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Cryptocurrency Cloud Mining vs Hardware Mining — Which is More Profitable?

  • George Shnurenko
    ⭐ Features

    The battle of cloud mining vs hardware appears to be in favor of good old hardware mining


Cryptocurrency Cloud Mining vs Hardware Mining — Which is More Profitable?
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Bitcoin, Ethereum, Litecoin, and other less popular altcoins are now generating an immense level of buzz among crypto enthusiasts and this has caused the adoption of different cryptocurrencies to surge. Although the concept of mining coins is very appealing, there’s often the debate about which offers more profitability, cloud mining or hardware mining?

To really drive the point home, let’s understand what mining is all about.

What is cryptocurrency mining?

Before a cryptocurrency transaction can be carried out, it must be verified on the Blockchain network.


The process of validating the transaction on this network is known as mining and those in charge of the operation are referred to as miners.

As easy as this process sounds, it is a lot of work. In order to mine, a software which is able to compute cryptographic algorithms is required and to complete this, an enormous amount of computing capacity is needed. At the inception, mining was done on personal computers, but now, individual computers do not suffice.

And this is one of the drawbacks of hardware mining. It is quite expensive and almost impossible to execute individually. However, cloud mining is fraught with fewer risks and doesn’t require an exorbitant amount to start up.

Since the issue of money appears to be a pressing one. Let’s consider the cost of starting up cloud mining vs hardware mining.

Cost of hardware mining

Hardware mining requires a significant initial investment. Some of the factors which influence the cost of mining are discussed below.

  1. Mining Rigs

  2. The hash rate of the Blockchain network

  3. The cryptocurrency being mined

  4. The cost of electricity

  5. The cost of cooling

  6. The physical space

The list goes on and on. Also, depending on how powerful you want your mining operation to be, the cost can go up significantly. Do you require an ASIC mining rig? One thing you’ll need to consider is that these cannot be repurposed. The implication is that if the cryptocurrency you mine decides to alter its hash algorithm, that signals the end of the mining rig.

In addition to this, most people start out with multiple mining rigs so as to justify the revenue they generate at the end of the day. You also need to consider the electricity cost where you stay and how much it’ll cost to cool your equipment.

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Cost of cloud mining vs hardware mining

In comparison to hardware mining, cloud mining appears to be simpler to compute. Some of the most popular cloud mining services, Genesis Mining and HashFlare, offer a monthly subscription model for users to purchase. This model is computed based on the cryptocurrency you intend mining and the hash rate of the network.

Cloud mining gained popularity simply because of the obvious limitations of hardware mining- only very few people can afford large data centers.

This new model then allows individuals to invest and purchase a part of a company’s mining power. Then, cryptocurrency is being mined without the issue of electricity bill, storage space or cooling equipment.

ROI for cloud mining vs hardware mining Ethereum

The battle of cloud mining vs hardware appears to be in favor of good old hardware mining and the reason for this conclusion will be delineated shortly.

We gathered sufficient information from reviews, several online ROI calculators, and cryptocurrency fora and we were able to come up with a definitive approach to assessing the ROI of cloud mining vs hardware mining.

It was discovered that ideally, after 10 to 15 months of constant mining, a miner who deals in hardware mining should recover a significant portion of the amount invested and should move on to the profit-making period.

Considering the fact that there are areas where electricity costs are low and the weather is halcyon, the time it takes to recoup investment might be about six to eight months. One thing to note is that cloud mining vs hardware mining offers two different sides to the story.

While hardware mining is initial investment heavy, cloud mining is all about recurring expenditure. The cost of purchasing a two-year contract for cloud mining ETH is about $1,520 at 40MH/s while it is as high as $12,960 at 360MH/s.

The time it takes to break even was recently calculated to be almost 11 years for BTC. Genesis Mining for ETH even demonstrated a worse ROI. It was estimated that it’ll take approximately 25,992 days for an average person to break even.

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Advantages of cloud mining

In view of the seemingly unfavorable time it takes for the operation to become profitable, what are the positives we can draw from cloud mining?

  1. You can begin mining with very little knowledge about the Blockchain technology

  2. It is possible to start mining immediately you decide to. There’s no delay associated with purchasing the hardware or shipping cost.

