Mining Bitcoin is the manner in which new Bitcoin are created. There were many people in the early days of Bitcoin that mined Bitcoin by solving mathematical problems on the blockchain. The reward for solving the problems was Bitcoin. It would be fair to say that some of these early miners made quite a sum of money doing this.
Today it is not so easy for the solo individual to try and mine Bitcoin. The process requires expensive computer equipment that is also expensive to maintain, and a vast amount of electricity is needed to accomplish the process. There are some alternatives to traditional mining that have become more appealing to the Bitcoin investor. Specifically, there is cloud mining.
Alternative Bitcoin Mining Solutions
The most popular type of cloud mining is one that involves selling mining contracts to groups of individuals. This is sometimes referred to as a cloud mining pool. The members of the pool purchase hash power and are allowed to share the rewards that are generated by the mining equipment owned by the company.
Cloud mining can be advantageous because it is more affordable than buying mining equipment. It can also give individuals that could not otherwise participate in mining the chance to do so. But, there are some risks involved. One of these is being scammed by an illicit cloud mining company. These types of companies sell bogus contracts to unsuspecting individuals and have no intention of ever returning a profit. This doesn’t happen much today, but it was a large problem just a few short years ago.
We like Genesis Mining as an alternative Bitcoin mining solution. Genesis Mining has been reviewed by CryptoSwede and found to be a reputable company. They offer reasonable contracts and have a track record of success. You might not get rich with Genesis Mining, but you will learn more about the mining process and have the chance to earn a few tokens.
How Cloud Mining Bitcoin Works
The way that cloud mining Bitcoin works is simple. It begins with an individual choosing a mining company like Genesis Mining and purchasing a contract. Each contract entitles the individual to a certain amount of hash power. Hash power is basically the ability of the mining equipment to solve the problems and generate Bitcoin. The more hash power a person has, the greater their share will be of the tokens that are generated.
The mining company has its own mining rigs. In the case of Genesis Mining, these rigs are kept in secure locations around the world known as mining farms. The sole purpose of a mining farm is to generate Bitcoin. The company will maintain all of the mining equipment, and they also pay for the electricity and other costs that are required to keep the operation afloat.
While the machines work on behalf of the individual who purchased a contract, the person who owns the contract can sit back and enjoy the ride. They can review reports about the success of their mining efforts, and they can spend the tokens that are generated from mining. Other than that they have no worries.
So, how does the Bitcoin cloud mining company make money? They make money by leasing their equipment in the form of these contracts. By selling many contracts they can afford to pass on the coins that are generated to their clients. In other words, it is more cost effective for the company to lease equipment to others and mine on their behalf than it is for the company to mine its own coins.
Should You Cloud Mine Bitcoin?
This is a personal decision that only you can make. If you are someone that wants to know a little more about mining and how it works then cloud mining might be for you. What you should know from the beginning is that cloud mining Bitcoin is unlikely to make you filthy rich. It should be seen more as a hobby interest than anything else.
Not that it won’t put some Bitcoin in your wallet. It can and probably will, but one should always remember the volatility of the cryptocurrency market when making a decision to cloud mine Bitcoin. There is never any guarantee that you will make a profit from your efforts. Like any other investment, cloud mining carries a measure of risk. It should only be undertaken by those with the discretionary funds required to purchase a contract.