Cloud Mining
In short: Cloud mining is cryptocurrency mining done with computing power rented through companies. Instead of buying, powering and cooling your own machines, you…
Cloud mining is cryptocurrency mining done with computing power rented through companies. Instead of buying, powering and cooling your own machines, you pay a provider for a share of its hash power and receive part of the coins that its hardware mines.
Why it matters
Cloud mining offers exposure to mining without the noise, heat, electricity bills and technical setup of running hardware yourself. In practice, contract fees, maintenance charges, rising network difficulty and falling coin prices can make returns small or even negative, and payouts may stop if mining becomes unprofitable. The model is also widely abused: many "cloud mining" sites are Ponzi schemes that own no hardware and pay early users with later users' deposits. It is essential to check who runs the service, whether it shows real evidence of its equipment and how its contracts end.
Example
A user signs a contract with a provider that rents out hash power for a fixed term and pays the full price upfront. The provider assigns a slice of its mining capacity to the user and, each day, credits their account with the coins that slice has mined, minus maintenance fees. If the network's difficulty rises, the daily payouts in coins shrink; if the coin's price drops, those payouts are worth less, while the fees may stay the same.