Cryptocurrencies are mined on the network by generating new coins through mining. This can best be explained by the cryptocurrency Bitcoin. In principle, each network subscriber can earn with a Bitcoin address corresponding to mining. However, to participate in the mining process, different requirements must be met.

“Mining” is primarily the exercise of the necessary control function in the Blockchain. There is no third party bank or financial service provider to check the transactions made in the system. It is worth mentioning that cryptocurrencies like Bitcoin cannot be issued twice. Thus, a fraud is largely excluded. Mining in the Bitcoin network ensures that all transactions are properly executed and recorded in the blockchain.

All transactions taking place in the network are sent to all network participants. Thus, essentially, each user can participate in the calculation of “blocks” and “block chains”. Once a transaction has been validated and verified, the user, who can solve the math problem involved, receives a reward in the form of bitcoins. Since the system requirements for Bitcoin are currently very high, it is usually not a single user, but a pool of users or a mining pool.

 

“Mining” in general

Newcomers to the Themenicon industry Wissen_varianteInsbesondere often assume that “mining” is all about creating new cryptocurrencies. However, this is only partially true. First and foremost, mining serves to secure the blockchain. The so-called “miners” are tasked with keeping the network stable by checking and verifying new transactions. Each individual network participant can audit a transaction and place it in a new “block”. A completed block is then integrated into the blockchain as a “blockchain” at all times. The mining process also ensures that the network does not duplicate transactions. In addition, miners ensure that no one violates the rules of the network protocol.

Increased difficulty and lower salary

Mining is becoming increasingly difficult for individuals because of the system. Over time, less and less coins can be mined. This slows down the growth of money until it eventually comes to a standstill. In total, 21 million bitcoins could be created. This limit is set to the Bitcoin protocol. It is assumed that the last bitcoin will be mined around the year 2140. However, experts also suggest that 100 years earlier, more than 90 percent of all coins will be created.

The sunk reward for the creation of new “blocks” has the result that, especially for individuals, mining becomes increasingly unprofitable. People with limited computing power often no longer have the opportunity to actively participate in the mining process.

How can individuals benefit from mining?

During the beginning of the Bitcoin cryptocurrency (between 2009 and 2010), it was still possible to compute blocks like a regular computer user with the help of their own graphics card in the Bitcoin network. The new generation of Bitcoin at that time was still profitable for individuals. Meanwhile, this is practically impossible. Because the computing power required to mine is too high for an average computer user. However, it is possible to participate as an individual in Bitcoin Mining and make a profit.

  • Mining Pool: One possibility is to join the so-called mining pool. These are networks that use shared hash power to compute the blockchain to get newly generated bitcoins. Mining pools differ mainly in size, but also in the type of public money for the participants.
  • Automatic Mining: If you have the right mining hardware, you can, of course, participate in the mining process yourself. Using a mining calculator, miners can calculate how much computing power is needed for an investment to be valuable.
  • Cloud Mining: Another way is to contract with cloud mining providers. They have server farms and provide users with the computing power needed to mine specific cryptocurrencies for a period of time.

The “mining” of cryptocurrencies through so-called cloud mining providers is becoming more and more interesting for individuals. Depending on the provider, those interested can choose from a range of different cryptocurrencies and associated algorithms.

Since cloud mining contracts can vary depending on the provider, there is an exact comparison of cloud mining providers. A presentation of the most famous companies in this field can be found in our supplier overview.

Temporary conclusion on mining

Due to the increasing difficulty of mining, packaged computing resources are especially promising. In addition to mining with your own computer, there is an opportunity to join mining pools or use the services of cloud mining providers. The latter also partially works with mining pools. The available resources are effectively used for successful mining participation.

We will discuss the topic of cloud mining in more detail below.

 

What is Cloud Mining?

The time when private users could “mine” cryptocurrencies like Bitcoin seems to be over. In any case, autonomous mining becomes increasingly difficult due to the high computing power required. Anyone who still wants to mine cryptocurrency requires not only technical skills but also extensive equipment. However, since in most cases it is no longer valid to act as a single miner, today so-called cloud mining can be used.

