Latest news about Bitcoin and all cryptocurrencies. Your daily crypto news habit.
Cloud mining is becoming a popular way to invest in cryptocurrencies. Mining crypto coins is no longer an endeavor one can try on their own because the equipment is too expensive and too complicated to use and maintain.
That’s why many small investors are using cloud mining as a way to invest and mine their own coins without having the funds to set up a mining facility. The companies that do and that provide this service charge a fee for doing so. This means that for a share of your profits, you can get in on the investment with no initial payment.
How Does it Work?
Cloud mining services work the same as with any other Bitcoin mining facility but the main difference is that you don’t own the equipment that’s being used. The equipment is owned, operated, and maintained by the company with which you have the contract. Some contacts allow you to choose which equipment is being used in particular, but you’re still just renting it.
The clients get to keep and withdraw the bitcoins that are created in the process and to use them and sell them as they see fit.
No Initial Investment
The equipment used to run cloud mining facilities such as the ones found on Truely is rather expensive and difficult to maintain. That’s why new investors (other than very few of the richest out there) aren’t able to set up mining farms and produce coins on their own.
The biggest advantage of cloud mining comes from the fact that there’s no such investment and that you can simply sign up for a contract, pay a set fee and start earning Bitcoins right away.
How Long Does A Contract Last?
It differs from one provider to another, but for the most part, the contacts can last from one to three years. Some companies provide a lifetime contract, but that’s a bit of a reach since cryptocurrencies are still kind of new. It’s also possible that investing in your own mining farm can be a better way to go during that timespan.
Some companies also allow you to send your contract to another user, but those are in the minority. In most cases, you’re stuck with your contract until it expires.
Legal Grounds
When it comes to the legal and tax side of things, cloud mining companies are legal to operate and they provide simple and clear evidence of your affairs. This is a rather useful feature to have since most crypto-related profits are in a gray area. There are still some countries that don’t have tax policies when it comes to profits made in cryptocurrencies.
This will soon change since the governments are aware that cryptocurrencies exist and that more and more people are using them. Having a company that has a legal and a tax team behind it gives you peace of mind.
No Control
There’s much less control over the process if you’re using cloud mining when compared to having your own mining facility. You don’t get to choose the equipment or the teams that run and maintain it. Other policies implemented by the cloud mining companies are also outside the reach of the users and you need to get by with what you’re offered.
For some users, half the fun is in the IT side of things and setting up the facility of your own. If you’re one of those- you won’t enjoy cloud mining as an option. However, if you’re in it for the profit alone, this shouldn’t matter.
Less Profit
Since there’s no initial investment, the equipment, and the maintenance needs to be paid somehow. The mining company also needs to make a profit from the arrangement. All of these will cut into your profits and you should expect the profits to be smaller than they would be if all of these expenses are covered by the user.
However, since there’s no initial investment needed to purchase and set up the equipment – you get to earn right away. It’s a matter of balance and most users are on the side of being able to get a foothold in the market as soon as possible.
Scammers
There are a lot of scammers in this area since a lot of the profits and work itself happen online and without tangible assets. This is something you need to prepare for right away. The best way to do so is to do your due diligence and to work with trustworthy providers only.
The reviews can help with this as well as making sure that the provider is set up and registered with the proper government agency. It’s also a good idea not to start long-term contracts right away and to test the service for a while before committing.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.