Bitcoin and cryptocurrency mining can be fun and profitable at times. There is no one way of earning cryptocurrency. Mining is just another method of owning cryptocurrency. However, if you choose to mine as a way of earning cryptocurrency, you are likely to invest in expensive mining hardware.
Unfortunately, not all of us can afford expensive mining rigs. So, as an alternative, they can buy hash power. That way, you are not investing thousands of dollars into mining rigs or ASICs. You are simply renting the computational power of the machine to mine coins for you. Renting a mining rig and mining with it is also a great way to learn how mining works if you are new to crypto.
How to Buy Hash Power (Cloud Mine)?
There are 2 main ways of buying hash power. You can either rent a rig directly from a rig owner or invest in a mining company and receive a portion of their earnings. Cloud mining companies allow you to purchase hash power from them.
Renting a mining rig and investing in a mining company, both has its advantages and disadvantages. Before we determine which one is best suited for you, we must first look at renting rigs and investing in a mining company in great detail.
How to Rent a Mining Rig?
There are many services that provide a marketplace for buying/selling hash power. Nicehash and MiningRigRentals are 2 of our favorites. Both of these services work in a similar way. The basic procedure is as follows:
- Go to Nicehash or MiningRigRentals.
- Deposit cryptocurrency to your wallet.
- Go to the marketplace.
- Select the hashing algorithm you want to buy.
- Set the total amount of Bitcoin you want to spend.
- Add pool details.
- Place the order.
It is very important to verify your pool before you place an order. If you enter incorrect details, your cryptocurrency will be spent to mine nothing. To add your pool, you must provide the following details:
- Stratum hostname or IP
You can find mining pools of a cryptocurrency with a simple google search. Heres a list of cryptocurrency pools to help you start mining. Every pool will provide you with a pool address, port, and other details. Some of the pools require you to signup, and earnings are sent directly to your account. In that case, you have to create a worker, assigned to your username. But some pools send the payout directly to your wallet.
You must provide all the above details of the pool when you place a buy order in Nicehash or MiningRigRentals.
You can check out this video tutorial for help:
Before you start placing orders, you must know a few things. First, you need to know which hashing algorithm, the cryptocurrency you are going to mine is using. Then, you calculate your estimated earnings. You can find the hashing algorithm of the cryptocurrency using a simple google search or here. After you find the hashing algorithm, this is the one you must purchase from Nicehash or MiningRigRentals.
To calculate your estimated earnings, you can use a mining calculator. Input the amount of hash power you will be renting, and the fee of the pool you will be mining at, as follows:
Note: There is no power cost or hardware cost. So, it should be 0. Difficulty and block reward is filled for you automatically.
Click calculate to check your estimated hourly, daily, weekly, monthly, and annual earnings. This is the amount you are expected to earn.
Nicehash is one of our favorite places to rent mining rigs. As of now, they support over 34 hashing algorithms. You can rent hash power from either the U.S. or EU marketplace at Nicehash. The minimum order must be 0.005 BTC.
What is interesting about Nicehash is that they support “Fixed” and “Standard” orders.
Fixed order – Hash power will be constant and guaranteed until the order ends.
Standard order – You set your own price. The cheapest option.
You can learn more about these orders from Nicehash themselves here.
As for fees, Nicehash takes a deposit, service, and withdrawal fee from buyers. You can check out there fee structure here.
MiningRigRentals is another service that enables you to rent mining rigs. What is interesting about MiningRigRentals is that there is no minimum order. They also have a rating system to rate the best sellers of hash power.
MiningRigRentals have live hashrate graphs for each rig connected to them. So, when you place a buy order, you can check the actual hash rate of the rig instead of the seller’s advertised hash rate.
What we like about this service is that, if the rig you rent underperforms, they will calculate the amount you are owed and send a refund to you. Like with any service, fees are an important consideration. MiningRigRentals charges a 2% service fee from buyers.
How to Invest in Mining Companies?
So now that you know how to rent mining rigs, our focus is now on investing in mining companies. Investing in a mining company can be the best choice if you aren’t a tech-savvy person. Just like renting mining rigs, investing in mining companies is best if you have very high electricity expenses.
What you essentially do is, invest in a mining company, then the company sends a payout for the share of money invested in the company. Hashflare and Genesis-Mining are some of these services. You are essentially utilizing a remote datacenter with shared processing power to mine cryptocurrency.
Genesis-Mining is a legit cloud mining company and our number 1 pick for cloud miners. Arguably the most popular cloud mining company. They make it extremely easy for non-tech savvy people to start mining. There are no complex software or hardware configurations when you mine with them. You simply buy hash power and your mining starts automatically.
What is interesting about Genesis-Mining is that you can allocate your hash power to mine one cryptocurrency or multiple cryptocurrencies. This means you can switch to the most profitable coin at any given moment.
As of now, you can buy 2-year mining contracts from them. Their maintenance fee is deducted from your daily earnings until the contract ends. You can check out Genesis-Mining here.
Eobot is another cloud mining company that we find legit.
Invest in Mining Companies or Rent a Mining Rig?
Investing or renting rigs both has its advantages and disadvantages. Investing in a mining company is best suited for newbies. On the other hand, if you have some knowledge about mining pools, difficulty, and how mining works in general, renting a rig is the way to go.
In terms of which one is more profitable, there is no clear answer. The profitability is dependant on a variety of factors like the coin you mine, your hash rate, price of the cryptocurrency, difficulty among many other factors.
It is important to understand that you are not the only one who tries to profit by investing in mining companies or by renting mining rigs. The company you invested in or the seller that rented the rig is also trying to make a return on investment. Those sellers that rent rigs usually charge a higher fee for renting their rig than if they had mined with it. Because of this, the buyer of hash power is constantly in the loss. The only way the buyer profit is if the price of cryptocurrency he mines appreciates in the future. Those who buy hash power is usually doing it for reasons other than profit. Check out the article “How to Earn by Buying/Selling Hash Power” here.
As opposed to renting mining rigs, investing in mining companies can generally make you a good return on investment if cryptocurrency price increases and the difficulty of the network decreases. But, with a price decrease and a difficulty increase, you will lose more than if you had rented a mining rig. Because, when you rent a rig, you can always cancel the order, minimizing the loss. With mining companies, if you cancel contracts, you are likely to lose your initial investment. Check out our article “How much can you earn from cloud mining” here.
So, if you want to buy hash power, you can either rent a mining rig or invest in a mining company. The best places to rent a rig is MiningRigRentals or Nicehash. For mining companies, Genesis-mining and Eobot are our picks.