Over the last 10 chapters, we’ve explained how to buy your own cryptocurrency mining hardware and begin mining different cryptocurrencies. We’ve explained how to choose the best mining hardware, how to download the right software, and how to make sure your mining operation is profitable.
But what if you don’t want to do any of that? What if you’d prefer paying someone else to mine bitcoin for you?
That’s sort of how bitcoin cloud mining works.
Bitcoin cloud mining takes place over the internet. Essentially, someone has a server full of bitcoin miners, then rents these miners out over the cloud. You might be able to purchase different cloud mining packages. Each package could guarantee a specific hashrate for a 2 or 3 year period. You pay a lump sum upfront along with ongoing maintenance fees. Then, you sit back and wait for the profits to roll in.
Of course, bitcoin cloud mining isn’t quite that easy. Profit is never guaranteed. Cloud mining companies can cancel your contract. Some cloud mining companies don’t even operate real bitcoin mining farms: they’re just online scams designed to steal investors’ money and disappear.
Today, the bitcoin cloud mining industry is filled with plenty of scams. However, there are several major companies that run legitimate bitcoin cloud mining operations – including Genesis Mining, Hashnest, and Hashflare. Keep reading to discover which bitcoin cloud mining service might be right for you.
How Does Bitcoin Cloud Mining Work?
Typically, these cloud mining services work in a similar way:
- You pay “rent” on your bitcoin mining hardware
- That rent covers the costs of the hardware and the electricity
- Someone else is responsible for maintaining and running that equipment at their own location; some bitcoin cloud mining companies charge an ongoing maintenance fee to cover these expenses, while others bundle the fee with their rent
- As long as you continue paying your fixed rent, you’ll be able to access any profits collected by that bitcoin mining hardware during the period of your cloud mining contract
- Some companies offer month-to-month contracts while others offer 1 year, 2, year, or longer contracts
- In most cases, the mining service reserves the right to cancel your contract if it becomes unprofitable; the company can’t be expected to run mining equipment at a loss
- As the user, you don’t need to worry about maintenance, cooling, electricity, upgrades, or anything else; all you need to do is keep paying your cloud mining “rent”
Do you want to participate in bitcoin mining with none of the hassle? Cloud mining might be the right choice for you. However, it comes with some major downsides. We’ll talk about those downsides next.
Bitcoin Cloud Mining Can Be Risky
A handful of major companies offer legitimate and trustworthy cloud mining services. However, for every 1 legitimate cloud mining company, there are 10 scam services trying to steal your money.
Scams are prevalent across the cloud mining industry, to say the least.
It’s obvious why scams are so common: there are plenty of people who want to get involved in bitcoin mining because they’ve heard about people getting rich. However, many of these people have no idea or desire to maintain their own mining rigs. Then, they stumble upon a website that promises huge ROIs with no risk: all you need to do is pay the company a bunch of money upfront, and they’ll do all the hard work. You get the profits sent to you.
Sometimes, that company doesn’t operate any mining farms in the real world. The company might just be taking money from users and then investing it in marketing. The cycle continues until customers get suspicious, at which point the scammers shut down the website.
In other cases, the bitcoin cloud mining scam could take the form of a pyramid scheme. Users might be asked to refer friends to the platform in exchange for big rewards. At some point, the entire scheme collapses and everyone loses their money.
Bitcoin Cloud Mining Can Be Unprofitable
At best, you’re going to make a small ROI with bitcoin cloud mining. Remember: someone else is doing all the hard work for you. You’re just providing the funding. You can’t expect to earn massive ROIs through such a process.
In most cases, your 2 year bitcoin mining contract might pay you 10% returns per year. Some companies advertise ROIs of 14%, although returns any higher than that will look suspicious.
If a bitcoin cloud mining company is offering suspiciously high returns – like ROIs of 0.5% to 1.0% per day, then it’s likely you’re being scammed. There are few legitimate businesses capable of guaranteeing such returns – especially in an industry as volatile as bitcoin.
Ultimately, bitcoin cloud mining is rarely the gold mine people expect it to be. It’s a fun way to dip your toes into the waters of bitcoin mining, but it’s far from a guaranteed income source.
And, as mentioned above, most bitcoin cloud mining companies will simply shut down your account if mining becomes unprofitable.
