possibly on response sites, but definitely not under custom articles on thematic web resources;
• Terms of service. It is important to carefully study the contact concluded with the service, paying special attention to the rules for entering and withdrawing funds, equipment maintenance fees and the availability of all kinds of details indicated in the "small print". For example, if there are no conditions for mandatory additional payments to be able to withdraw profits or something like that.

Read more: Crypto wallet: the most important & practical tips

The best cloud mining

When studying the cryptocurrency cloud mining market, you should look at at least four indicators:

• The date of the company's foundation and the creation of the service.
• Total capacity.
• How many users the company has served.
• Photo and video materials directly from data centers. Also a big plus is the publicity of the team of employees.

Over the past few years, three companies have proven themselves to be the most reliable in the cryptocurrency cloud mining market:

• HashFlare is a company founded in 2015. It uses equipment from companies such as Bitmain, Bitfury, Inno3d and others. For all time, the service has been provided to 2.5 million users.
• IQMining is a company founded at the end of 2016. The largest data centers are located in China, Russia, Canada, Iceland, Georgia and Algeria. The possibility of mining cryptocurrencies on the most popular algorithms is provided.
• Genesis Mining is a company founded in 2013, but the first data center appeared in Iceland in 2014. More than 2 million customers from more than 100 countries have been served for all time. GM offers mining of 10+ cryptocurrencies on 6 main algorithms.

Of course, there are many more such companies than three, but the rest have not yet managed to prove themselves at the same level, so we will talk about each of them in more detail later.

Read more: What is an ICO?

Cloud Mining: HashFlare

This service provides equipment rental for a year for cloud mining of cryptocurrencies using five algorithms - SHA-256 (Bitcoin), Scrypt (Litecoin), Ethash (Ethereum), Equihash (Zcash), X11 (DASH). And, most interestingly, at the moment the equipment is free only for mining ETH. And this indicates the popularity of the service.

Prices for all contracts:

• Bitcoin – $0.60 for 10 GH/s. Service is $0.0035/ 10 GH/s / 24 hours;
• Litecoin – $1.80 for 1 MH/s. Service is $0.005/1 MH/s / 24 hours;
• Ethereum – $1.40 per 100 KH/s. There is no service charge;
• Zcash – $1.40 for 1 H/s. There is no service charge;
• DASH – $3.20 for 1 MH/s. There is no service charge.

HashFlare cloud mining offers capacity rental for a year with the possibility of increasing the hashrate at any time. Each new contract is concluded for a new term. Since several large mining pools are available to the user at once, the user has the right to choose it himself, or distribute his power among several.

Also quite interesting is the possibility of reinvestment. That is, the earned cryptocurrencies can be immediately spent on renting new capacities. For those who have decided to mine a particular coin in the long term, this is especially useful.

Note that the HashFlare service does not charge a commission for the withdrawal of cryptocurrencies. When withdrawing, only the standard Bitcoin network commission is charged. According to user reviews, investments pay off in six months, and then there is net income.

There are practically no disadvantages of the HashFlare service. Some customers complain that every withdrawal has to be requested. That is, the process is not automated. Others do not like that it is not so easy to rent facilities – most of them are already rented, and you have to wait until they are released.

But if you think about it, these are not the minuses. Especially if you consider the number of advantages.

Read more When Bitcoin appeared: telling the story of BTC

IQMining

This service is somewhat different from the same HashFlare. For example, the fact that there are three categories for each tariff – Bronze, Silver and Gold. That is, by choosing one of them, the client sees his approximate income and how much he will pay for the tariff and what the commission will be.

IQMining offers cloud mining on three algorithms - SHA-256, Ethash and Equihash. At the same time, there are four tariffs themselves - SHA-256, SHA-256 PRO, Ethereum and Equihash Out of stock.

SHA-256

The minimum rental capacity (Bronze package) is 500 GH/s at a price of $13 per year. It is also possible to conclude a contract for two years or five years, as well as the so-called "lifetime contract".

The cost of maintenance of the minimum package per day for every 10 GH/s is $0.001. Note that when you purchase a Silver contract (from 3000 GH/s) or Gold (from 30,000 GH/s), the cost of every 10 GH/s decreases.

SHA-256 PRO

The minimum power in the Bronze package is 1200 GH/s at a price of $30. The commission is also $0.001 for 10 GH/s per day.

If we talk about the maintenance and the contracts themselves for SHA-256, that is, when mining Bitcoin, the maximum rental capacity is 500,000 GH/s.

