Anyone can do it, there is no requirement for technical knowledge other than knowing how to make an online purchase and using a wallet for cryptocurrencies.
It’s great that there is an easy way for people to participate and potentially see good returns on their investments.
This means the user base most likely won’t recognise when a service is a scam.
This means most new users will lose money and probably deem the entire space as fraudulent.
That’s a pretty generalized summary but I’ll hit you with some details in a bit.
The amount that you pay is often labeled as hash power, and your payouts will reflect how much hash power you’ve purchased.
In case you missed my past video that covers proof of work mining, hash power refers to the amount of computing power used to solve the complex algorithms required in order to unlock a new block of the blockchain.
Essentially when you purchase a cloud mining contract, you are helping to fund a mining farm.
A mining farm is the name for a large facility that is comprised of many computers which do nothing but mine cryptocurrencies.
Basically, you’re sponsoring a fraction of their computing power, helping them to handle the costs of running their facility and in exchange, you get a portion of the coins that they mine according to the contract that you’ve purchased.
Typically you can choose to remotely mine Bitcoin, Ethereum, Dash, Monero and other coins as well, it’s not just limited to Bitcoin.
The time frame of your contract is important to consider because you can easily purchase a short term contract which can expire before you start seeing any returns. Withdrawal fees can also end up taking a big chunk of your profits as well.
The hash difficulty is equally important to be aware of because this determines how effective your hash power will be against it.
An increase in hash difficulty requires an increase in hash power.
As the price spikes, more miners shift to that coin, this increases the difficulty level. As the price slumps, miners disperse, which decreases the difficulty level.
There aren’t very many that have stood the test of time. In fact, many have abruptly stopped payments without any warning or explanation to their investors.
The only services that I feel comfortable even mentioning their names are Genesis mining and Hashflare mining.
I have personally used Genisis mining and it has proved beneficial for me. I’ve also heard positive things about Hashflare, but have not used their services myself.
In my next post, I’ll be going over how to use your awesome new ledger hardware wallets with decentralised exchanges, so if that’s something you’ve been wanting to learn how to do, be sure to hit the follow button so you won't miss it!
