Hosted Mining vs. Cloud Mining: A Comparison

As Bitcoin and other cryptocurrencies continue to grow, more and more opportunities to capitalize on these technologies are presenting themselves. One major way in which consumers and businesses alike are profiting from the surge in cryptocurrency is via mining. Yet, cryptocurrency mining is extremely complex, and requires knowledge of decentralized protocols and the correct equipment in order to succeed. For this reason, the services of cloud and hosted mining solutions are beginning to emerge as legitimate ways to mine Bitcoin with the help of third-party solutions.

Mining: What to know to get involved

Cryptocurrency mining requires securing a blockchain network by completing complex algorithms, known as proof-of-work (PoW) mining. Because these equations are so complex, it takes a significant amount of computing power to solve them, and in turn, receive new cryptocurrency as a reward for doing so. This makes the most important aspect of mining hashing power, or, the rate at which a piece of equipment can solve these complex algorithms.

As blockchain networks grow, so do their hash rates, making it more difficult and resource intensive to successfully mine new coins. For example, the current Bitcoin hash rate is above  50 million tera hashes per second, up almost tenfold from just a year ago. This makes it more difficult to do the necessary work required for securing a block on the Bitcoin blockchain. For this reason, having access to as much hashing power as possible, while being the most energy efficient, is the key to mining profitability.

Hosted Mining

Hosted mining allows a provider to build and lease/sell mining equipment directly to a customer. This model can play out in a number of ways, but generally involves a customer purchasing mining equipment from a hosted service, or purchasing equipment on their own and having it sent directly to a hosted data center or mining farm. The customer then pays for electricity and storage costs associated with hosting. This allows someone to mine a blockchain with purchased equipment without having to deal with the storage, electricity, and maintenance concerns of running mining hardware on their own.

Hosted Mining - Blog - Blockbase

Hosted mining provides more control on the part of the purchaser, as they have access to the exact specifications and output of their mining equipment, and can have remote access into their mining hardware to monitor exactly how it is performing. Additionally, because each customer owns their mining equipment, cryptocurrency never has to be touched by the hosted service, lessening the security risk between the miner and a third-party service.

Yet, customers of hosted mining services have a relatively high upfront cost via the purchasing of mining hardware. This doesn’t include the costs associated with repairing mining equipment over time which can add up.

Cloud Mining

Cloud mining allows customers to pool processing power together in order to mine cryptocurrency on a mass, and cheaper scale. Because there is no cost for purchasing mining equipment, it is relatively cheap to get started on a cloud mining services, where customers generally pay for the electricity consumption and fees associated with mining, as well as a percentage of the block reward for cloud mining services.

Anyone who is cloud mining should ensure the service they are utilizing can guarantee the hash rate and mining capabilities they are specifying, as fraud and false advertising is rampant in the cloud mining industry. Security is also key here, as cloud-based mining services collect mined coins and distribute them to customers


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Do the Proper Research

Anyone looking to begin mining, be it with a hosted or cloud-based solution, should make sure to do the proper research before getting involved. This means understanding the hashing power, energy usage, and monthly hosting fees associated with mining. Some blockchains offer calculators to better understand the cost of mining and how much profit to expect based on the network hash rate and other variables.

A proper mining solution should be transparent in their payment method, contract, fees, energy usage, and more. Blockbase is a mining service provider which provides a trustworthy mining solution while also allowing users to purchase physical hardware from the company to be hosted by us. Customers never need to deal with hardware setup, installation, or maintenance, yet still have full control over their mining. At Blockbase, we are also fully transparent with our rates and fees, allowing each customer to calculate their profit potential from the get-go.

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Why Mining is profitable

Mining is a complex Calculation, running on for this purpose built hardware. But how is that generating money? And how much do you have to invest to make a passive income. With our free Mining Profit Calculator you can learn how profitable Cryptocurrency Mining can be for you. Click the button, fill out your details and you receive your free Profitability Calculator within minutes!

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