Ethereum

The contract is concluded for two years with the possibility of concluding for five years. A minimum capacity of 2 MH/s is available for rent in the Bronze package for $20. And the maximum capacity is 1000 MH/s. A feature of ETH mining through this cloud service is the absence of commission.

Read more: Everything you need to know about Ethereum (ETH)

Equihash

The minimum hashrate is 0.6 kSol at a contract price of $42 for 1 kSol. The commission is equal to $0.07 for 1 kSol per day.

The main difference between IQMining and other services is that cryptocurrency mining is carried out not for a specific coin, but for a variety of altcoins with subsequent resale and profit distribution. For example, on the SHA-256 PRO tariff, mining goes immediately for 100+ tokens.

This allowed us to achieve a yield of 128% per annum. However, this applies specifically to the PRO tariff. For example, in the usual SHA-256, the historical yield is at the level of 73%, as the company honestly writes on the website. However, mining Ethereum or Equihash is also profitable and gives a good income of more than 100% per annum.

Genesis Mining

Genesis Mining provides cloud mining equipment for Bitcoin, Ethereum, DASH, Litecoin, Monero and Zcash. Unfortunately, at the time of writing, equipment rental is available only for DASH mining.

For each of the cryptocurrencies, Genesis cloud mining offers 4 tariff plans that differ in power – gold, platinum, diamond and an individual package, in which the client chooses how much power he wants to rent.

Note that if he is talking about commissions, then Genesis Mining is probably the most unprofitable of the three companies we have presented. However, this does not prevent it from being reliable.

• Bitcoin - the minimum package for BTC mining costs $77 for 2.5 TH/s, and the maximum is $5,600 for 200 TH/s. The contract is for 9 months, and the daily service fee is $0.099 per TH/s. At the same time, the fee is fixed in USD, but calculated from daily payments in BTC;
• DASH ֪- the minimum package costs $57.50 for 5000 MH/s, and the maximum is $4750 for 500,000 MH/s. The contract is for 2 years, and the commission is $0.00001 per MH/s per day;
• Ethereum - the minimum tariff is $525 for 25 MH/s, and the maximum is $6650 for 350 MH/s. The contract is also concluded for 2 years, and the commission for MH/s per day is $ 0.004.
• Litecoin - the minimum tariff is $28 for 2 MH/s, and the maximum is $2,400 for 200 MH/s. The advantage is that the service fee is not charged, and the contract is concluded for 2 years;
• Monero - the minimum contract costs $830 for 1000 H/s, and the maximum is $7200 for 9000 H/s. By renting equipment for mining this coin, the client has the opportunity to receive payments in Zcash, DASH and other altcoins using the auto-distribution function. The service fee is also not charged. The contract is valid for 2 years;
• Zcash - the minimum tariff is $530 for 200 H/s, and the maximum is $7650 for 3000 H/s. Since the coin is mined using the Equihash algorithm, the client can receive payments in BTC, ETH and other coins. No commission is charged, and the contract is valid for 2 years.
  Based on user reviews, Genesis Mining cannot be called the most profitable. Commissions play a significant role in this, as well as the state of the market as a whole. But the company has been working for a long time and has established itself as a reliable supplier of capacities.

Read more: Blockchain technology: how it works and where it is used

Cloud mining without investments

In theory, mining cryptocurrencies through cloud mining does not always require investment. Some sites offer new users a small amount of computing power for free and without investment to check the operation of the service before investing money in it.

However, serious companies rarely resort to this practice now.

Usually, such offers can be found on sites that only disguise themselves as cloud mining services, but in fact they are ordinary HYIPs that lure gullible customers with the help of free "probes".

On such a web resource, you can try to have time to earn some minimum while it continues to function and make payments. However, in most cases it turns out that in order to withdraw funds, you need to make a real deposit, which not everyone will be lucky to get back.

Of all the verified companies, only BitDeer currently has an option to get free test access for a short period.  When registering a new account on the site, the user receives 1 TH/s for free for 3 days.

Of course, you will not be able to earn a lot on this, but it will be enough to familiarize yourself with the process of cloud mining. To withdraw the profit received in this way in several tens of cents, you will have to purchase one of the tariff packages available on the website and wait for the account balance to increase to the minimum withdrawal limit.

As a result, cloud mining without investments is more suitable for testing services than for real earnings on the Internet.

Ethereum Cloud Mining

During the general market downtrend of 2018, the value of Ethereum was constantly declining, which is why the cloud mining of this cryptocurrency has lost its popularity. However, in 2019, amid the recovery of the exchange rate, interest in its production resumed. Now among altcoins, this direction is one of the most popular, as evidenced by the frequent lack of free equipment for mining ETH on most large sites.

