Is Cloud Mining A Scam?
Every time anyone mentions about cloud mining, comments flood in, like “Cloud mining is a scam”, “Don’t invest” etc. We learned that some people got hurt by certain cloud mining providers. But as a cloud mining provider, we don’t think it’s fair to regard the whole industry as scam. When you are thinking about “Should I invest in cloud mining”, the priority key becomes figuring out what cloud mining is and how to pick a solid one.
What Is Cloud Mining?
Cloud mining refers to buying hash rate or computing power from mining farms that run lots of specialized mining rigs in remote area. In this way, individuals can mine Bitcoin or Altcoins without operating or managing mining facility personally. Usually, individuals buy mining contract from cloud mining provider and earn mining profit. In exchange, mining contract provider charges electricity fee and maintenance fee.
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Pros and Cons of Cloud Mining
Traditional mining requires specialized mining rig. Miners need to know how to arrange mining rig, set up mining program, maintain mining facility, most importantly, find cheap enough electricity. However, average people won’t have easy access to these kinds of skills or resources, which shows a nature barrier for Bitcoin or Altcoins mining investment. Here comes cloud mining.
- Fragmental investment friendly. Individuals don’t need to buy a whole mining rig. It allows individuals to invest in mining with a little money.
- No special skills required. Investors don’t need to understand how to set up mining programs. Just buy contract and wait for the earning distribution.
- Save time and energy. No need to buy a mining rig. It means individuals can get rid of all problems that mining rigs bring, such as warehouse to place mining rig, how to set up, how to fix bugs, cooling system, cheap electricity resource.
In spite of all these advantages, cloud mining is not risk-free.
- Most mining contract providers state that they will terminate contract (turn off mining rigs) if coin’s price linked to the contract decreases to a level that mining revenue doesn’t cover cost for certain period. (Although this situation is relatively rare, it’s a potential risk investors are faced with.) In this case, you will lose some part of your principal.
- Another threat is the mining contract providers run away or they are frauds. Hence, choosing a platform with good reputation is very important.
How to Select Solid Cloud Mining Platform?
- Make sure the cloud mining provider has mining farm. If you cannot find anything about their farm, it may be Ponzi scheme.
- Figure out what kind of mining rigs they are using. Certain platforms don’t even let you know this info and say it’s confidential. As a customer, you have the rights to know the key info.
- Be careful if the platform claims you will get high profit soon after you buy the contract. What we should be clear is that mining is a long term business. It can never payback quickly.
- Learn how to calculate mining profit. If you don’t know, check our previous post: What is Bitcoin Mining and How to Calculate Mining Profit?
- Fully read the contract details before you buy. Check your mining profit regularly. Daily profit payout may be more reliable since you don’t have to wait a long time to collect your profit, which decreases the risk you take.
As we know, investing in crypto is “high risk, high return” business. Before investing in cloud mining, you need to evaluate if you are comfortable with the risk. You should never invest with money you cannot afford to lose. And do your own research, which is not a cliche. It’s what you should always keep in mind.
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