Recently, Newconomy explored the advantages and disadvantages of cloud mining Bitcoin. Today we will take a look at the best practices for cloud mining altcoins. As with Bitcoin cloud mining, users are able to ‘rent’ out hardware power in order to contribute to the mining process and receive their selected altcoin as compensation.
We’ll briefly examine why someone would choose not to mine Bitcoin, before examining the practical steps of how to go about getting involved in obtaining those cryptocurrencies!
Mining Alternative (alt)coins vs Bitcoin
The argument between the Bitcoin maximalists and everyone else is well documented. You’re either a ‘true believer’ following Satoshi’s vision to the letter, or you’re not a cryptocurrency supporter. Without getting bogged down with the philosophical arguments for each case, it’s important to examine the pragmatic and practical reasons for why mining altcoins, specifically cloud mining, can make a lot of sense.
Firstly – hardware costs. Many cryptocurrencies do not have the same intensive hardware requisites as Bitcoin. This drastically lowers energy consumption and cost. As a result, cloud mining fees and services are often factors cheaper than their Bitcoin service counterparts. Furthermore, the price movement potential of other cryptocurrencies, whilst drastically more volatile, are, again, factors greater than Bitcoin’s potential (short-term) price movements.
Take three ‘alt’ cryptocurrencies from the start of 2017 as an example; DASH, VERGE, and MONERO. DASH increased by over 139X, from $11.26 to $1,500 by end of the year. VERGE exploded from $0.00001802 to $0.21 in a year – a staggering 11,653X, and MONERO from $11 to $419, a 38X increase. Ignoring market timing, all three cryptocurrencies could have netted miners potentially life-changing profits. Whilst these sorts of gains are increasingly unlikely until the next major bull run, it demonstrates the growth potential of lower market-cap cryptocurrencies in comparison to Bitcoin.
The Practical Stuff
As our last article on cloud mining, all that remains is for you to pick a cryptocurrency to mine – you can use our great comparison charts to track historical price patterns and news – and create the relevant wallet. Both Ledger Nano S and Trezor offer great hardware choices to store cryptocurrencies safely. It’s worth checking out the homepage of your chosen digital currency to find alternative storage methods if it isn’t yet supported by either of these brands.
Choose a Cloud Mining Service
Genesis Mining offers customers the option of either BTC or any altcoin featured in their catalog, with automatic hashpower switching. HashFlare also offers customers a similar level of service, with auto-hash switching, depending on the currency you select. Many cloud mining companies will provide a rough estimate or calculation of your rate of return based on the current market value of the currency.
Join a Mining Pool
Some cloud mining companies will require you to join a mining pool. As with most things, it’s recommended you join a reputable, known organization. Pools will often charge a small percentage fee on your total earnings, and require you to create what’s known as a ‘worker’ – a sub-account used to track your personal contributions to the mining pool. The pool will have instructions on how to set up the worker.
And there you have it. Once you are signed and set up, you just have to sit back and watch your passive income roll in. As with all financial decisions, due diligence is always recommended, and the above calculations and service recommendations do not count as financial advice!