Ethereum mining by cloud mining is possible through services that have tariffs with support for the Ethash hashing algorithm. There are quite a lot of such suppliers, but, of course, it is worth buying computing power only from the most reliable:

• HashFlare - a tariff for a year at a price of $1.4 per 100 KH/s (the final price depends on the hashrate chosen by the user);
• Genesis Mining - contracts for 2 years, minimum for 25 MH/s for $525, maximum for 350 MH/s for $6650;
• IQ Mining - packages for 2 and 5 years, as well as an option with a lifetime lease of equipment; cost from $0.45 to $0.75 for 0.1 MH/s, depending on the size of the contract;
• BitDeer - tariffs of 300 MH/s for 120, 180, 240 and 360 days; the price of 1 MH/s is from $0.0138 to $0.0104 per day.

The first two services have no free contracts for Ethereum cloud mining right now. IQ Mining has all available options. BitDeer has only 240 and 360 days left.

Considering the current Ethereum exchange rate, the profit from cloud mining, for example through IQ Mining, on average will cover the cost of purchasing a 2-year contract for 300 MH/s ($1845) in about a year. That is, at the end of the validity of such a tariff, the initially invested funds will increase by 2 times. At the same time, daily payments will range from $3.8 to $4.7.

For other sites, according to user reviews, payback comes in 8-12 months. Considering that during this time the Ethereum rate may grow, there is a chance of a significant increase in the final yield.

Read more: Exodus crypto Wallet - reviews, how to deposit & withdraw

Bitcoin Cloud Mining

The equipment working with the SHA-256 hashing algorithm, on which bitcoin mining is based, is present in almost all cloud mining services. In addition, there are sites that only support Bitcoin. For example, such is Hashing24, on which a 2-year lease contract of 53,000 GH/s (the capacity of the Antminer S17 asic) will now cost $3625.

The rest of the proven services, where bitcoin is only one of the assets available for cloud mining, will have slightly different tariffs for similar capacities:

• Genesis Mining - at $2,300 for 18 months
• HashFlare - $3180 per year;
• BitDeer - $1,900 for an annual package;
• IQ Mining - $1944 for 2 years or $1202 for a 12-month contract.

Among the listed services, only HashFlare does not have available contracts for the rental of bitcoin mining capacities, and BitDeer has all tariffs sold out by 80-97%.

At the current rate and complexity of the Bitcoin network, the payback of cloud mining on average occurs in six months. And only on HashFlare it can take up to 12 months, given the initially high cost of computing power compared to other companies.

Reviews about cloud mining

Judging by user reviews, cloud mining is becoming attractive again in 2019-2020. Profits now, of course, are not as sky-high as in 2017, but there are also no losses, as it was last year. But this is if we talk about those who interact with real long-proven leaders in this field - Genesis Mining, HashFlare and IQ Mining.

If you read the reviews of users who are clearly frivolous about choosing projects for cloud mining of cryptocurrencies, then they often become victims of scam HYIPs, which, as before, now appear a lot.

Some, after such an experience, do not believe at all that there are real cloud mining providers.

Those who are lucky enough to receive payments from at least some of the tested projects remain dissatisfied with the need for a long wait before a profit is made, forgetting that things are exactly the same with classic mining. More experienced users are advised to study little-known companies before entrusting their money to them.

In general, as of 2021, nothing has changed in this industry. There are many fraudulent projects, as well as real cloud mining services that deservedly enjoy the trust of grateful users.

The only alarming thing is that some of the reviews about the industry leaders are far from positive - they are accused of blocking accounts, lack of payments, or simply cursed without specifying the reason for indignation.

Reading them, one can't help but think that even recognized companies do not always play fair. Although it may well be that this is slander ordered by competitors.

Read more: Bitcoin on a flash drive? How to store cryptocurrency correctly

Is it worth doing cloud mining

Many enthusiasts knowingly say that cloud mining is the mining of the future, because the main mission of such companies is to simplify the acquisition of cryptocurrencies for everyone.

The use of such services is simple and convenient – it is enough to register quickly on the site and after a few clicks you become a real miner who has real power.

However, there is still a high probability of bumping into scammers, which repels some users. The companies we have reviewed are just an example of services that have proven themselves very positively. But they are not the ultimate truth.

Therefore, if you are considering cloud mining as a means of passive income, you should study the market carefully, and in no case invest all available funds in this method of cryptocurrency mining. After all, even taking into account the appeal to a trusted company, there is a risk of being left with nothing.