In this article, I explain Bitcoin Cloud Mining and provide recommendations on the Best Bitcoin Mining Pools available in the market based on personal experience and industry professionals.
The discovery of gold nuggets in Sacramento Valley in 1848 sparked one of the most significant events in American History. When word reached the mainstream that gold was discovered in California, thousands of people flocked to the gold mines. Makeshift residences or lodgings were set up near mining sites with many merchants and general stores selling supplies and tools to gold miners. One of these temporary residences has grown into a powerhouse today and may sound familiar: San Francisco.Today, the word mining has taken on a whole new meaning and has created a new ecosystem.
However, there is one significant difference between mining gold and mining bitcoin.
The process of the mining bitcoin includes the additional responsibility of validating bitcoin transactions and preventing the “double-spending problem.” To avoid the same Bitcoin from being spent twice, miners around the world need to reach consensus together and give their nod of approval. Imagine bitcoin miners as digging through layers of digital rock by running mining software. Miners are compensated for their efforts of running software to validate transactions and are rewarded with Bitcoin.
In a centralized payment network like the United States, trusted third parties (such as banks) solve the double spending problem. Banks can verify whether or not somebody has money in their account.
The creator of Bitcoin - Satoshi Nakamoto - was the first person in the world to solve the problem of double spending for digital currencies in a truly decentralized peer-to-peer network. For the first time in history, value over the Internet can be exchanged with no counterparty risk.
This remarkable achievement is known today as Blockchain Technology.
Blockchain Technology is a universal public ledger, which records every transaction in an ever-expanding record. Transactions must be validated by miners to become legitimate and added to the blockchain. Miners play a vital role in the Bitcoin network by confirming transactions and receive bitcoin as a reward.“Bitcoin gives us, for the first time, a way for one Internet user to transfer a unique piece of digital property to another Internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer. The consequences of this breakthrough are hard to overstate.” - Marc Andreessen
Without getting into the Byzantine Generals Problem or Triple Entry Accounting, I will provide a real-life example. Mining essentially works like this:
Will purchases a coffee from Starbucks with bitcoin. His transaction is broadcasted publicly to the Bitcoin Network. Will’s transaction must be validated by miners to prevent him from attempting to spend the same bitcoin next door at Dunkin’ Donuts.
Will’s transaction is bundled together with many other transactions into what is a called a “block.” A “block” is secured with a virtual padlock by using cryptography. Miners running software race to find the key to the virtual padlock by attempting to solve an extremely complex puzzle. The first miner to solve the puzzle and open the virtual padlock receives newly minted bitcoin as a reward.
The successful miner broadcasts to everyone in the network that Will’s transaction is valid. Will’s account is debited, and the Starbucks account is credited. Each member in the network has a copy of the ledger and updates the account balances.
This process of solving puzzles is repeated over and over again every 10 minutes to generate new blocks and link them together – creating a chain of blocks (hence the name “blockchain”).
Think of the blockchain as a never-ending book. Each page in a book contains information such as the words, page number, the title of the book, or title of the chapter. Similarly, each block in the blockchain includes information on transactions. A page is added to the book whenever miners validate a block.
Mining bitcoin was once just a hobby for computer nerds and cypherpunks. Back in the day, the difficulty of mining bitcoin was so low you could successfully mine it from your computer. When word got out that people could quit their jobs and mine magic Internet money, a digital gold rush ensued.
However, the difficulty to mine bitcoin began to rise as more and more people became interested. Pretty soon, new hardware dedicated to the mining of bitcoin developed called Application Specific Integrated Circuits (ASICS). An arms race followed the invention of the ASIC.
No longer could hobbyists successfully compete to mine bitcoin from their computer, but they had to purchase specific hardware. Similar to the California Gold Rush in 1848, entire businesses established themselves dedicated to selling bitcoin miners supplies. Full warehouses called mining farms sprang up around the globe filled with thousands of ASICS dedicated to mining bitcoin.
As a result of fierce competition to mine bitcoin, people joined together to combine their resources. The first mining pools established in the year 2010 giving them a higher chance to mine bitcoin and distribute the rewards amongst each other.
