by David Crypto

November 30, 2021

CLOUD MINING

A quick overview

Cryptocurrency and blockchain have become a very hype topic since 2017. The digital space is saturated with terabytes of information about bitcoin, altcoins, blockchain, as technologies that are about to change the global financial system beyond recognition. The covers of glossy magazines are full of pictures of newly minted millionaires who made their fortune on transactions with cryptocurrency. But is it that easy to get your foot in the door of this business, especially for beginners?

miner

Cryptocurrencies will be an upward trend of the twenty-first century for a long time, and a huge number of investors and startups will become millionaires in this market. Cloud mining services are one of the available ways for ordinary users to start mining bitcoin or Ethereum without investing in equipment. 

The scheme of this business is quite simple: the company buys mining power, starts mining cryptocurrency, and attracts investors to scale the business.

cloud mining

Thus, an ordinary person can invest a certain amount of money by buying a certain share in the company’s capacity (sometimes it can even start at around 10 USD), a person receives his initially agreed profit from mining (minus the company’s commission). If the whole process is structured transparently and without deception, both parties receive their profits. The company, in turn, receives an inflow of investments to expand its business.

Possible risks

The beauty of this scheme attracted many crooks to the market, who, having collected money from investors, simply disappeared with all investments. Google search pages give out dozens of little-known websites that offer this service. And the amount of real-deal companies in this sector is considerably low.

The problem is that it is practically very difficult to determine how many ASICs (mining devices) a company has, where they are located and whether it is possible to legally protect the interests of investors. Therefore, cloud mining is a mixture of real investment, gambling, and trust in a startup.

miner

More or less reliable cloud mining can be found by reading the info on specialized forums that value their reputation. An additional plus can be an official partnership with some giant of the fintech industry or affiliation with the state. 

Even if the company is 100% alive & well, there is an audit investor who can lose the expected profit in case of sharp and long-term corrections in the value of the crypt for a long time on the market. For example, a prolonged drop in bitcoin prices in 2018 led to the fact that the profit received from mining, could not cover investments in equipment. Both the company and the investor suffer losses up to the bankruptcy of the company and the loss of depositors’ funds.

Summary

Newcomers to this market should understand that cloud mining is not a “quick money” button, but just one of the tools, and a high-risk one! If the desire to become an investor of such a business model is still strong, it is advisable not to invest credit funds and only the amount that is not critical to lose.

All of the above does not at all depreciate the cloud money model but is intended to protect the investor from rash actions and reduce the risk of losing funds. This market is dynamic and does not stand still, and knowledge is a very good advisor and a guarantee of success.

About the author 

David Crypto

Hello. Today, Bitcoin can serve as an organizational principle for all of humanity, and I want to invite you to this world of the crypto industry!

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