Month: October 2019

The pros and cons of cloud mining

Bitcoin mining doesn’t have to be an individual pursuit. In fact, thanks to the concept of cloud mining, both mining operations and cloud customers can help share in the costs and rewards of the industry. Just like everything else though, there are pros and cons to cloud mining.

The first pro of cloud mining is that it reduces costs, for both the operation and the consumer. A Bitcoin mining operation that opts to offer cloud services can use subscriber funds to help off-set their operating costs, and ensure a baseline income regardless of how the market performs. For the consumer, subscribing to a cloud service means skipping the costs of purchasing hardware and infrastructure.

Continuing that thought for the consumer, anyone can subscribe for a cloud mining service, anywhere in the world. That’s a huge advantage for those who might not have the funds to start up their own operation, or those living in hot climates or energy-expensive areas where it wouldn’t be cost effective to mine cryptocurrency.

As a cloud mining contract typically offers a certain amount of hashrate for a fee, the fluctuation of the markets could then be both a pro and a con. You’re paying to mine Bitcoin regardless of the price, so if the market explodes, it can be quite lucrative. If the market tanks, it could be a losing proposition. That’s not that different from running your own mining operation, but the nature of being in a cloud contact offers less flexibility to the end user.

Giving up that flexibility and sense of control can be another con. Without having total control over the mining operation, you may be unable to switch which coin you’re mining as fast as you’d like to, and potentially give up bigger block rewards as a result. It’s less risky, but there’s a drop a necessary drop in reward that comes with that.

Allowing the cloud provider to handle most of the responsibility and hard work of running a mining operation can be a huge pro. They’re maintaining the equipment, keeping it cool, and delivering you a potentially profitable service for your subscription fees. If you’re unable to afford the space and time to manage these things yourself, because you’re still a student or living in a small family home for example, these become massively important pros.

The decision to pursue cloud mining is really just that, a choice. It has lots of pros and cons, and weighing all of them can help you decide if it’s the right choice for you, or your operation.

Bitcoin mining difficulty: How competitive is mining today?

Bitcoin mining has continued to evolve as the cryptocurrency industry has grown from one level to the next. Having begun as a simple task which could be completed by an average computer, mining has now become much more complex, requiring sophisticated equipment and a lot of energy. Companies have sprung up across the world developing Bitcoin mining equipment that gives the miners an edge over their rivals. The change in the mining patterns has been as a result of the constant shifts in the Bitcoin mining difficulty.

Bitcoin mining difficulty is a value that indicates how hard it will be to find a hash that’s lower than the target, which the system defines. It shows how hard it is to compete for the mining rewards on the Bitcoin blockchain with the other miners.

The Bitcoin mining difficulty is automatically adjusted every two weeks to account for any changes in the hash power available from the miners. So, how competitive is Bitcoin mining today?

In the 2018 crypto winter, many miners went out of business. The prices were low and the revenues gained couldn’t account for the heavy energy costs. The number of miners dropped drastically, hitting its lowest in December. The mining difficulty went down in response as well. However, cryptos have bounced back since then, leading many of the miners to resume mining. The mining difficulty has also increased quite significantly to reflect these changes.

This year, Bitcoin mining difficulty has repeatedly smashed previous records to set new all-time high records. This has been as a result of the steady rise in the network’s computing power. In the month of August, the hash rate hit a record-setting 82.5 TH/s (terahashes per second). For reference, in 2018 before the crypto winter took its toll on the miners, the record hash rate recorded had been 56 TH/s. It later dropped to 32 TH/s in December last year before embarking on a consistent rise since then.

With the assumption that most of the mining is being done by some top-of-the-range equipment, it’s estimated that over 100,000 miners have begun operations in the past month. This is an indication that Bitcoin mining is now the most competitive it has ever been.

Mining equipment manufacturers have strived to keep up with the increased demand for the equipment. As these manufacturers develop faster and more efficient mining equipment, the mining hash power is expected to greatly increase, further pushing the Bitcoin mining difficulty upwards.