Cloud Mining Explained: How It Works, Benefits, Risks, and Profitability in 2025
ETH
VIRGIN
WHEN
ETC
CLOUD
Cloud mining offers a tempting value proposition, as it allows cryptocurrency users to profitably mine cryptocurrency using hardware hosted on a third-party server. However, the realities of cloud mining are not so rosy.
Read on to find out what cloud mining is, how it works, and whether you can actually make money by participating in cloud mining.
What is cloud mining?
Cloud mining is the leasing of computing power from cryptocurrency mining companies that host mining equipment on behalf of their clients, allowing people to mine cryptocurrency “in the cloud” instead of personally owning and running crypto equipment to earn rewards for mining.
Bitcoin cloud mining has opened up the possibility for people around the world to earn rewards for mining bitcoins without requiring a capital-intensive mining rig and the expertise to operate it effectively.
To start cloud mining, users must register with a cloud mining service provider, purchase a cloud mining contract, and then watch the rewards for mining flow into their cryptocurrency wallet.
Now let’s take a look at how cloud mining actually works. Cloud mining works by utilizing a pooled mining structure where users purchase hash power from specialized mining farms, making it accessible for beginners and those with limited technical skills.
How does bitcoin cloud mining work?
Cryptocurrency mining involves using high computing power to solve cryptographic equations in a Proof of Work (PoW) blockchain to verify and validate transactions in order to find the next block for a block reward. In addition to transaction fees, miners receive their share of the block reward each time they manage to mine a new block.
A cloud mining company uses cryptocurrency mining machines such as ASICs and GPUs and sells contracts to users who will be rewarded for mining minus the operator’s commission.
By using a cloud mining service provider, you will reduce costs such as buying and maintaining equipment, electricity and renting out space for your miners to operate. In addition, you will not need technical knowledge to successfully operate your mining rig.
Currently, there are two cloud mining models that you can use to access mining services, depending on your needs and the company you choose to work with. The first is Hosted Mining. This is where you buy or rent equipment from a mining company’s facility.
During the mining process, the company’s role is to make sure that the equipment runs efficiently and is always in working order. The cloud mining business is inherently competitive, where operators are constantly striving to minimize costs and enhance profitability against various market challenges. Everything that was mined using the company’s hardware and software stays with you, giving you more direct control over your cryptocurrency.
The second model is Rented hashing power. Here you will rent mining power from a mining company. In this model, you register an account, deposit a certain amount of money and choose a period of time and hashing power before investing. During this period, you will receive a share of the company’s total profit from mining.
Regardless of the model you choose, cloud mining is considered a simpler alternative to traditional cryptocurrency mining and a way to potentially make money from crypto markets. Traditional crypto mining methods can require expensive resources and technical knowledge, making it less accessible to the average investor.
Choosing a Cloud Mining Platform
Choosing a cloud mining platform can be a daunting task, especially for new users. With so many options available, it’s essential to do your research and consider several factors before making a decision. Here are some key things to look for in a cloud mining platform:
Reputation. Look for a platform with a good reputation and a proven track record of paying out rewards to its users. A well-established cloud mining company with positive reviews and testimonials can provide more confidence in your investment.
Transparency. Choose a platform that is transparent about its mining operations, including the location of its mining facilities and the type of equipment used. Transparency ensures that you know exactly where and how your mining power is being utilized.
Security. Ensure that the platform has robust security measures in place to protect your account and your mining profits. Look for features like two-factor authentication and encryption to safeguard your data and earnings.
Contract Duration. Consider the length of the contract and whether it aligns with your investment goals. Some contracts may offer short-term gains, while others might be more suitable for long-term investments.
Mining Power. Look for a platform that offers a range of mining power options to suit your needs and budget. This flexibility allows you to scale your investment according to your financial capabilities.
Customer Support. Choose a platform with responsive and helpful customer support. Good customer service can make a significant difference, especially if you encounter any issues or have questions about your mining operations.
