The difference between cloud mining and hosted Bitcoin mining
The crypto mining industry has evolved from miners having to physically host their application-specific integrated circuits (ASICs) and graphics processing units (GPUs). Today, a person interested in Bitcoin (BTC) mining can choose to purchase only the power needed to conduct the actual mining. They also purchase the physical mining machines and entrust their management to a third party.
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The first option where a miner only purchases the mining power is called cloud mining while the second option of purchasing mining machines and entrusting their management to a third party is known as hosted mining. What�s the difference between cloud mining and hosted Bitcoin mining?
Cloud mining and hosted Bitcoin mining: What is cloud mining?
Cloud mining is the act of mining Bitcoin and other cryptocurrencies using rented mining power known as hashing power. The actual mining hardware such as ASICs and GPUs are operated by a company that rents out their computing power to customers.
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This mining option doesn�t require a miner to buy the physical equipment or even worry about things like the equipment�s maintenance. Because you only rent the hashing power, you don�t own the physical devices doing the actual crypto mining tasks by solving complex mathematical hash functions.
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Renting hashing power involves signing a contract stipulating critical terms like the monthly fee payable and the duration you wish to conduct cloud mining with the company. The contract also states the penalties incurred in case you decide to cancel the agreement before the end of the contract.
Cloud mining and hosted Bitcoin mining: Is cloud mining profitable and safe?
The profitability of cloud mining depends on several factors like the monthly fees charged by the provider, early contract termination costs, and the projected earnings. How much the provider charges to withdraw your earnings also affects your profits.
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With the current competition in the mining industry, it�s highly unlikely to make consistent profits with cloud mining. However, cloud mining providers may provide extra advantages like switching between coins to improve profitability.
Is cloud mining safe and worthwhile?
There�s no straight answer to this question. Although following this route to mine Bitcoin saves you from spending a lot of money in upfront costs incurred when setting up a physical cryptocurrency mining rig, there are no guaranteed returns and no assurance that the monthly fees go into supporting the actual running of the mining machines.
Cloud mining and hosted Bitcoin mining: What is hosted Bitcoin mining?
Hosted Bitcoin mining is the act of mining BTC using your mining equipment that is managed by a third party. In this setup, your ASICs are operated by a company like EndlessMining.com mostly in a different location, hence the term �hosted.�
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You may choose to individually purchase the mining machines and deliver them to a hosting company or purchase them from the hosting company. The second option is usually better because the hosting company buys the equipment in bulk meaning that they get them at better prices an advantage it transfers to its customers.
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The hosting company provides services like cooling, internet, maintenance, and powering your machines at a cost. Interactions with the company are usually done online.
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A contract between the company and the client defines the terms of service. Critical contract details include the expected uptime of the ASICs, shipping costs in case you need the machines delivered at your physical location, and the cost of terminating the contract immaturely, etc.
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Hosting companies like EndlessMining.com have qualified onsite technicians who perform timely troubleshooting, maintenance, and repair of ASICs ensuring that your mining equipment lasts longer.
Cloud mining and hosted Bitcoin mining: Is hosted Bitcoin mining profitable and safe?
First, crypto mining doesn�t have guaranteed returns. However, hosted mining saves you from constantly worrying about things like power outages, internet strength, security of the equipment, and maintenance.
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The chances of being a profitable miner through hosted mining are boosted by the fact the hosting company may offer a better price when purchasing the equipment plus lower electricity rates.
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Some hosting companies use renewable energy sources like wind, geothermal, and solar, which may contribute to them offering even lower electricity costs.
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The safety of mining equipment is guaranteed by the hosting company. Since you can directly monitor the mining equipment�s hash power and uptime, it eliminates the possibility that the hosting company will divert your ASICs� power to another client or fail to provide the agreed-upon uptime mostly of more than 95%.
What are the benefits of hosted Bitcoin mining?
Hosted cryptocurrency mining is beneficial to people who want to conduct Bitcoin mining but do not have the time to constantly watch and maintain the mining equipment.
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It�s also ideal for miners looking for an accessible way to mine BTC and other coins even when they are located in locations not suitable for crypto mining due to factors like high electricity and cooling costs.
Cloud mining and hosted Bitcoin mining: What is the difference?
The difference between cloud mining and hosted Bitcoin mining lies in the nature of the two cryptocurrency mining methods.
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The major differences include:
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- With hosted crypto mining, you own the physical mining equipment unlike with cloud mining.
- The profitability of hosted crypto mining is presumably higher than with cloud mining
- Cloud mining requires lower upfront costs compared to hosted Bitcoin mining
Conclusion
Cloud mining and hosted Bitcoin mining are both viable crypto mining options. Although a hosted Bitcoin mining operation has a higher upfront cost, it's relatively more profitable than cloud mining. When choosing a hosting company, go for one with a good reputation and has been in the game for some time. A reputable and seasoned hosting company has the experience necessary to maneuver market downturns, ensuring you don�t lose your ASICs.