پنجشنبه, ۱۹ تیر ۱۳۹۳، ۰۴:۲۸ ب.ظ
How Does Cloud Mining Bitcoin Work
If you want to invest in bitcoin mining without the hassle of managing your own hardware, there is an alternative. You can use the cloud to earn your coins
Put very simply, cloud mining means using (generally) shared
processing power run from remote data centres. One only needs a home
computer for communications, optional local bitcoin wallets and so on
Pros
Here’s why you might want to consider cloud mining:
A quiet, cooler home – no constantly humming fans
No added electricity costs
No equipment to sell when mining ceases to be profitable
No ventilation problems with hot equipment
No worry of hardware failures
Practically instant setup: no system building or software configuration
Reduced chance of being let down by mining equipment suppliers.
Cons
Here’s why you might not want to consider cloud mining:
Less fun (if you’re a geek who likes system building!)
Lower profits – the operators have to cover their costs after all
Lack of control and flexibility.
Types of cloud mining
In general, there are three forms of remote mining available at the moment:
-
Hosted mining
Lease a mining machine that is hosted by the provider.
-
Virtual hosted mining
Create a (general purpose) virtual private server and install your own mining software.
-
Leased hashing power
Lease an amount of hashing power, without having a dedicated physical or
virtual computer. (This is, by far, the most popular method of cloud
mining.)
Hosted bitcoin mining
Bitcoin ASIC Mining
Clients pay monthly rental rates for a large range of bitcoin ASIC
mining systems, and can rent a dedicated physical machine for their sole
use.
Many manufacturers are working on their own hosted mining facilities. KnCMiner recently announced that they are developing such a scheme in Sweden that uses renewable energy.
Clients pay monthly rental rates for a large range of bitcoin ASIC mining systems, and can rent a dedicated physical machine for their sole use.
Virtual hosted mining
Amazon’s EC2 platform
Amazon’s Elastic Cloud Computing (EC2) platform was once a popular way of mining scrypt-based currencies, such as litecoin, feathercoin and dogecoin. Amazon comes with added costs either in the form of an advance payment for a year’s service or a ‘pay-as-you-go’ model.
However, a potentially more economical model is the ‘spot instance”,
whereby users can bid for computing time at a price they are willing to
pay. When Amazon has spare capacity, it will grant computing power to
the highest bidder. However, if you bid too low, your mining system may
never come online at all. Furthermore, you may select instances in
different geographic regions that can have an effect on price.
The best type of EC2 virtual machine for mining will have virtual
graphics cards. But, these are harder to access on spot instances.
At one time, it was profitable to mine litecoin this way, but not currently.
Digital ocean
This VPS service offers a very simple ‘pay-as-you-go’ service that became popular
during the early days of primecoin. However, the cheapest plans offer
only modest computing power. For example, the $5/month tarriff has but
one core and gives single-digit kilohashes per second for scrypt
currencies. It should be noted, though, that this could be cost
effective for completely new currencies.
The rest
In principal, mining can be done on any type of virtual host service.
However, one needs to carefully consider the computing capability on
offer. While it is theoretically possible to install mining software on a
web server, it would probably not be profitable.
There have been issues with hacker-controlled botnets that have been
able to direct a vast amount of computing power at mining
cryptocurrencies, or by developing different types of malware to infect more machines.
Leased hashing power
Here are some of the options on offer:
Cloud Hashing
With
this service, clients can specify the amount of hashing power they
want, on a one-year contract. Contracts of 30Gh/s-350Gh/s are available.
Hash Rack
Clients make a single payment for an indefinite time (basically,
until the hardware breaks). A percentage can be reinvested to increase
hashing power, and users can move ‘Hashpacks’ between their mining
workers.
E-Pickaxe
Offers one-year contracts or indefinite contracts paid in bitcoin,
and paid out in bitcoin. The amount of GH per contract is not fixed
because, as they put it: “as we add more hardware, your contracts
have access to that too, meaning as we grow and invest in more hardware,
you benefit from this throughout the term of the contract”.
Bit-Miner
Offers collective mining, a competitive price per GH/sec and rent
shares. There are various assets (rigs) on offer, for instance, the Ant
Miner rig (6×180 GH/sec) is divided into 10,000 shares, with a price per
share of $5.50.
Cex.io
Unlike some of the other services on offer, clients can both trade GH/sec and mine using Cex.io.
You can choose to generate income by cloud mining, or trade on the
GH/sec price variation. Even if you have a sell order on your GH/sec, it
continues to mine in the cloud until sold. Profits are shared using the
PPLNS (pay per last N shares) scheme and all hash-rates are guaranteed.
Nimbus Mining
Nimbus Mining offers 12-month contracts of varying hashing powers, using ‘off-the-shelf’ hardware from various manufacturers.
Bit of Glory
This company offers 12-month contracts at 100 GH/sec, 500GH/sec and 1TH/sec.
eBay contracts
For those who wish to dabble in mining contracts, many eBay users are
now offering 24-hour mining contracts for as little as £1 ($1.67).
These contracts are often fulfilled on old USB Block Erupter miners, so
hashing power would be limited. However, there’s nothing stopping anyone
offering a more powerful mining contract in the future.
How to determine profitability
We have previously covered ways to calculate mining profitability. However, the web services offered are designed to work with your hardware parameters, not cloud-mining parameters.
Even so, you can still use these calculators by thinking clearly
about the costs involved. Profitability calculators (for example, The
Genesis Block) often ask for your electricity costs, and sometimes the
initial investment in hardware. Effectively, you are being asked for
your ongoing costs and your one-off investments.
Therefore, since the provider, not you, is paying the electricity
bills, you can enter the monthly mining bill in place of the electricity
cost.
The conversion process isn’t completely straightforward, though. In
the case of hardware miners, you can work out the monthly running cost
by multiplying your electricity charge (ie: $ per KWh) by the power
consumption of the unit and by a conversion factor of 0.744 (the ratio
of seconds per month to joules of energy per KWh).
But, for cloud mining calculations, you need to do the opposite,
because the provider gives you an (effective) monthly running cost.
Hence, you need to calculate an equivalent cost per kilowatt hour to
feed into the mining calculator. This is done by dividing (not multiplying) the monthly running cost by the 0.744 conversion factor mentioned above.
For example, were you to then plug these numbers into the bitcoin mining calculator
at The Genesis Block website, you would enter ‘0’ for the cost of
hardware, shipping costs and miscellaneous costs, and you would enter
‘1’ for power usage, and then enter the equivalent electricity cost into
the electricity costs line. Note that you could swap the power use and
electricity cost values around and it would make no difference to the
calculator.
This type of calculation doesn’t apply to all cloud mining
businesses, as some have a significantly different cost structure. Hash
Rack or Cex.io, for example, would not be suitable for the calculations
mentioned here.
Risk vs reward
When
engaging in any type of cryptocurrency mining there are risks, but
profitability is possible if you make the right choices. In this
article, we’ve given you some pointers on how to decide which way to go.
In your test calculations, you will likely see that some cloud
mining services will be profitable for a few months, but, as the
difficulty level of bitcoin increases, you would probably start to make a
loss in four to six months and beyond.
A possible remedy to this situation is to reinvest what you have made
into maintaining a competitive hashing rate, but this is highly
speculative.
Disclaimer: This article should not be viewed as an endorsement
of any of the services mentioned. Please do your own research before
considering investing any funds via these services.
Australian mine, server room, accounting and reward and risk images via Shutterstock
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