What is Bitcoin cloud mining
At the end of the era of Bitcoin mining using individual capacities, large companies that provide mining equipment for rent came to the fore. At the same time, miners began to create communities (bitcoin pools) to join forces and postpone the limits of the first and most popular digital currency.
Various cryptocurrency mining schemes: solo mining and pooling
The classic principle of Bitcoin mining
The process of generating bitcoins (Bitcoin, BTC) is based on connecting the power of a personal computer to carry out payment transactions and synchronize all users of the cryptocurrency network. Unlike other networks, the Bitcoin system does not have a control center, and its participants are located in different parts of the world. Thus, mining is not only the release of new MTC units, but also a method of data processing.
All participants who perform certain work to support the life of the network are rewarded for this. The mining process is a key component of the system, which will remain necessary even after the last bitcoin is received (the issue of BTC is limited to 21 million).
Switching to cloud mining of bitcoin
Since 2009, the bitcoin rate has increased hundreds of thousands of times, and the mining process has become many times more complicated. To calculate the algorithm, more powerful equipment became required, and therefore solo mining on video cards ceased to be relevant a few years ago. Investments in individual mining farms and spending on electricity simply stopped paying off. In this situation, miners began to look for new ways of earning money that could bring even a small, but constant income.
This is how cloud mining arose – associations of miners under a common wing or the creation of separate structures using cloud services to generate more profit than individual work.
Technically, it looks like this: the organizing company buys high-quality modern equipment, adjusts it and rents or sells it to customers. All problems related to maintenance of equipment, electricity bills, Internet connection and other problems also fall on the shoulders of the company.
Cloud mining involves joint actions of miners united in bitcoin pools
Cloud mining has become a good option for Bitcoin network members, saving them a lot of hassle. All cloud services are divided into two types: paid and free. In the second case, we are talking about the provision of certain capacities at the disposal of the client without paying rent. In fact, companies get their income only from commissions. It is impossible otherwise, because to ensure the smooth operation of a business, substantial sums are required for maintenance of equipment, rent for premises, electricity, and so on. As for customers, it is much more convenient for them than assembling a farm at home and enduring the hellish noise of coolers. In addition, even free cloud mining today practically does not use video cards, but is switching to more powerful, efficient and compact equipment designed specifically for mining – ASIC chips.
How cloud mining works
The principle of MTC mining in the new conditions has not changed – the equipment still performs mathematical tasks for processing and confirming transactions. The adjustment was made only to the capacity, which became many times higher. The key task of “cloud miners” is to accelerate the mining process and increase the profitability of their activities. The rental company, acting as a server, earns from commissions and payments for the provision of capacity.
On average, it takes up to 10 minutes to search for one hash with this organization of work. Such high performance was made possible by connecting huge capacities and uniting a large number of miners into groups. None of them can control the process of crypto mining and predict in advance when a new block will be created.
The creation of cloud mining made it possible to mine bitcoins at a faster speed
Obtaining information about confirmation of operations largely depends on the previous blocks, which is necessary to form the structure and build a chronological sequence of transactions in the chain. That is why the cancellation of payments already made in the Bitcoin system is even theoretically impossible. When creating two new blocks at the same time, the equipment processes the first block first, while switching to a longer chain after creating a new block.
When working in a pool, none of the participants can increase their profits through any fraudulent activities. Any contributions to a single block disrupt the operation of the system, which instantly rejects distorted information. If a whole company participates in mining, combining its capacities, then there is no need for fraud at all, because the reward for successful operations goes to the common piggy bank.
The future of cloud mining
Since the advent of cloud services, many predicted an imminent crisis for them, similar to the one that overtook the individual earners of military-technical cooperation. Nevertheless, this method of extraction still exists today, is moving to a new technological level and continues to bring good income to both rental companies and their clients.