The majority of cloud mining services you see online are scams, but there are legit ones. If you want to obtain cryptocurrency, the fastest way to do it is to buy some; not cloud mine. CEX and Binance are some of the services that allow you to buy cryptocurrency with debit/credit cards.
What is Cloud Mining?
In the simplest terms, cloud mining is when you utilize a remote data center with shared processing power to mine cryptocurrency. There are so many cloud mining service providers today. These services set up mining rigs and mine cryptocurrency for you for a fee.
If you are considering cloud mining as a way to earn cryptocurrency, there are few things you need to know. Firstly, cloud mining is a slow way to earn cryptocurrency. The majority of people that get into cloud mining expect to earn a profit. Yes! Cloud mining is a legit business but earning profit is never guaranteed.
Can You Profit from Cloud Mining?
Cloud mining services promise a positive ROI, but this is hardly the case. More than likely you will lose money or at best, break even. Cloud mining services charge maintenance fees and electricity fees. These fees will eat up a significant amount of your profit.
Cloud mining service like Genesis-Mining offers 2-year mining contracts. You have to make an investment at the start of the contract. Genesis-mining will mine cryptocurrency for you for a period of 2 years. But, during that time, if mining becomes unprofitable, meaning electricity and maintenance costs exceed profit, mining will be paused.
You may say if the price of cryptocurrency rises, it can be profitable. No. When the price of cryptocurrency rises, the difficulty of the network increases. When that happens, your mining reward will be lowered. Your payout in dollar value will be constant regardless of the price increase.
But, what if difficulty decreases?
Yes! If difficulty decrease, you can expect an increase in mining reward. But, this scenario is very unlikely. If you look at the Bitcoin difficulty chart, you will see that it always increases. The difficulty will continue to rise and your profit will be lower and lower.
There is one scenario where cloud mining can actually be profitable. That is if the price of the cryptocurrency you mined increases. But there is a catch. The cryptocurrency must not increase in price while mining but after mining contract has ended. When that happens, the value of the cryptocurrency you own will be higher than the initial investment you made.
When mining becomes profitable, all cloud mining services up their prices. The customer can never guarantee a profit.
If you are patiently waiting for the value of cryptocurrency you mined to increase, you’d rather want to just buy cryptocurrency and hold instead. This is much riskier than buying cloud mining contracts. Buying cryptocurrency is always a better option when compared with cloud mining.
Crypto veterans always never get involved with cloud mining. The ones that do put money into cloud mining are the newbies. A lot of newcomers get into cloud mining because of the exceptionally high yield these cloud mining services promises. If a cloud mining service promises a high yield, it is likely to be a scam. Think about it! If cloud mining was that profitable, wouldn’t they mine it themselves?. Newbies that do not do their research always end up losing money.
How to Spot a Cloud Mining Scam?
Ask these questions:
- Does the service promise exceptionally high yields? If a cloud mining service promises exceptionally high profits, it is a scam.
- How good/bad are the reviews? Check for users’ reviews on Google. BitcoinTalk and Reddit. Be aware of positive reviews that have affiliate links.
- How old is the service/website? A scam cannot continue for long. Please be careful about new cloud mining services.
If cloud mining is not profitable, why do people still cloud mine?
Making a profit is not the only goal of every cloud miner. Some get into cloud mining as a way to obtain cryptocurrency. Some countries have banned buying and selling of cryptocurrency. Cloud mining could be the only way to obtain cryptocurrency.
The majority of services that do allow buying and selling of cryptocurrency always require KYC. Cloud mining is one way to avoid KYC. Services like Nicehash and MiningRigRentals allows users to purchase a massive amount of hash power and mine their favorite coins.
Some of the newer coins do not get listed on cryptocurrency exchanges. Cloud mining is the only way to obtain these coins.
So, to answer the question, “Is Cloud Mining Legit?”, Yes! Cloud mining is a legit business but turning a profit is never a guarantee. Genesis-Mining and Eobot are some of the legit cloud mining services available today.