Cloud mining Bitcoin- Types and Risks

Could mining refers to the process of mining cryptocurrency through a shared system, basically in the clouds. This system is better than other processes because it does not require heavy equipment or systems.

Types of cloud mining

These are of three types, to sum up

These are

1- Hosted mining

2- Virtual hosted mining and

3- Leased hashing power

Hosted mining refers to leasing a mining machine that is hosted by someone else. Virtually hosted mining means setting up a virtual server that installs your own mining software. On the other hand, leased hashing power means to lease a certain amount of hashing power without actually dedicating a computer to mining.  This method is the most popular form of cloud mining prevalent today.

Risks

In every investment, there is a risk. The reward of risk is profit. Usually, the initial days of mining bring profits. However, with the increase in the difficulty of algorithms, it becomes harder to mine and you may start incurring losses. This usually happens within a period of four to six months.

Other risks include fraud and mismanagement of funds that you have invested. So it is always safe to invest only as much as you are ready to lose.

It is also wise to investigate the place you wish to invest in. You could check out reviews and contact former investors in the place you are about to invest. Also, take a look at the market and the types of coins you are going to invest in.

Conclusion

While Cloud mining does not have the flexibility and rate that regular mining would bring, it is still safer, less demanding and faster. However, due to the increased risk of fraud and decline in profits over time, you might want to think twice before investing substantially in this type of mining.