What is Bitcoin Cloud Mining And How Does It Work?

bitcoin cloud mining


Mining is the process by which Bitcoin exists as a fluid payment mechanism. Put simply; it is how payments are verified and actioned, and how new Bitcoins come into existence. Bitcoin miners are people who use their computer systems and bitcoin mining hardware to register payments on the digital ledger – the blockchain. They do this by using their computing power to solve complex mathematical equations. This is an incentivized process – they get rewards based on the transaction fee and, occasionally, new Bitcoins come into existence. So what is Bitcoin cloud mining and how does it differ from traditional mining?

Bitcoin Traditional Mining Vs. Cloud Mining

The problem with Bitcoin mining is that it gets more and more difficult as time goes on. This is because there are fewer Bitcoins left to be discovered, and means that a greater amount of computing power is necessary week by week. The Bitcoin network has now reached a point at which individual mining is now virtually impossible. The hardware, energy and computing power that you need to mine and make any money successfully is far too great. This has resulted in mining pools – groups of people combining their computing power together to mine.

Sounds great, right? The problem here is that these groups grow and grow, creating monopolies. The only choice you now have is to join a pool to make money, but you have to have a good level of technical knowledge to join, and plenty of processing power. This has become a barrier to entry for many people. So, there is another way in Bitcoin Cloud Mining.

What Is Bitcoin Cloud Mining?

bitcoin cloud mining

Cloud mining is a process by which you lease mining power on a remote system, or you lease a physical machine in a remote location. You then just need your own computer for communicating with the remote mining pool and its data center, and your Bitcoin wallet to receive payment. This also means that your own technical knowledge doesn’t need to be anything special for you to try and cash in on Bitcoin mining.

Cloud Mining – Pros

There are a number of advantages of cloud mining. The first, most obvious one, is that you don’t have to spend money on expensive equipment. The whole point is that you’re leasing somebody else’s equipment. Coupled with this are your energy costs. Mining these days consumes a huge amount of electrical energy (which results in high electricity costs), and this is another cost that you can avoid by deciding to engage in cloud mining.

Bitcoin Cloud Mining – Cons

The main disadvantage of cloud mining is that it is less profitable in the long run than doing it yourself, as the company you’re leasing from will want to take its cut. These days, mining isn’t as profitable as it used to be anyway, so you’ll probably need to spend quite a lot on your lease to stand any chance of profiting. Of course, there aren’t any guarantees that you’ll get a major pay-out anyway, but you’re more likely in the first 3-4 months with the same level of investment. As of difficulty increases though, you’ll need to increase your own mining capacity along with it continually, and this is where the risks start to grow.

Another major concern for cloud miners is fraud and scams. As you’ll be leasing a system in another area or another country, you’ll never meet the people you’re leasing from. Cryptocurrency and blockchain technology are largely shrouded in anonymity, so there is a significant risk that you could be scammed. Bearing this in mind, it’s important to shop around for cloud mining opportunities and only go with a company that has good reviews, and you feel you can trust.

The final warning here is to look at the wording of the contract. A lot of cloud mining contracts these days have clauses written into them. These clauses say that once mining exceeds a certain difficulty, operations will cease. This effectively terminates your lease but without the possibility of a refund for what you have already paid up front.


A lot of the time, the decision of whether you should start using cloud mining or do it yourself, comes down to fun and funds. In terms of fun, if you enjoy the thought of setting up your own system, then cloud mining isn’t for you.

Think of cloud mining as being a non-executive; you aren’t there, you aren’t controlling the hardware – you just make money if there is money to make. For this reason, a lot of people like the idea of setting up their own mining station and then physically joining a pool.

However, this is much more expensive than cloud mining. So, if you’re strapped for cash, or you don’t have much technical knowledge, the best option for you is to have a really good look around, then get into cloud mining.

Bitcoin cloud mining final checklist:

  • Beware of cloud mining scams
  • Understand cloud hashing
  • Look for the best cloud mining services

Always remember to read the small print!