Cloud Mining : a Beginner’s Guide for Bitcoin & other crypto-currencies

Introduction

For those of you who don’t know anything about bitcoin & crypto-currencies (and are able to speak french), I created an e-learning course about bitcoin and blockchain that you can find here. If you’re interested about following this course in english, please let me know in the comment.

Bitcoin no longer needs an introduction. The famous crypto-currency does the headlines and it doesn’t look like it’s going to stop anytime soon, to the contrary. Real monetary revolution, decentralised and without control, bitcoin is seducing more and more people and organisation at a fast pace.

Other crypto-currencies are also on the spotlight : Ethereum, Zcash and others are gathering many adepts.

In this complex galaxy of crypto-currencies appeared a few years ago what is now called « cloud mining ». At the beginning, it was only reserved to a selected few (understand : geeks) able to create a cloud mining server on Amazon Web Services (so… not me :p). But today, thanks to some easy to use websites, anyone can get started. Let’s see together how all of this works and how you can take advantage of that opportunity.

What’s the main idea?

As you might know, bitcoin is « mined ». This means that people give resources from their computer (computational power to resolve math equations) to maintain the network functional. A computer validates the bitcoin transactions in the entire world and write them in the blockchain. This allows the system to be extremely secure. In exchange for that computational power that you give away, you receive a bitcoin compensation.

The only problem is, mining difficulty has increased so much that today it is more expensive in electricity to mine than what you will earn in return. So for example, let’s say you plug in your computer, start mining bitcoin to validate transactions and maintain the network. If you win $1, your computer will have spent $2 or $3 in electricity to do the calculations it’s supposed to do. Not cool, right?

The solution to this problem is to invest in a computer specialised for the purpose of mining. It’s main particularity? As you would’ve guests : a very good ratio of electric consumption compared to the calculation power. But this means that you have to invest a big amount of money upfront (usually these kind of computers start around $1000).

So what if you want to mine bitcoin, actually make a profit, but don’t start by spending $1000 on a computer? That’s when cloud mining was born. The name is rather self-explanatory : you mine in the cloud, instead of mining on your own machine. To be more precise : a company puts at your disposal their specialised computer with very small electric consumption and high calculation power without you having to buy the computer. This service comes for a fee, of course, and the « art » of cloud mining is to find a rentability while paying someone for their computer.

Of course, if I’m taking the time to write all this, it’s because you will be able to make it profitable and to earn money. Here’s how to start.

You will need a Bitcoin Wallet

When you mine crypto-currencies in the cloud, your earnings are automatically sent to your bitcoin / crypto wallet.

I recommend that you use Coinbase. This website is one of the world leader in crypro-currencies wallet. The choice of a particular website for your wallet is not to be done lightly because those companies are very often the target of hackers. By choosing a « very big » company like Coinbase, you go for the safer option because smaller players probably don’t have the money to invest in the best security possible.

By using this link, you will receive $10 as a welcome gift for your first $100 deposit.

Of course, you don’t have to deposit that much and you can start with as little as $30 (I’ll come back to that).

How to start?

There are many cloud-mining websites, but today I will talk about one in particular that I recommend to you : Genesis Mining. I have been personally using it for the last few months and am very happy with the results.

Il a notamment passé le test de risque du « bitcoin scam test » that says the website can be trusted.

The idea is relatively easy : you buy hash power (calculation power on a computer) and receive everyday the bitcoin that you mined, directly to your bitcoin wallet.

Here’s how to register :

1- Go to www.genesis-mining.com

2- Enter your name & email

3- Validate your email

4- Start mining !

5- Don’t forget to fill in your Wallet details to receive your gains (My Account > Settings > Wallets)

The minimum to start is $30. You can invest $30 today and start earning bitcoin everyday! Don’t have false hopes, you won’t earn a lot everyday and it will take some time to recoup your investment, but if you chose the option of the « forever » plan, once your investment is reimbursed you will keep on earning money everyday.

I really like the fact that the earnings are directly transferred to my Coinbase account. This means that even if the website came to close or crash, my money is safe and already in my possession. Pretty reassuring and practical.

You can mine many different crypto-currencies on Genesis mining. Personally, I only mine bitcoin because it’s one of the crypto-money that I believe the most in.

Here’s the cryptp-currencies that you can mine with Genesis Mining : Bitcoin (BTC), Unobtanium (UNO), BitcoinDark(BTCD), Dash (DASH),  Litecoin (LTC), Dogecoin (DOGE), Zetacoin (ZET), Zcash (ZEC), Etherem (ETH), Startcoin (START), Peercoin (PPC), MemoryCoin (MMC), Monero (XMR) et Namecoin (NMC).

Here’s my earnings curve so far :

Security

Before anything else, and since this is called « security », please turn on your 2FA (two factors authentification) on all of your bitcoin websites. It might just save you a lot of troubles 🙂

I see some of you already saying « wait that’s not possible, that’s gotta be a scam! ». Mostly you might have the question « how is it possible that I pay only once and then earn revenue forever? ». I might answer you with a question of my own : « If you buy Apple stocks in the stock market, won’t you pay only once but earn dividends all your life? ».
More precisely : no, it’s not a scam. Your investment allows Genesis Mining to purchase a computer, and this computer will run forever once it’s purchased and mine bitcoin in perpetuity. Yes, even with your $30. They will for instance group 100 people to buy a $3000 computer.

Don’t forget that, on the daily earnings that your hash power earns them, they don’t give you everything back. They keep a share to pay for the electricity and make a small profit. Now it all makes sense doesn’t it?

Finally, there is an important rule at Genesis mining regarding bitcoin mining (I’ve been told this rule does not apply if you mine other crypto-currencies) : If your mining is not profitable for 20 consecutive days, your « forever » plan will be terminated. What do they mean by « profitable »? Well, everyday the commission they take on your earnings is set, it matches the electricity costs. So it’s about if the money earned (mined) is superior or not to that commission. Don’t panic, it has been the case every day in the last 6 months, and will have a tendency to stay this way since the bitcoin price is generally going up. However, this rule protects them in case the price of electricity would suddenly rise or if the price of bitcoin would suddenly plummet. This rule would allow the company to survive and not transform itself in a Ponzi scheme as we see to often in the crypto-currency world.

I hope this article will be useful to you and that you will start cloud mining today!

If you have any question of if I forgot something, please don’t hesitate to leave a comment 🙂

Happy mining everyone !

Gabriel