Fees. Understand the fees associated with the platform, including any maintenance fees, electricity costs, and withdrawal fees. Knowing the full cost structure helps you calculate potential profits and avoid unexpected expenses.
By considering these factors, you can choose a cloud mining platform that meets your needs and helps you achieve your investment goals.
Getting Started with Cloud Mining
Getting started with cloud mining is relatively straightforward. Here’s a step-by-step guide to help you get started:
Create an Account: Sign up for an account on a cloud mining platform that you’ve researched and chosen. This usually involves providing some basic information and verifying your email address.
Choose a Mining Plan: Select a mining plan that suits your needs and budget. Consider the contract duration, mining power, and fees associated with the plan. Different plans offer varying levels of hash power and contract lengths, so choose one that aligns with your investment strategy.
Fund Your Account: Deposit funds into your account to purchase mining power. Most platforms accept a variety of payment methods, including cryptocurrencies and traditional payment options.
Start Mining: Once your account is funded, you can start mining instantly. The platform will take care of the mining operations, and you’ll receive rewards in the form of bitcoin or other cryptocurrencies. This hands-off approach allows you to earn BTC without managing physical mining hardware.
Monitor Your Account: Keep an eye on your account and adjust your mining plan as needed. You can also withdraw your rewards at any time. Regularly monitoring your account helps you stay informed about your mining performance and make necessary adjustments to maximize profits.
By following these steps, you can start mining bitcoin and other cryptocurrencies with ease. Cloud mining platforms simplify the process, allowing you to start earning passive income without the need for expensive equipment or technical expertise.
Can you make money from a cloud mining contract?
Cloud mining can help you make money passively, especially since you don’t have to actively participate in the mining process. However, as with many investment opportunities in the cryptocurrency world, there are several factors that determine whether or not you will make money. While estimates can be calculated for future earnings based on various factors, the actual income a user will receive depends on unpredictable variables like cryptocurrency prices and network difficulty.
First, it is the amount of investment you put in. For example, if you rent out a large space or equipment to a mining company, you will have a better chance of generating higher revenue from mining a larger amount of cryptocurrency. However, this is an expensive venture as it will require a higher initial investment.
Secondly, the market performance of the crypto asset you mine will determine your income from mining. For example, the cryptocurrency market is facing one of the biggest collapses in 2022 after a huge bull market in 2021. If the coin you are mining is on a downward spiral, chances are you will suffer a loss in cloud mining.
Finally, the credibility of the company you decide to invest in will be crucial to making or losing money in this market.
A reliable company with a good team and solid reputation is the safest way to ensure a positive outcome of your mining efforts. Therefore, it is important to research the company and its management to evaluate the company’s performance over time before making a final decision. Due to the high risk of scams and uncertainties around profitability, consumers should only invest amounts they can afford to lose.
Unfortunately, fraud is very common in the cloud mining industry, and as a result, an incredibly large number of people have fallen victim to such scams in the 2017 bull market.
Advantages and disadvantages of cloud mining
Cloud mining attracts the attention of many aspiring crypto-enthusiasts due to its low financial and technical entry threshold. However, like any other earning model, it has its pros and cons.
This eliminates the need for users to understand complex technical details and saves time. Additionally, the cost and source of energy significantly impact mining profitability, with cheaper or renewable energy sources providing a competitive advantage.
Users have the ability to choose the amount of computing power based on their budget. The evolution and challenges of cloud mining businesses in the cryptocurrency sector highlight the importance of operational transparency and the need for consumers to carefully vet potential providers.
In some cases, they receive not only the rent, but also a portion of the tenant’s profits. Mining various cryptocurrencies can be profitable, especially when mining multiple coins simultaneously, but it is crucial to choose which coins to mine based on market conditions and potential risk factors.
Advantages of cloud mining
Low entry threshold
Users don’t need to spend thousands of dollars to buy expensive equipment - minimal power packages for rent are often much cheaper, making cloud mining accessible to a wide audience.
No technical problems
All tasks related to the configuration, repair and maintenance of equipment fall on the shoulders of the provider. This eliminates the need for users to understand complex technical details and saves time.
