Bitcoin-Cloudmining.io

How to Make a Profit with Cloud Mining and When Does It Make Sense?

Crypto Coin with question mark
There is a lot of information online about cloud mining, but some of it is incorrect or overly emotional. The big question about cloud mining is: How to Profit from it? The simple answer is that normally you can only make a profit with cloud mining if you’re doing solo mining and get a bit lucky. Let’s explain why and see afterwards, that there is one noteworthy exception to this rule:

Solo Mining vs. Pool Mining

  1. Solo Mining: You only earn a reward if you personally find a block. It's riskier obviously because you might not find anything, but if you do, you get the full reward. In case of mining bitcoin: more than USD 300.000 !

  2. "Normal" Pool Mining: In this case, you mine together with others in a pool. If a block is found, you share the reward with the other miners based on your contribution (measured by your mining power or "hashrate"). There are two main methods to divide the reward: PPS (Pay Per Share) and PPLNS (Pay Per Last N Shares).

Making Mining with your miners Worthwhile

  1. When doing normal mining in a pool, you’re guaranteed a small but consistent "safe" reward. However, you need to make sure your costs are lower than the income from mining. You can calculate your costs by factoring in electricity usage and the price of mining equipment if you are mining with your own ASICs.

  2. For example, if you use an Antminer S19j Pro with high electricity costs, your daily profit may only be a small amount after electricity costs are deducted, i.e. 0.3 USD per day if you have electricity costs of 0.08 USD/KWh. If your costs are higher than the mining income, it’s not profitable unless Bitcoin’s price increases and you have not sold your mined Bitcoins right after mining them.

THe Situation with Cloud Mining

  1. Cloud mining is when you rent mining power from a provider like Bitcoin-Cloudmining.io . The cost is fixed, but the income you receive depends not only on the mining pool, but rather on the rewards you can make within the duration and hashrate of the rental. To see if cloud mining is profitable, you can use a mining profit calculators (here and here for mining bitcoin)

  2. Cloud mining generally isn’t profitable unless the provider offers a price that’s (mistakenly ?) low or if the cryptocurrency you’re mining increases in value very quickly. Cloud mining providers need to cover their own costs and want make a profit, so their prices are usually higher than the actual mining reward the period of the rental.

Do Solo Mining WHen Cloud Mining

You can make a profit with cloud mining, but only if you’re solo mining and have a bit of luck. This is because solo mining doesn’t involve sharing the reward with others, and if you find a block, you get the entire reward. However, the chances of finding a block are low, so it’s like a lottery. If you’re lucky, solo mining could give you a large reward, especially with coins like Bitcoin Cash (BCH), which have higher chances of finding a block than Bitcoin.

The EXCEPTION WHEN CLOUD MINING CAN MAKE SENSE WITH NORMAL POOL MINING

There is a scenario however when cloud mining services can profitably be used for normal pool mining. From time to time, a cloud mining provider may reduce his prices because of overcapacity or the fear that the prices for crypto coins may fall. To make sure their mining equiment still makes some profits during those (expected) downturns, he may offer a price for a longterm rental that is not much higher than your cost for buying and owning a miner yourself. Now, if prices do not fall during the time of the rental, but rather climb against the expectation of the cloud mining provider, the renter can make a handsome profit even with normal pool mining. This is because the price he will get during the rental for selling the minted coins will be much higher than at the start of the rental. And the hashrate provider has to deliver the specified hashrate without being able to increase prices. 

Conclusion:

Cloud mining can be profitable, but normally only if you’re solo mining and lucky. Normal pool mining only makes sense in special circumstances. Therefore: always make sure your costs are lower than your potential earnings before you start.

If you have any questions, feel free to reach out!