Profitability of Cloud Mining: 6 Influencing Factors in 2020

Cryptocurrency Cloud Mining Profitability

Cloud mining profit is the profit that a miner receives by mining cryptocurrency using rented hash power. It depends on several factors, in particular, the available hashing power, commission fee, cryptocurrency rate, and others. No less important factors are the size of the initial investments, the right choice of the coin and its prospects in the digital coin market.

What is Cloud Mining?

The increasing cryptocurrency mining difficulty, requirements for equipment and its price make miners pay attention to another direction – Cloud Mining. It is based on a data center, which has huge premises with equipment used for cryptocurrency mining. The hash rate is rented to users for a certain price.

Cloud mining companies offer several options that differ in hash power and cost. The higher the initial investment, the greater the return. At the same time, profitability depends not only on the hash rate but also on other factors.

Skilled personnel with mining experience work on equipment maintenance in data centers. Such companies are based in regions with low tariffs, where there is no difficulty with heat dissipation. For example, in the northern regions of Russia or Europe. With the growth of the customer base, the capacity of the data center also increases. The equipment used is optimized.

How to start getting profit from cloud mining

Unlike classic cryptocurrency mining, cloud mining does not imply the need to buy graphics cards or ASIC miners, build farms and spend time setting them up. In this type of mining, investments and the ability to forecast cryptocurrency rates in the future come to the fore. The miner selects the plan and coin for mining. After the payment they receive a certain hash rate. Other issues are solved by the data center.

The algorithm for generating income using cloud mining is as follows:

1. The choice of cloud service, the study of opportunities, options and commission fees.
2. Filling out an application for the selected plan and the check out.
3. Receiving payments to a cryptocurrency wallet.

This way of earning is the opportunity to avoid the race for high-performance equipment against the background of increasing difficulty. Purchasing, setup, optimization and other works are done by data center staff. Representatives of the cloud service also do the tasks of legal regulation of work and payment for electricity. The miner is required to make payments on time taking into account the executed contract.

It is important to choose the right data center and give preference to proven websites in order to minimize risks. The solution is hashmart.io, where users regularly receive transfers without delay. They can control the cryptocurrency mining process through special reports. At the same time, the latest ASIC chips and modern equipment are used. They guarantee high performance at an affordable price. The average profit can reach 30-40 percent and higher.

Cloud mining and high profitability attract scammers. You need to be careful when choosing a partner company. If the company offers high profits in a short time, they are probably a scam. Such services often attract users and subsequently disappear.

Mining profitability calculation

Purchasing hash power in the data center is a kind of investment that requires preliminary calculations. The investor should estimate the size of future profits and possible risks. Before investing, it is advisable to calculate the ROI or payback ratio. It shows the potential return or loss on investments and is measured in percentages. For calculations, you need to know two things – profit and cost.

To calculate the ROI, the investments are deducted from the income received, and the result is again divided by your costs. The resulting number is multiplied by 100%. Let’s consider these indicators separately:

1. Income – the amount received by the user of the cloud service from the use of purchased hash power. In other words, this is the profit from mining.
2. Investments (costs) – funds spent on the purchase of a contract in a data center. The volume depends on the cloud mining tariffs and the selected hash rate.

The investments also include costs for the purchase of hash power. All that’s left is to calculate the profitability of cryptocurrency mining. For this, a cryptocurrency calculator is used. It makes calculations according to a special formula, which takes into account the main aspects, namely:

• Performance of the equipment used (purchased hash power);
• Commission fee of the used mining pool;
• Equipment maintenance fee;
• Power consumption;
• The cost of electricity and the amount of consumed kW/h;
• The difficulty of mining;
• The current rate of a digital coin;
• Payments for the block received during the mining process.

Having the necessary data at hand, enter them into the special fields and click the button “calculate.” In the case of cloud mining, filling in all the fields is not necessary. It is enough to indicate the total hash rate, service charge, and commission fee. Other fields, such as the rate, the difficulty of the mining process and the block reward should be automatically filled.

The result shows the monthly profitability. In order to calculate ROI, you need to use the formula mentioned above. The higher the rate, the better. For example, mining profitability of 60% shows that, with $10,000 invested, the miner receives 16,000. In other words, the net income is $6,000.

What determines the profitability

Size of the profit is variable. It depends on many factors. The following aspects affect the profitability of mining in a cloud data center:

1. Hash rate. A person chooses what hash power to buy on a cloud service, taking into account financial opportunities. The larger the amount paid, the higher the hash power. Accordingly, the amount of earnings also increases.
2. Block reward. The aspect is individual for each cryptocurrency. In many cases, it decreases with increasing difficulty. For example, in the case of Bitcoin, it dropped from 50 BTC in 2009 to 12.5 BTC in 2016. In the future, it will decrease.
3. Difficulty of mining. With increasing hashing powers in the cryptocurrency network, the difficulty of mining coins also increases. In the case of Bitcoin, this aspect increased from 1 TH/s in 2009 to 12.97 TH/s at the time of writing this article. The greatest leap occurred with the appearance of ASIC miners.
4. Service charge. Many cloud mining services charge a certain amount (percentage) for the maintenance of equipment and the employees’ remuneration. This aspect is also taken into account in the calculations and affects the outcome indicator.
5. Cryptocurrency rate. The main influence on the profitability of mining is provided by the cost of the digital coin. It depends on the demand for coins, the behavior of large players, the news background, the messages of large countries about the prohibition/permission of turnover of digital coins, etc. With an increase in the exchange rate, the total profit of mining also increases.
6. Pool commission fee – the percentage that is charged for participating in the extraction of digital coins.

The abovementioned main aspects affect the profitability of cloud mining. When mining cryptocurrency on private equipment, other factors are also taken into account – the cost of electricity, the cost of collecting the farm, etc.

Summary

Before starting mining, it is important to make a profitability calculation for a particular cryptocurrency. However, when analyzing the result, it is important to remember about changes in the exchange rate. The value of digital coins tends to increase. Payments are made in coins, which can be stored in your wallet. You only need to wait when the cryptocurrency rate begins to increase. That is how hundreds of thousands of people have already become millionaires.

An important factor is the right choice of cloud mining service. It is necessary to take into account the company’s transparency, the period of its existence, hash power, commission fee and speed of withdrawal.