Even Legitimate Bitcoin Cloud Mining Companies Don’t Disclose their Farm Locations
One thing that makes bitcoin cloud mining difficult is the fact that legitimate companies rarely disclose the location of their bitcoin mining farms.
This is done for security reasons. These farms are home to millions of dollars’ worth of mining equipment. These locations might also hold enormous amounts of funds in cold storage.
We list a number of legitimate cloud mining providers below. However, even with these companies, you won’t see specific addresses or location information for their global mining centers. This is on purpose. The company is trying to protect itself. However, it also makes it easier for scammers to trick people into thinking they’re running a legitimate mining farm.
The Best Cloud Bitcoin Mining Companies
The list of good, legitimate cloud bitcoin mining companies is very short. At best, there are five legitimate companies in the space. The best-known company, Genesis, is a well-established and highly-popular firm. The other companies on this list don’t have the same strong reputation, but they do have a multi-year track record of providing cloud bitcoin mining to clients:
Genesis Mining is the best-known cloud bitcoin mining company available today. Genesis was founded in 2013 and maintains large cloud mining centers worldwide. At their official website, you can view a live feed of some of the company’s Iceland-based data centers. The company has based its operations in Iceland due to the cheap geothermal electricity.
When you buy a Genesis Mining cloud mining plan, you can choose to focus on one or more cryptocurrencies. You might choose to split your hash power between bitcoin and Litecoin, for example, and go 40% bitcoin and 60% Litecoin. You can actually customize your hash power on-the-go through your Genesis Mining dashboard.
Unlike other providers, Genesis Mining doesn’t exaggerate about how much money users can expect to make. They don’t fill customers’ heads with grandiose claims about getting rich quick. Instead, they provide a legitimate cloud-based crypto mining service.
Genesis Mining has frequently sold out of cloud mining contracts. In many cases, you’ll visit the Genesis Mining website and find no contracts are available to purchase. This is the only real downside of Genesis Mining: they’re so popular that it can be hard to buy a cloud mining contract for your desired cryptocurrency.
Hashnest is made by Bitmain, the well-known bitcoin ASIC hardware manufacturer. Bitmain is a China-based company responsible for Antpool, one of the world’s largest bitcoin mining pools.
Hashnest is newer than Genesis Mining, although the company has proven itself to be legitimate. Unlike Bitmain, Hashnest is not exclusively based in China. The company has mining farms worldwide in regions with low electricity.
Hashnest is well-known for its Payout Accelerated Cloud Mining Contract or PACMiC. PACMiC is a type of electronic contract structured in a way that Bitmain pays the maintenance costs of mining rigs (like electricity) while all mining revenue is used to pay back the owner of the PACMiC contract. If the principal is not paid back fully, then Bitmain will share profit with buyers.
With Hashnest, you can purchase hash power directly frm Antminer devices like the S9, which has a rate of around 125 TH/s. You can then pay a fixed maintenance fee depending on the device. If you’re renting an entire S9 from the company, for example, then you’ll pay a maintenance fee of $0.19/TH/day.
Like Genesis Mining, Hashnest lets you customize mining plans extensively based on your desired power and price.
Hashlare is another legitimate cloud bitcoin mining company. The company was launched by Hashcoins, a bitcoin mining equipment manufacturer founded in 2013. At the website, you’ll find a complete rundown of the firm’s data center, including pictures of the miners in operation.
Hashflare sells cloud mining contracts for a variety of different cryptocurrencies. You can choose to buy SHA-256 and Scrypt mining contracts, for example, that allow you to mine all SHA-256 and Scrypt coins. Hashflare also lets you choose your own mining pool.
Like the other two providers listed above, Hashflare is open and honest about its maintenance fees. They only offer 12 month contracts (although they used to offer unlimited-length contracts).
You’ll find plenty of bitcoin cloud mining companies available online today, but few of them are legitimate. The three companies listed above – Genesis Mining, Hashnest, and Hashflare, are all operated by legitimate companies who provide transparent information about their rates and contracts. We don’t recommend straying outside of these three major names because the cloud bitcoin mining industry is filled with scams.
That concludes our chapter on cryptocurrency mining. In Chapter 5, we’ll talk about cryptocurrency mining pools.