With the current boom in cryptocurrencies, many users feel a renewed interest in the possibility of mining bitcoin or other cryptocurrencies and obtaining a passive income that can be revalued over time.
And is that investing in bitcoin or other cryptocurrencies is not the only way we can benefit from the current bull market we are experiencing: cryptocurrency mining is hotter than ever.
What is Bitcoin and cryptocurrency mining?
When we say that cryptocurrencies are decentralized we mean that there is no central authority in charge of supervising transactions and ensuring their operation.
On the contrary, there are a large number of individuals or miners who do such work, who are in charge of validating transactions through a consensus mechanism and of sustaining all the infrastructure necessary for cryptocurrencies to work. These individuals are called miners.
And as you might be imagining they do not do their work altruistically: they receive a reward for their work in the form of bitcoin or other cryptocurrencies.
In the case of bitcoin, in total there are only 21 million bitcoins to be put into circulation, of which 18.5 million have already been mined (i.e. they have already been distributed among the miners who help maintain bitcoin as a reward for their work).
Synthesizing, the Bitcoin mining process that a miner does consist of:
- Verify and validate the last transactions that have occurred in the Bitcoin blockchain. This part of the job makes our job as miners to audit the network, legitimizing and verifying the transactions that have occurred. To avoid that we may have bad intentions and falsify the results, the work that our miner does will be compared with that done by thousands of other miners. If there is no consensus on the results, our work will be excluded.
- Solving complex mathematical problems: In this stage of mining, called proof of work, our job as miners will be to solve as quickly as possible a mathematical problem, whose complexity increases with each Bitcoin that is mined.
The first miner who manages to solve both points gets the reward: 6.25 BTC (more than a quarter of a million dollars or euros at the current Bitcoin exchange rate).
The problem we run into today is that mining Bitcoins is such a lucrative business that it is full of large companies that are dedicated to it with tens of thousands of very powerful processors working simultaneously.
Years ago you could mine Bitcoins with a simple desktop computer; now you need specific and very powerful hardware created for that purpose.
Fortunately for the average user, there are still ways to mine Bitcoin and other cryptocurrencies that can be profitable and do not require investment in hardware: cloud mining.
Cloud mining, the solution to mine Bitcoin and other cryptocurrencies without investing in hardware (or even for free)
Within the cryptocurrency mining sector, there are companies that, even having the capacity to mine, decide to rent their high-performance infrastructure in small “portions” so that users like us can mine as the big players in the industry do.
And you may ask, why do these companies rent their infrastructure when they could be mining themselves? Well, because of a risk issue: mining cryptocurrencies has a certain risk while renting infrastructure is a safer business. These companies decide to make less money but have more financial security, because at the end of the day they always make money, whether the Bitcoin goes up or down.
Currently, mining in the cloud has become a very lucrative business due to the large increase in price that cryptocurrencies have experienced. Every day there are more and more people who manage to obtain passive income with this type of mining, so the availability of these services is becoming scarcer every day.
However, there are still a few companies with the availability of mining machines for rent (or to “give away”, as you will see below):
1) StormGain.com – Allows free bitcoin mining to its customers
This company is a rare case among the others, as it allows free (yes, free) bitcoin mining to its customers.
StormGain.com is a cryptocurrency exchange that you probably already know, as recently it is experiencing a big boom on the Internet and is the official sponsor of Italian soccer team Lazio. The reason for its growing popularity is that it offers lower commissions than other more popular exchanges, such as Binance or Coinbase.
In addition to the above, it has recently allowed its customers to mine bitcoin completely free of charge, albeit under certain conditions.
They “lend” you their bitcoin mining infrastructure, but in exchange, you have to invest the profits you get from mining in some cryptocurrency they have on the exchange. That is, you have to make some operation with the mining profits in order to withdraw them.
Why do they allow you to mine Bitcoin for free?
It is clearly a very clever marketing strategy. Currently, cloud mining services are in high demand and in short supply, they go highly sought after.
StormGain.com offers you their mining infrastructure for free, but since you have to do some operation with what you earn from mining they make sure you will test their platform before leaving.
By testing their platform you will see that their commissions are lower than the competition and, most likely, you will become one of their loyal customers.
Also the more you trade on their exchange the better Bitcoin mining machines they will give you, to the point that their best users are given free mining servers capable of producing over $18,000/month in Bitcoin mining.
This StormGain promotion is getting a lot of buzz on the internet and given that there is currently a severe shortage of mining hardware it may not last much longer.
To benefit from it you can do so by accessing:
https://stormgain.com/bonus/minar-bitcoin
2) Genesis-mining.com – Mine Ethereum starting at $20/month
UPDATE: No availability. Genesis Mining has all of its mining infrastructure leased and all of its packs are out of stock.
Genesis Mining is a company specializing in mining Ethereum and other altcoins such as Dash, Litecoin, or Monero. Although it is headquartered in Hong Kong its mining centers are located in Iceland.
This Nordic country has an average annual temperature of 11.8 °C, which makes the cooling costs of the mining hardware lower. In addition, the cost of electricity in Iceland is especially low as 80% comes from renewable energy such as geothermal and hydroelectric power plants.
Genesis Mining offers infrastructure leases at its mining centers through annual and bi-annual contracts. The cheapest plan consists of a pack with a processing capacity of 12.5MH/s, for a period of 2 years, for a one-time payment of $499.99 (about $20/month).
In addition, its entire infrastructure comes preconfigured for mining and has no maintenance costs.
How much profit would we get with this Ethereum mining service?
According to our own calculations, and assuming the current Ethereum price, the above mining pack would be able to produce $816 worth of rewards in 2 years, so we would make a net profit of $316.01 ($816 rewards -$499.99 rental costs), not counting the additional profit we could make if Ethereum continues to rise in value.
The ROI (return on investment, for its acronym) of the most basic pack 2 years ahead would be +63.20%, considering that the price of Ethereum remains stable for the next 2 years.
UPDATE: Genesis Mining currently has all its packs sold out. You can check availability at:
https://www.genesis-mining.com/pricing
3) NiceHash.com – A cryptocurrency mining capacity marketplace for advanced users
NiceHash is not a platform like the ones we have seen so far: it is a hash power (computational mining capacity) marketplace where users can buy and sell such assets.
In other words, NiceHash offers us 2 possibilities:
- You have mining hardware and want to sell your cryptocurrency mining capacity to the highest bidder. This case can be useful if, for example, you have a really good gaming graphics card and you want to profit from it (with a normal processor or a standard graphics card you won’t make a profit).
- You want to buy third-party mining capability to mine your own cryptocurrencies and (try to) make a profit.
This platform is, in effect, a live marketplace for mining capacity. The drawback it has is that, as it is a self-regulating real-time market, the profits you make by buying cryptocurrency mining capacity are small.
In addition, it requires advanced and constantly updated knowledge of mining algorithms and the most profitable cryptocurrencies. If you decide to buy “hash power” to mine cryptocurrencies and earn money for it you must take care to detect small inefficiencies in the mining ecosystem from which you can make an economic profit.
For example, if you detect that there is a specific cryptocurrency whose mining difficulty has decreased and forecasts indicate that its price may soon increase in value, you may have an opportunity to make money by buying hash power.
Calculating the profitability you can get with this method is impossible, as it will depend on your skills, the level of knowledge you have, and how the price of the cryptocurrency you mines evolves.
For more information about NiceHash you have a guide where they explain in detail the process of mining cryptocurrencies:
Investing in Bitcoin