The future belongs to cloud mining, say experts interviewed by CoinTelegraph.
Nowadays, Bitcoin is the most popular cryptocurrency used as an alternative to traditional payment systems. All Bitcoin transactions must be verified by miners, in a process called mining.
This process is done by a software that accesses the CPU’s processing capacity to solve transaction-related algorithms. Originally, bitcoin mining was conducted on the CPUs of individual computers. Nowadays, to have enough processing power, that is done in big data centers.
Not everyone can own a big data center, obviously, and that’s why recently a new type of mining started to gain popularity, cloud mining.
Cloud mining allows users, instead of using their own machines, to buy mining power of the hardware placed in remote data centres. All bitcoin mining is done in the cloud, without any offline hassle, such as electricity, hosting issues, or installation and upkeep trouble.
Low cost of entry and minimal risks
Cloud mining offers a mining system with a low cost of entry, minimal risks, and expenses, it is opposite to traditional models of mining that involve procurement, maintenance and configuration of highly specialized hardware.
Traditional mining, in fact, needs “to maintain the frequency of “closing” blocks atten-minute mark. Increasing number of miners results in difficulty growth - the block is processed within 10 minutes; a number of miners decreases followed by the drop of difficulty and the close time of a block still takes 10 minutes”, commented marketing expert at HashFlare Alexander Gromov.
The reasons for cloud mining being a current trend are many and we had the chance to find out more about them in a recent interview with Mr.Gromov:
“Cloud mining allows to hire specialized equipments and a team of professionals to maintain them, so you are not limited by the capacity of a real miner; you can get your hashrate immediately, without any need to wait for delivery; you don’t need to care about servicing of equipment and replacement of broken parts”.
HashFlare seems to be a simple way to earn bitcoins from cloud mining, as all you need to do is sign into the project, choose the hashrate according to the size of your investments, and pay for it by any means available. 24 hours later, you will receive and be able to withdraw the profit (the minimal amount is 0.0004 BTC, since the commission fee is 0.0003 BTC).
HashFlare provides only two types of contracts currently: SHA-256 and Scrypt. So, how can bitcoin fans choose between them?
“The first one is used for bitcoin mining, whereas the second one is used for Litecoin mining. It is difficult to tell which one of these contracts is more profitable since market prices are constantly changing. Expected time before payback is about 7 to 10 months, and thereafter the cloud will work exclusively for profit”, answered Edgar Bers.
Starting from February 16, HashFlare has launched a preorder of ETHASH that is used to mine Ethereum. If you tune into the preorder before March 21, you will get a 12% discount.
Comparison with others
Currently there are a lot of cloud mining services so we decided to compare some of these platforms:
Genesis Mining is one of the most famous cloud mining providers around the world.
A bitcoin mining contract with Genesis Mining costs $15.99 at the beginning. If you want to invest greater amounts of money, you can buy 1000 GHS (Platinum) for $779, or 10,000 GHS (Diamond) which is worth $7699.
It is a very simple platform as you just have to sign up, fund your account, and pick the mining plan that corresponds to your needs. Of course they provide a system of 2-factor authentication and they always upgrade their Scrypt Hashrate for free.
Skycoinlabs allows bitcoin, altcoin, and litecoin cloud mining with one year contracts. It is also possible to include dogecoin, which will be mined via the cloud. Skycoinlabs costs $5.99 for every Bitcoin mining GH/s or you can get 100GH/s mining cloud power going for $599. The cheapest contracts are the litecoins, which go from as low as $2.49 for every KH/s of LTS cloud mining, as reported on a Cloud Mining review website.
How it works
To verify that the virtual money transactions take place in a legal and safe manner, a process of verification of the transactions themselves is necessary. To simplify, if a user buys an item and pays in bitcoin, algorithms check whether the bitcoins spent are taken from his wallet, avoiding the phenomenon called double spending.
This verification, that with the spread of bitcoin always requires more computing power, is called mining. The so-called miners provide the computing power of their computer to run these verification. In return, they receive free bitcoin, until bitcoin reaches 21 million units (roughly), as its total number is limited.
“Cryptocurrency mining is the process of finding solutions to compose blocks in the blockchain. Blocks consist of transactions that bitcoin netizens conduct with each other, and the blockchain is a groundbreaking technology of secure financial transactions, which, incidentally, is already being extensively adopted not only by banks, but also by some government structures. Whenever a miner or a mining pool closes the block forming the sequence of transactions, they get 25 bitcoins”, commented customer service expert at HashFlare, Edgar Bers.