  3. There’s no decrease in hash rate with time. This also means that environmental factors do not cause a decline in efficiency.

  4. The pool management system is automatic and doesn’t take up your time

  5. Cloud mining incurs very little additional maintenance cost. It only requires you to purchase a subscription model and stick to it.

  6. You can get a daily automatic payout if you desire.

  7. It’s easier to expand your mining operation by increasing your subscription model. This is unlike hardware mining where you are required to discard your old equipment and then purchase new ones

Advantages of hardware mining

  1. Requires significant initial cost but eliminates recurrent expenditure

  2. There’s no way to fall victim to numerous cloud mining scams

  3. It is believed to be more lucrative.

Conclusion

Hardware mining vs cloud mining 2018 is one of the most talked about topics. This is a topic where experts and cryptoanalysts take different sides, arguing about the cloud mining vs hardware mining profitability. Whichever technology you decide to employ, you’ll need to devote significant time and effort to carry out more research.

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Question of the Day: Can Stablecoins Accelerate Cryptocurrency Adoption?

  • Yuri Molchan
    ⭐ Features

    Stablecoins show hardly any volatility compared to Bitcoin and altcoins, many are hoping that they will be able to bridge new crypto economy and regular fiat money


Question of the Day: Can Stablecoins Accelerate Cryptocurrency Adoption?
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Bitcoin, the father cryptocurrency, emerged in hope that it will remove all intermediaries in electronic commerce that cut off their share of payments. BTC was perceived as a P2P way to replace fiat cash in an electronic format, which would enable one party to pay another without any financial institution or payment platform which would demand its share of a transaction as a reward for its services.

What is wrong with Bitcoin

For quite a while Bitcoin was performing the way the crypto community expected. But the situation changed later – BTC rate became weaker, thus bringing down its financial and economic reliability, when it gets to be used as a regular means of payment.


You cannot have a currency that would cost like a British castle today, a gram of gold – tomorrow and a pack of French fries the day after.

At that point practical fintech minds came up with an idea of creating something which would become a breakthrough in the universe of crypto – a so-called stablecoin.

Will stablecoins solve the volatility problem?

Technically, stablecoins are protected from the volatility roller-coaster that Bitcoin and other cryptos love to ride. They are programmed to keep their prices stable and investors now are largely attracted to this new type of digital assets.

Stablecoin does not show any volatility in its monetary value, since it has a fixed connection to an asset it is pegged to. The major goal of using stablecoins is taking the best from decentralized crypto coins and combining it with a constant value. Thanks to it, stablecoins can be used as a reliable means of trade.

Asset-pegged stablecoins

Asset-backed ones get their value from an asset as can be understood from the name. An asset provides the necessary value to a coin, as well as the necessary legitimacy.

A great example of an asset-pegged stablecoin is Tether (USDT). In spite of a series of scandals at the end of last year, it remains the most popular stablecoin in the crypto market.

Recently, it has partnered with the Tron Foundation to launch a Tron-based stablecoin.

Other examples are TrueUSD (TUSD), USD Coin (USDC), the Gemini Dollar (GUSD), and the Paxos Standard (PAX). They are all pegged to the USD.

Crypto-backed stablecoins

Some digital coins work in a similar way to fiat-backed ones, however, they are pegged to collateral crypto. That means that crypto assets that ensure the value of such stablecoins are stored in a wallet similar to escrow.

A good example of a crypto-pegged token is Maker, which is ranked 16 on CMC.

Algorithmic stablecoins

Even though, stablecoin can be interesting at first thought but the way they are built goes against the principle of decentralization that crypto coins have as a foundation. Thus, many crypto fans and evangelists are positive that stablecoins must be linked towards not a centralized asset but a computer algorithm which takes value from a balance between supply and demand.

Basis is now considered the most promising algorithmic stablecoin of all.

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Can stablecoin ensure smooth future for the crypto industry?

The primary goal of all crypto assets was and remains to come up with virtual asset that would be liquid enough and not vulnerable to market volatility. From this point of view, stablecoins are a dream of all crypto fans and evangelists of a decentralized economy.

Apart from the potential to conduct crypto transactions smoothly, experts believe it can bridge the two worlds – fiat and crypto, bringing them a mutually beneficial coexistence. However, that may take time.

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