Cryptocurrency mining services offer an alternative for those disinclined to set up a mining rig. The cost of crypto mining hardware as well as its maintenance can, after all, be rather off-putting, as can the technical know-how required to ensure that everything runs as it should. To get around these problems, a growing number of companies have started to offer various mining services. Read on to learn more.
What is Cloud Mining?
Cloud mining is currently one of the most popular crytpo mining services. Despite being exploited by scammers in its early days, more and more bona fide companies are springing up offering legitimate services.
Basically, cloud mining allows individuals to sign up and join a mining pool with shared processing power. Each participant purchases computing power, also known as hash power, from a dedicated remote data centre.
Profits are then calculated and awarded in proportion to the amount of hash power that’s been purchased. The process is ideal for miners who are unwilling or indeed unable to shell out on the requisite hardware and the continued cost of running it – it’s also a very simple process, requiring minimal technical knowledge.
There are of course downsides to using such services. For instance, many cloud-driven operations feature large networks of miners which means that profits tend to be rather low – so making a tidy sum often requires considerable investment.
In addition, a strong degree of caution is necessary given the countless scammers who purport to offer services from non-existent data centres. So it’s crucial to thoroughly research a company before making any financial commitment. Here’s a collection of some of the most trusted cloud mining services.
What is a Mining Pool?
Mining Pools are basically a group of miners who’ve decided to cooperate and share block rewards in proportion to the hash power they’re able to contribute. This approach offers certain advantages over solo mining including ease-of-set up and more regular payouts.
In addition, the actual blockchain is managed by the pool which means less administration for the individual miner. Many pools also allow members to keep abreast of their status remotely, updating them regarding payouts and such like.
However, there are a few downsides. Payouts are often lower with some mining pools charging hidden fees. Others use a kind of reward system such as Pay Per Share which can drain profits even further.
And as is the case with cloud mining firms, the use of a mining pool is based on trust – there’s no guarantee that the owner won’t use your money or hash power for nefarious purposes or for their own personal agenda.
So before proceeding, do the research first. This process is made easier by the many established and trusted crypto mining pools currently in existence.
Methods of Payment
Some of the following payment types don’t actually feature in the mining pools we mention. However, it’s a good idea to familiarize yourself with them so that you’re in a better position to make an informed decision before parting with any cash.
PPLNS – Pay per Last N Shares
This is a round-based reward system in which a single round represents the time between the first share following the last found block and the share which solves the block. Although susceptible to significant fluctuations in pay-out per share (plus or minus 30%), the law of large numbers dictates that pay outs are higher than the similar PPS payment model.
PPS – Pay per Share
PPS is a reward scheme in which mining pool operators provide a fixed payment per share that is commensurate to its average worth, irrespective of how many valid blocks found by the pool. This kind of system isn’t really suitable for low budget mining given that the pay-out isn’t very high in the long term.
FPPS – Full Pay Per Share
Some pools, although not that many, operate the FPPS model in which miners are issued with the full block reward as well as the associated transaction fees. Such a scheme can increase revenue significantly. However, the challenge is to find a mining pool which actually uses it. Currently, BTC.com is the only one.
DGM – Double Geometric Method
Similar to PPLNS and Geometric systems, DGM payment methods allow the pool operator to receive a proportion of the payout on short rounds and then return it on longer rounds, thus normalising payments. This way, the operator is able to absorb some of the variance risk.
CPPSRB – Capped Pay Per Share with Recent Backpay
This is a variant of Maximum Pay-Per-Share (MPPS) where a pool pays its miners the maximum amount possible from the income derived from finding the blocks. The pool is able to avoid going bust due to the high variance. The last shares are paid first.
POT – Pay on Target
Similar to PPS, Pay on Target is a high variance system which pays out according to the difficulty of the work returned as opposed to the difficulty of work served by the pool.
PPLNSG – Pay Per Last N Groups
The particular payment system is a variant of the more widely-used PPLNS, in which shares are grouped into ‘shifts’ and paid as a whole.
PROP – Proportional
The PROP payment scheme distributes rewards to pool miners in proportion to the number of shares they have discovered. Such a system allows pool operators to avoid risk because the miners are only paid out when a block is found. Also, if the miners take longer than expected to find a block, there’s a chance that they’ll earn a lot less.
PPS – Pay per Share
PPS is a reward scheme in which the mining pool operator provides a fixed payment per share that is commensurate to its average worth, irrespective of how many valid blocks found by the pool. This kind of system isn’t really suitable low budget mining given that the pay-out isn’t very high in the long term.
SMPPS – Shared Maximum Pay Per Share
SMPPS is a variant of the popular pay-per-share system with the only difference being that the pool will never pay out more than it earns.
RSMPPS – Recent Shared Maximum Pay Per Share
This particular payment system follows the same model as SMPPS with the pool endeavouring to prioritise the most recent miners first.
The SCORE system offers a proportional reward that includes in its calculation the time of block submission. Each share is worth more than the previous one which results in rewards being calculated according to scores and not share submission.