Cloud mining is a method of earning mining rewards by investing in a mining service.
- You sign up with a cloud mining service provider and purchase the mining power of their machines.
- Use that machine to do mining and receive a portion of the cryptocurrency from the provider.
Since mining requires a PC or other device, electricity, and expertise, it is not considered to be something that many people can easily start. Individuals can easily start mining by providing funds to a mining service provider and outsourcing the mining to them.
Pros and cons of cloud mining
The advantage of cloud mining is that it is low cost and requires no management effort. With cloud mining, you only need to pay for it and you don’t need to have any specialized knowledge or purchase a PC. You don’t need a dedicated machine or knowledge about mining to participate in cloud mining.
However, there are some disadvantages. The amount of reward for mining and the amount of profit from cloud mining depends on the price of the cryptocurrency, so if the price plummets, there will be no profit. In some cases, it may be difficult to recover the principal.
There is also a risk that the story of investing in cloud mining itself is a scam. Uninformed beginners need to be careful of scammers.