When Bitcoin first existed, the total block reward for mining a block was 50 Bitcoin. Every four years, the block reward cuts in half. Today's block reward equals 12.5 and the next “Halving” occurring in May 2020.
Today, it is unrealistic to expect a profit by individually mining bitcoin. Your best chance is to cloud mine bitcoin and join a mining pool.
Advantages of Bitcoin Cloud Mining
• No high electricity costs • No bitcoin mining hardware is required • No excess heat from running bitcoin miner • No loud noises from bitcoin miners • Low barrier to entry for less tech-savvy users
Disadvantages of Bitcoin Cloud Mining• You don’t own the mining equipment • Some Bitcoin cloud mining operations have shady practices • Payouts can be low if the mining pool is unsuccessful
Not only can you mine Bitcoin, but you can mine various alt-coins as well. In my opinion, mining alt coins offer the best return on investment. Accumulating a successful altcoin offers better potential than Bitcoin, but is there is also more risk. While Bitcoin will still be around five years from now, I can't say the same for most alt-coins. It is estimated in 2018 alone more than 1000 projects shut down, so make sure to do your own research!Historically, bitcoin cloud mining is a shady business with unreliable payouts from cloud mining services. You need to be on the lookout for the variety of scams out there competing for your money. Below are three mining pools I personally use and recommend. Across the industry, these mining pools are considered the best and offer you the best return on investment.
Genesis Mining was founded at the end of 2013 and is the largest cloud bitcoin mining company in the world. They offer hosted cryptocurrency mining services and a variety of mining-related solutions to small and large scale investors. They have mining farms located in a variety of locations including Iceland. They have earned a solid reputation for its integrity when it comes to the best bitcoin cloud mining platform – Genesis Mining takes the crown.
It’s straightforward to get started earning with Genesis Mining and join their best bitcoin mining pool. All you need to do is:
• Create an account and choose Bitcoin or another cryptocurrency to mine
• Purchase the required Hashpower
• Receive your first payout the next day
Get a 3% discount with Genesis Mining using my code: v5hGWz
HashFlare is a cloud mining service that launched in 2015 and has developed to become one of the largest providers of computational power for bitcoin, Litecoin, ethereum, and other cryptocurrencies. They have over 2.5 million users on their bitcoin cloud mining platform with all payouts distributed among all customers depending on their share of hashrate in the whole system.
They make it easy to set up an account, join one of their best bitcoin mining pools, and start earning cryptocurrency. If you're looking for an alternative to Genesis Mining, check out HashFlare!
Eobot has been operational since 2013 and is located in the Los Angelos, California. They let you sign up for bitcoin cloud mining and a variety of cryptocurrency with their hardware. They are one of the oldest running cloud service providers on the Internet with more than 590,000 users. You can buy a contract from as short a period as 24 hours up to 5 years.
I put together a list of the best bitcoin mining hardware in the industry, along with some cheap alternatives.
Out of all the Bitcoin mining hardware, the DragonMint T1 is by far the most powerful with a hash rate of 16 TH per second. There is intense demand for the DragonMint T1 and its costs a pretty penny – over $2,700.
For an intermediate miner looking to make a profit, the Bitmain Antminer S9i is considered the most popular in the market. For $499, the Antminer S9i is more affordable than the DragonMint T1 and offers a hash rate of 14 TH per second.
If you’re a hobbyist looking to master the art of mining bitcoin than the Raspberry Pi is the best option for you. Learning how to set up your own miner is invaluable. Once you learn how to mine bitcoin, you can begin prospecting other cryptocurrencies that are far less difficult to mine and earn a profit!
For mining cryptocurrencies other than Bitcoin, I recommend joining Genesis Mining. They have the best reputation in the market and offer the best service.
For evaluating cryptocurrency project’s check out my reviews Why TRON Cryptocurrency Will Strike $1 and GRIN - Fundamental Analysis - Better than Bitcoin. You can use the same framework for determining whether to invest in cryptocurrencies on your own!
Let me know if you have any questions or need any help!
I would love to hear your 2 cents! Feel free to check out this article and more on my blog!
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