Note: Not to be confused with cloud mining. In it, several users work together by pooling their computing power. With cloud mining, users rent or buy computing power or hardware from cloud mining providers. These are settled through a contract. Maintenance fees are usually added. But: some cloud mining providers also work in conjunction with different mining pools.

Cloud Mining: The Truth

  • In “Cloud Mining”, users buy or rent the computing power or hardware needed to mine from cloud mining providers.
  • A cloud mining company that performs mining for the signatory as part of a closed contract.
  • The level of remuneration corresponds to the amount specified in the contract. In addition, any maintenance fees will be deducted automatically from profits earned.
  • While attractive profits can be made with cloud mining, there is also an increased risk of loss here, as cryptocurrencies are highly volatile currencies.</ li>

In order to make cloud mining attractive to ordinary users, various cloud mining providers have established themselves in the market. Various contracts allow users to participate in the mining process relatively smoothly. Depending on the provider and currency chosen, there are both lifetime contracts (as long as the contract is profitable) and limited. One obvious advantage of cloud mining is that users don’t have to provide their own computing and hardware power. This is done entirely by the cloud mining provider.

How does cloud mining work?

In the first step, an interested party must select a cloud mining provider. Here is an overview of our worthwhile cloud mining provider. Then he goes to the supplier’s website and opens a customer account. A cloud mining comparison is always recommended. Because depending on the provider, the offers and conditions can be very different.

Depending on the provider chosen, the user can then choose and sign a contract for mining and corresponding computing power. Once purchased, the cloud mining provider’s hardware usually begins immediately with the creation of coins. However, for some providers, contracts also sell out quickly, so customers have to wait in this case, a few weeks to months. More information can be found in our Cloud Mining Provider Review.

Coins mined by cloud mining can then be transferred to their own wallets. Delivery is done daily to weekly and also depends on the selected provider. The leased computing power is also linked to a corresponding mining pool by the cloud mining provider. In this case, the user does not have to worry about anything after completing the Cloud Mining contract.

 

These advantages are provided by cloud mining

Especially for beginners, the barrier to entering mining is reduced with the offer of a cloud mining company. Because they don’t require any software knowledge that would be required to set up a corresponding high-performance computer, nor do they need to own the right hardware. Accordingly, there is no need to invest a large sum of money before mining can begin. As in the early days, individuals with smaller amounts of money can again participate in mining.

Another advantage of cloud mining is the flexible use of computing power provided by cloud providers. If the business is profitable for the individual, additional resources or contracts can be added as needed (depending on the provider). This also allows for a flexible response to the respective market situation.

The advantages at a glance

  • No prior technical knowledge is required.
  • No hardware or software purchase required.
  • Accordingly, no installation, maintenance or repair is required.
  • The cloud mining provider takes care of the whole transaction after signing the contract.
  • Quick and easy registration on provider websites is time-saving and intuitive.
  • Depending on the provider, different cryptocurrencies can be mined.
  • The “mining” is on a fixed contract basis.

 

These disadvantages are in cloud mining

Lower investment costs and flexibility can be purchased by users at cloud mining providers through respective contracts. In general, however, more money must be paid for more computing power. In addition, there are contracts with different durations and maintenance fees, which require most cloud mining providers.

Another issue is the risk of cloud mining fraud. Users should always keep themselves informed of the provider from which they are getting their computing power. Our Cloud Mining Provider Comparison only lists reputable companies with their services. In addition, we recommend that you read the respective Cloud Mining Experience Report to learn more about the Cloud Mining Company.

Disadvantage at a glance

  • As a rule, the returns are lower than with automated cryptocurrency mining.
  • The initial investment usually pays for itself after only a few weeks or months.
  • In addition to the costs specified in the contract, depending on the supplier, additional “maintenance costs” will be incurred.
  • There is a general loss risk on volatile digital currencies.