Flexibility
Users have the ability to choose the amount of computing power based on their budget. This allows to scale investments depending on the current financial capabilities. Platforms like Hartcoin are empowering users by providing accessible tools for passive income generation in cryptocurrency.
Income for equipment owners
For equipment owners, cloud mining provides a stable income, regardless of market fluctuations and the probability of profit when participating in traditional mining. In some cases, they receive not only the rent, but also a portion of the tenant’s profits. Cloud mining platforms also offer the potential for daily profits, allowing users to select mining contracts tailored to their profit goals and monitor earnings in real time.
Disadvantages of cloud mining
High costs
Costs for equipment rental, electricity and provider services are higher than for self-service.
Lower profitability
In contrast to traditional mining, where the user receives all the income, in cloud mining some part of the profit is taken by the provider in the form of commissions.
Limited control
Users do not control the rented equipment and are dependent on the quality of the provider’s services. This can be a problem if there are failures on the site side. Many cloud mining companies may not guarantee the legitimate use of customer funds for mining operations, raising concerns about potential scams and the reliability of promised returns.
Risks of unscrupulous providers
Providers may provide rent mining capacity intermittently or not fulfill their obligations at all. In addition, cloud mining can often be a front for pseudo-mining or fraudulent schemes;
Before renting capacity, it is important to research the terms of the contract, the reputation of the provider, and current market conditions. Because of its remote nature, cloud mining requires careful attention and self-analysis skills to minimize risks.
Top 6 cloud mining providers
Binance
The largest centralized exchange that provides cloud bitcoin mining service through Binance Pool. Users can purchase hashrate for specific periods. The ability to purchase capacity is only available from time to time, while the revenue from mining is credited to the user's wallet daily.
Hashmart
Cyprus-based provider Hashmart has been operating since 2018, offering cloud bitcoin mining plans. The service is also experimenting with Ethereum steaking services and allows third-party equipment owners to connect to the platform to generate passive income from renting out capacity.
BitFuFu
Founded in 2021, the service is actively partnering with ASIC hardware manufacturer Bitmain and mining pool Antpool. The platform offers two formats of cloud mining: Easy Mining for beginners who want to earn passive income, and Pro Mining for experienced users who are ready for more risky investments with the potential for high profits;
BeMine
Founded in 2018 and registered in Seychelles, BeMine platform specializes in hosting ASIC miners. The service brings together equipment owners and consumers of cloud mining services, allowing the latter to rent or purchase capacity for mining bitcoin and other cryptocurrencies such as Zcash (ZEC), Ethereum Classic (ETC) and Litecoin (LTC). Equipment owners can host their devices in the company's data centers and earn passive income.
NiceHash
Since its founding in 2014, the British Virgin Islands-registered NiceHash platform has operated as a marketplace connecting buyers, renters, and owners of computing power. The service supports a wide range of cryptocurrencies that utilize a Proof-of-Work-based consensus algorithm.NiceHash also offers simplified versions of cloud mining through special packages, some of which can be co-paid.
Hashing24
Founded in 2015, Hashing24 specializes in cloud bitcoin mining. The service cooperates with major mining providers such as Wattum and Bitfury, providing users with access to state-of-the-art equipment and competitive rates. The provider offers various mining contracts with daily payouts and a transparent commission structure.
It's worth remembering that choosing the right cloud mining provider depends on a variety of factors, including the company's reliability, rates offered, supported cryptocurrencies and contract terms.
Is it possible to make money from cloud mining in 2025?
The question about the profitability of cloud mining in 2025 remains open and depends on many factors. Individuals participating in cloud mining do not own the physical equipment but instead rent mining power from companies that own and manage the necessary hardware. It is impossible to state unequivocally how profitable or unprofitable this tool is in a volatile crypto market, but a concrete example will help to better understand the situation. Cloud mining platforms like Binance Pool enable miners to receive mining rewards directly into their wallets for trading purposes.
