What is the investment thesis behind Cryptocurrency and Cryptocurrency cloud mining?
The basic idea of Cryptocurrency cloud mining is to invest X Cryptocurrency in a cloud mining contract, with the hope that X+Y Cryptocurrency will be returned.
The returns are in the currency your mining contract is for, so if your contract is for mining ETH then it will produce ETH.
Investments in Cryptocurrency cloud mining can be done in both USD and Bitcoin, but the returns will most likely be in Bitcoin. Thus the ROI can also depend on the Exchange rate between Cryptocurrency and USD.
What is cloud mining?
Cryptocurrency mining does not happen in clouds, it happens on the ground in huge server farms. These farms are buildings which have row upon row of computers.
These computer process transactions in order to obtain a block reward. The block reward is found by mining a block or an entry in the blockchain ledger/database. This process takes a lot of resources to execute.
That computational power requires crypto and computer engineers, buildings, computers and most importantly electricity. This electricity is the main overhead for Cryptocurrency and other cryptocurrency mines.
The more computers there are trying to mine a block, the less likely it is for a single computer to mine a block because there is more competition. This drives down the ROI of Cryptocurrency mining.
Electricity is one of the great overheads in Cryptocurrency cloud mining it is used to power the computers, operate fans to keep the computers cool and filter out dust from the air.
Single Cryptocurrency mining can also be done from the comfort of one’s own home but, there are costs. A miner can stop working at any time, and when it does the ROI goes down. Repairing it requires money, time and knowledge. Its hash rate will not decrease but the competitivity with other Cryptocurrency miners will decrease over time, eventually, the cost of running a miner will become more than its profits.
Legitimate Cryptocurrency cloud mining contracts offer benefits such as;
- They are fine-tuned for maximum ROI.
- They are constantly shifting their mining power to the most profitable coins
- They upgrade their mining server so that they remain competitive
- Can source electricity and cooling at much better rates than a single individual can.
How to avoid a Cryptocurrency cloud mining a scam?
- Identifiable owners
- Visual verification of their mining setup by multiple parties for example https://www.youtube.com/watch?v=Nc9cxWnp30o)
- Official documents
- More than just an idea, but an implementation of that idea
What are some legitimate Cloud mining services?
Hydrominer
Is a new cloud mining service which operates in Austria, one of its main advantages is that it has cheap hydroelectricity powered by the many rivers that crises cross theAlps. Hydrominer’s electricity is cheap because it does not need to consume fossil fuels; water passes through turbines which generate electricity. This gives Hydrominer a competitive edge against other cloud mining services. Hydro Miner’s solution is scalable, the server farms will be housed in containers which house all the equipment, this allows them to easily operate their mining farms efficiently. The whole containers can be sent for refits and upgrades making the process cheaper and faster.
Hydrominer has an ongoing ICO, this means that they have invited contributors to finance their expansion. When contributing to their ICO investors will be acquiring ERC20 tokens, these are managed through a special online wallet. These tokens represent energy, which will be used to mine cryptocurrencies. It will still be possible to purchase Hydro tokens after the ICO, but their price will be slightly higher.
The owners of these tokens will be entitled to the cryptocurrencies generated with this energy.
For more information please visit:Â HydroMiner.org
