What is Ethereum cloud mining?
Also known as Ethereum cloud hashing, Ethereum cloud mining is a service that allows you to mine ether without having to own mining hardware. What happens is that you pay a subscription fee to lease a certain hashing power (mining capacity) of hardware located in remote data centres and earn ether as it’s generated by miners.
How does it work?
First you choose your preferred provider and sign up for a mining contract (don’t let the word ‘contract’ scare you, it’s just an agreement with the company that lays out how much you pay and how much you get in return). Then you will earn ether as it is generated by the miners at a rate dependent on the amount of hashing power you have leased.
More accurately, as miners generate ether, you will be paid based on your contribution to the mining capacity/hashing power (minus the applicable fees). Services such as HashFlare charge $1.40 per 100 KH/s for a one-year contract, whereas others such as Genesis offer more powerful and expensive packages: $1,520 for 40 MH/s ranging up to $12,960 for 360 MH/s for a two-year Ethereum cloud mining contract.
Is Ethereum cloud mining profitable?
It certainly can be, but don’t expect to earn a fortune in short space of time: it’s better thought of as a long-term investment. You won’t have to worry about the costs of setting up and running your own rig, which means you can focus more on making sure the numbers add up to keep generating a decent profit. One thing to bear in mind is that the size of your profits will depend on the value of ether: if the price rises or falls, so will your returns.
Are there any fees?
While there tend to be maintenance fees associated with cloud mining contracts for other coins such as Bitcoin, these are often absent from Ethereum cloud mining contracts. Most providers, including HashFlare and Genesis, don’t charge any maintenance fees when taking out a cloud mining contract for Ethereum.
How long do cloud mining contracts last?
Depending on the platform you choose, you can take out contracts of different lengths. For instance, HashFlare offers a 1-year contract package, while Genesis offers 2-year package contracts. You’ll typically find the minimum duration of a cloud mining contract is a year. Genesis also gives you a chance to create a custom Ethereum mining plan, indicating your preferred hashing power and duration (up to a lifetime contract).
Can I sell an Ethereum cloud mining contract?
It is technically possible, but very difficult, to sell an Ethereum cloud mining contract. Providers such as HashFlare don’t allow its users to sell mining contracts, but there have been reports of Genesis users selling their lifetime contracts. Generally, if you want to sell your mining contract, you will likely struggle to find a buyer because most people would prefer taking out contracts from providers themselves.
Is cloud mining regulated?
No it’s not. There is no regulatory body that oversees the selling and operation of cloud mining contracts. and this is why it is important to make sure to read around and compare the options to make sure you’re taking out a cloud mining contract with a company you can trust.
Can I pay for an Ethereum cloud mining contract in ether?
Yes, it’s possible, but it’s not the best idea. It’s easy for scam sites take advantage of the anonymity provided by cryptocurrencies and ask users to pay for contracts in ether in order to disappear with their coins. Unless you are dealing with a credible platform (like those we have reviewed), it’s better to pay for your contract using a credit card or any other mode of fiat payment provided by the site.
Do I need a wallet before I start cloud mining?
You won’t typically need a wallet for cloud mining because your ether will be stored in an account hosted by your provider. But having your own wallet where you can transfer your coins to is always a good idea for extra security.
What are the main companies in Ethereum cloud mining?
There are many Ethereum cloud mining companies out there, but only a few have proved to be reliable. The best companies around include:
- HashFlare. One of the most popular cloud mining services out there, HashFlare offers contracts for different coins. Currently it offers a 1-year contract for Ethereum cloud ming charged at $1.40 per 100 KH/s.
- Genesis. The largest cloud mining service provider, Genesis offers a number of 2-year contracts for Ethereum cloud mining. You can get the Small Starter at $1,520 for 40MH/s, Medium Best Buy at $4,440 for 120 MH/s, Large Professional at $12,960 for 360 MH/s, or a customisable package that allows you to enter your preferred amount.
- Eobot. Based in the US, this company was launched in 2013. Eobot allows you to start with as little as $10 and offers a range of cloud mining packages.
What are the risks associated with Ethereum cloud mining?
Ethereum cloud mining comes with plenty of risks, so you need to be careful. Because of the popularity of Ethereum mining and lack of regulation, there is always the risk of scam sites offering cloud mining services at attractive prices to attract new victims. You should only deal with reputable platforms that have proven to pay its users.
Also, bear in mind that although cloud mining offers the opportunity for low, steady income, the price of ether will affect your profits. If the prices keep on falling, then you might not get your investment back or the provider may close down.
Overall, the main risks are:
- Attractive options for scammers trying to rip people off.
- The provider could close down.
- If the price of ether drops you may start losing money.
- Cloud mining is not regulated so you have to trust your provider.
And what are the advantages?
Well, the main one is that you don’t have to buy or maintain the hardware, since the provider does the job for you. Additionally, if you find a company that generates steady profits and the price of ether doesn’t fall (or it continues to rise), then it can be a great investment in the long run.
Overall, the main advantages are:
- You don’t need to spend money on hardware to start mining.
- Can mine Ethereum without technical knowledge of the equipment needed.
- A good value mining contract can generate steady profits in the long-term.
- If the value of ether rises, your mining contract will generate more money.
Should I use Ethereum cloud mining?
It’s up to you. Considering the fact that you won’t go through the hassles of setting up your own mining rig and purchasing all the hardware involved, cloud mining is probably a great way to mine ether. But if you’re going to get involved, thoroughly research the provider you’re taking out your contract from to ensure you’re not dealing with a scam site.
How do I get started?
Before starting cloud mining, it’s important to understand everything about the provider you’re using. Head along to our in-depth reviews where we’ll take you through all the aspects you need to consider so you can make the right choice.