Gate.io Blog What is Cloud Mining?

What is Cloud Mining?

22 April 11:44

Cloud mining is the process of mining for cryptocurrency using purchasing or leasing mining equipment from another provider. The third-party that provided the equipment will, in turn, be responsible for maintaining the equipment.

There are common models for cloud mining. Some of them include hostel mining, leased hash power, etc.

Cloud mining has amazing benefits, including reducing the overall cost of mining. It also allows investors who lack the technical know-how to mine cryptocurrencies.

However, the shortcomings of cloud mining are that it centralized mining to its farms. Its profits are also susceptible to demand.

Cloud mining is mining a cryptocurrency( e.g., bitcoin) using rented cloud computing power rather than hardware or any related software. Using cloud mining, people worldwide can participate in the cryptocurrency mining process remotely for a basic cost, making mining more accessible to a larger number of people. In addition, cloud-based mining eliminates equipment maintenance and direct energy costs.

Cloud mining is one of the fastest-growing trends in computing and technology today. The cloud mining process uses cloud computing to generate blockchain-based cryptocurrencies. It is an Internet-based service that provides processing, database services, software, and file storage over the cloud. A good example is cloud mining on Gate.io where you can purchase mining contracts, without needing to buy equipment, run or maintain a mining rig.

Cloud mining uses the principle - of outsourcing computing work - to mine cryptocurrencies, such as bitcoin, litecoin, and dogecoin. Cloud mining allows you to rent computing power from a data center globally instead of buying expensive computers or maintaining them yourself.

Cloud Mining Models

Cloud mining is most commonly conducted through hosted mining. This model involves customers purchasing or leasing mining equipment at a miner's facility. In this model, the miners are responsible for maintaining their equipment and ensuring it works properly while the customers use it. This makes the customer be in indirect control of their cryptocurrency. As an example, Shamming uses this model.

Another model for cloud mining is the leasing of hash power. This model leases out computing power (hash power) associated with a cryptocurrency to mining farms. Also, a percentage of the farm's earnings from mining cryptocurrencies is shared with clients. To get started, individuals open cloud mining accounts online through the company's website and select certain features such as contract length and hashing power. Reports indicate that leased hash power is a popular method for mining altcoins (any coin or token that isn't bitcoin or ether). Companies that use this model include Gate.io, ECOS, ScryptCube, etc.

How Cryptocurrency Mining Works

bitcoin mining occurs either in the cloud or locally. While the mining operation results in new cryptocurrency tokens being awarded to miners, the vast majority of cryptocurrency tokens are used for a much more crucial purpose: to maintain the validity of a distributed ledger I.e blockchain. During bitcoin mining, computers use high-performance computational math to solve complex problems; they are so complex that they can't be solved by hand and are complex and time-consuming enough to task even extremely powerful computers.

A part of the job of cryptocurrency miners is to verify that new transactions added to the blockchain are accurate. bitcoin miners, in particular, ensure that it is not duplicated in a unique process called "double-spending." One of the major setbacks with minted money is that there are many counterfeits. However, it cannot be a victim of double-spending. With digital currencies, it is much more possible. Miners use their power in computation to solve the mathematical cryptography that prevents double spending in a decentralized way.

Gate.io launched a cloud mining product in August 2021 to meet the demands of users. Contract packages for cloud mining start at $47.

Cloud mining on Gate.io

The Gate.io cloud mining product currently supports bitcoin mining. However, the company plans to introduce a product for Ethereum cloud mining shortly. Gate.io cloud mining offers full Hashrate within guarantees, immediate access, and multiple contract option.

Source: Gate.io Home page

The official Gate.io website can be accessed using the linked URL, selecting "Finance" in the top menu bar, clicking "Cloud Mining," and selecting the product that best suits your needs.

Costs associated with the mining contract will be deducted from the user's account. Hence, users should ensure a sufficient amount of USDT in the account before purchasing.

Author: Gate.io Observer: M. Olatunji
* This article represents only the views of the observers and does not constitute any investment suggestions.
*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all other cases, legal action will be taken due to copyright infringement.

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