Bitcoin Mining Services: Hosted Mining vs Cloud Mining

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Growth in popularity of Bitcoin and the other cryptocurrencies has presented new opportunities for investors to improve their portfolios. Apart from buying and selling cryptocurrencies on the exchanges, investors can dabble in mining them in various ways online. The problem is that most investors do not know how to mine cryptocurrencies. Traditionally, Bitcoin mining could only be done by those with the right equipment and knowledge of how to use decentralized protocols. Not anymore. With the emergence of cloud mining and hosted mining, investors can get their Bitcoins in a simple and straightforward way.


What’s Bitcoin mining?

Cryptocurrency mining takes place on the blockchain network where a miner needs to complete proof-of-work, a complex set of algorithms. To solve the complex equation, it is important that you prepare yourself with equipment with enough computing power. Once you get the required solution, you will be rewarded with a cryptocurrency. As such, mining equipment should have fast hashing power, which simply refers to the rate at which you can use it to solve complex algorithms.


The more the number of Bitcoins mined, the more the blockchain network grows. This results in the harsh rates growing to a greater extent. Thus the efforts and resources required to mine the cryptocurrency are even more intense. For instance, the Bitcoin hash rate has grown tenfold in just one year. It is, therefore, ten times more difficult to secure a block on the blockchain than it was a year ago. Thus, miners need a lot of hashing power to mine Bitcoins today.


In the hosted mining vs cloud mining debate, it is important to understand how these two types of Bitcoin mining services work. In this write-up, we talk about these two kinds of Bitcoin mining services with the view of helping you to choose one that best works for you.


What’s Hosted Bitcoin Mining Service?

Hosted mining involves the leasing or selling of mining equipment to a cryptocurrency miner by a provider. By and large, hosted mining can be done in two distinct ways. In the first instance, the customer could purchase mining equipment straight from a provider of hosting services. You could also buy your own equipment and then connect it to a mining farm or hosted data center. To take advantage of the hosted mining services, the client has to pay for storage or electricity costs. Miners do not have to worry about electricity, storage, and maintenance costs, for as long as they meet their part of the bargain.


One thing about hosted mining is that it gives the purchaser more control, given that they can decide the specifications as well as output from the equipment. Where there’s the need, miners can remotely monitor the performance of their hardware. Even so, the mining equipment is owned by the customer and the hosted mining service provider cannot tamper with them. Miners don’t have to worry about their security being compromised by third-party services.


The only downside of hosted mining services has to do with the costs of acquiring the mining equipment. It gets even more costly when you factor in the repairs required from time to time. In the end, this type of mining services can be very costly.


What’s Cloud Bitcoin Mining Service?

The need for cloud mining services emanates from the fact that most miners do not have the computing power to complete the task. As such, miners can get all the computing power they need from the companies offering cloud mining services. As such, it is unnecessary to have your own equipment for Bitcoin mining. You don’t have to enter the network via your computer, either. Due to the prohibitive electricity costs in most parts of the world, keeping cryptocurrency mining equipment running is no joke. To avoid the hassle that comes with it, all you need is to buy cloud mining services from a provider.


Since cloud mining services involve many people, it is akin to pooling processing power so as to mine cryptocurrency cheaply and on a large scale. This option does not require the miner to buy mining equipment. Rather, miners pay a mining service provider to enjoy cheap services. All a client needs to pay the mining fees, cost of electricity, and a percentage of the block reward.


Before enrolling for a cloud mining service, it is important to find out if it has the ability to provide the mining capabilities and hash rate you need to mine Bitcoins. If you are not careful, you might end up falling prey to false advertising and fraud. The cloud mining service also needs to assure you of the safety of your cryptocurrencies. That’s because they collected all the mined Bitcoins before distributing them to their clients.


The downside of cloud mining services is that miners are likely to expose themselves to fraudulent providers. With that, they are likely to lose money in terms of what they pay for as well as the cryptocurrencies they mine. The monthly income paid by cloud mining service providers is low and the payback term too prolonged. where there's a sharp change in exchange rates, the service provider may just have to go out of business.


Bitcoin Mining Services: Hosted Mining vs Cloud Mining | Things You Should Know Before Investing

Given the detailed discussion above, the choice of a Bitcoin mining service is entirely yours. As such, you could pick hosted mining or cloud mining depending on your budget and personal preferences. Before you settle on a given service provider, first carry out intensive research. Find out aspects such as energy usage, hashing power, and hosting fees. The good thing is that you will find the necessary calculators on some blockchains so that you can have a good understanding of the mining costs and the expected profit depending on variables such as the network hash rate.


Go for a mining service that lays bare their energy usage, terms of the contract, mining fees, and method of payment. So don’t just pick anyone. If you have money to buy mining equipment, go for hosted mining services. As for a cloud mining service, it is great if you want to avoid the cost of acquiring equipment.



When it comes to choosing the right Bitcoin mining service, the amount of money you can afford and your personal preferences really matter. Hosted mining services are great if you can afford to buy mining hardware. If you can’t, then cloud mining services will do just fine. However, before you commit yourself to a contract with any of these kinds of mining service providers, carry out proper research. The information you discover could save you a lot of money in the future.

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