The common risk is the price development of a cryptocurrency. This also depends on the success of the mining. Because even if the cloud mining provider coordinates the whole process very well and everything is done to the maximum satisfaction of the customer, all the participants should always expect that the value of the chosen cryptocurrency will sink. Therefore, it should always be kept in mind that the loss of capital is possible at any time. However, the corresponding digital currency would then have to be (almost) completely worthless.

How much can you earn with Cloud Mining?

How high the Vietnamese publicity of cloud mining is depends on several factors. Among other things, as mentioned, the price of the respective digital currency plays a role. But also the cost of cloud mining plays a part. In most cases, this is a fixed amount, determined through the respective contract. The costs depend on the one hand on the currency chosen and on the other hand also on the duration of the contract and other fees, given by the offeror.

In addition, any fees for the transfer or sale of the removed coins must be taken into account by the user. For example, if discarded coins are transferred from your wallet to another wallet or a stock exchange, a transaction fee is usually applied. This means that in addition to the cost of pure cloud mining, there can still be additional fees that reduce revenue. When choosing a cloud mining provider, make sure that all costs and fees are transparently displayed.

 

Initial concept of digital currency

The concept behind digital currencies dates back to 1998. Wei Dai introduced the basic idea through an email mailing list. But at that time, it did not go to the implementation of the idea because of the missing technical requirements for it. In 2008, Satoshi Nakamoto came up with the idea again and published in a white paper the concept of a digital currency – Bitcoin (“Peer-to-Peer Electronic Cash System”). The system is said to operate “person-to-person” without any state or banking intervention. The result is an innovative bitcoin network (bitcoin protocol) based on cryptography.

On January 3, 2009, the first bitcoin was created electronically. It was Nakamoto himself (until now whether it was a single person or a team) who “discarded” the first 50 bitcoins.

General information about cryptocurrency Bitcoin

Digital currencies are still quite young, experimental and at the same time very expensive. The latter applies above all to the undisputed market leader Bitcoin. Cryptocurrencies have practically kicked off a new era of payments – at least when it comes to Bitcoin advocates. For even an innovative and decentralized currency like Bitcoin has had to overcome several hurdles in the past to gain recognition.

To date, Bitcoin has many supporters, but also many critics who talk about the threat to the financial system. The reason: Neither countries nor banks can interfere with transactions taking place in the Bitcoin network. While the digital currency was pretty funny in its early days, it has made a remarkable upward journey, especially in recent years. It is frequently read in the media. Banks also have no choice but to see cryptocurrencies as a serious competitor to conventional currencies. This is exactly the goal that Bitcoin pursues. In addition to the creation of new coins, Bitcoin, as a recognized means of payment, will in the future be given a permanent place in the financial sector. In this country, currency is still not a popular means of payment. But other countries have created Bitcoin.

And where can you buy bitcoins?

Bitcoin (as well as other cryptocurrencies) can’t just be “mined” in the network. Investors can also buy them on related markets and stock exchanges on the Internet. Depending on the provider, the coins are purchased by other individuals (exchanges) or purchased directly from a vendor at the current price. Price is always determined by supply and demand.

Note: Since cryptocurrencies are digital currencies, they actually only exist as a single file. Holding funds requires a wallet (digital wallet), which also acts as a type of account for sending and receiving cryptocurrency.

Compared Cloud Mining Providers

Meanwhile, there are several cloud mining providers that offer their services under different terms. For users, it is very important to familiarize themselves with the services and associated costs of the provider in advance. To be able to get an idea of the providers, we compared different reputable cloud mining providers with their offerings for our readers. These include, among others, two well-known companies HashFlare and Genesis Mining, each of which has been successfully operating in the market for many years. Both providers allow mining of different cryptocurrencies besides Bitcoin. Different contracts with different maturities are offered. Customers must come here one by one. Once a contract has been signed, the selected cloud mining provider initiates execution and participates in the corresponding mining process.