How Does Cloud Mining Bitcoin Work?

How Does Cloud Mining Bitcoin Work?

It is possible to participate in bitcoin mining indirectly, by partially funding a remote mining operation.

Cloud mining is separate and distinct from pool mining, because instead of owning hardware and pooling resources with other miners to increase the likelihood of securing profits, cloud mining simply secures funding from investors, essentially, who have a contract to participate in profits of a mining pool in a remote locations based on the bandwidth of Gigahashes/s that they would like to fund (“buy”).

Critics of cloud mining point out that the entire risk of loss is borne by the customer funding the operation, and that the resulting profits are shared with them at a sometimes unfavorable rate, and there is often a lack of transparency or access to the company running the cloud mining operation.

It can take a year or more for someone investing in cloud mining to recoup their investment, which is not atypical for bitcoin mining. But the difference between this method and other methods is that it takes much more trust in the company that you’re signing up with.

Considering the cost of participating in a cloud mining operation is relatively high, and the profits are relatively low, most miners would advise newcomers to gravitate towards pool mining and investing in actual hardware if they would like to participate in the mining side of things at all.