While Bitcoin is showing its volatility and is working on breaking the $8,000 barrier, investors all over the world are hoping for the new round of global demand on cryptocurrencies. Mass media is speculating on looming crypto ETF come-off, on hordes of institutional investors coming to the market and widespread blockchain technologies integration into routine life. A new round of Bitcoin fever is in the air, so it’s time to assess the key criteria while choosing the best cloud mining website.
The key issue is the profitability of the platform for cryptocurrency cloud mining. And while assessing, we need to take 4 factors into consideration.
Hash rate in cloud mining
First of all, you need to assess the power you will get per second, i.e., the estimated number of terra hashes per second (trillions of hashes per second) the Bitcoin network is performing. You should pay attention that mega and giga hashes are different from terra hashes, so it is important that you choose the correct amount suitable for you.
If a potential cloud mining provider has the hardware placed in data centers all over the world with lower electricity costs and more loyal attitude to crypto industry, it’s a perfect solution for diversification. This way the risk of power shortage is much lower.
Sure enough, the entry price for potential cloud miner should be fair. For example, Hashtoro.com offers 10 TH/s for 400 Euros that may be a good benchmark to use.
The difficulty measures how hard it is to find a hash below a given target. The Bitcoin network has a global block difficulty. Valid blocks must have a hash below this target. Network difficulty is changed every 2016 blocks.
This is a very important factor for assessing the cloud mining profitability. The higher the price of a cryptocurrency, the better it is for the miner.
For example, some providers use diversification when mining, e.g., top three cryptocurrencies (LTC, BTC, and Ethereum), in equal proportions, to spread out its risk. For example, early in the year, it was very profitable to mine Ethereum and Litecoin, but when their prices fell, it became more lucrative to mine Bitcoin.
The local system determines which currency is the most profitable to mine at the current moment and dynamically switches to mine that particular currency. At the end of the day, the currency is exchanged for the one the client chose to mine. This allows the client to generate up to 10% more profit.
Cloud mining contract term
You need to take into consideration the period during which you will recoup your investments when choosing the contract.
The minimum plan of cloud mining service may be as low as 20 Euro. However, it may be more profitable to sign the annual contract for 100 TH. In the case of Bitcoin, it will mean the payback period is less than a year: you get the contract by $6,000 and mine 1.71 Bitcoin which is currently trading around $8,000.
ABOUT THE AUTHOR
Alexander Petersons, product director of cloud mining service Hashtoro.com. IT specialist, serial entrepreneur. Started his professional career in small IT companies in Europe, then moved to America for several years. Worked on the development of mobile processors in Telecommunications equipment company Qualcomm (USA).
Since 2012, with a team of like-minded people been working towards creating their own cryptocurrency. Crypto-enthusiast, author of articles on IT and blockchain.
Education: Riga Technical University and Cass business school (The UK), MSc in Corporate Finance.