Hosted Mining vs. Cloud Mining – Here are the Differences

The Bitcoin ecosystem has many moving parts.

If you take an average person on the street and ask them about Bitcoin, they will likely talk about its price and not much else. When such individuals get to research on Bitcoin, they can, unfortunately, come across information sources that don’t get everything right.

Mining is one of those constituent parts of Bitcoin.  At any one time, there are hundreds of thousands of computers, if not millions, actively mining Bitcoin. This process involves computers confirming Bitcoin transactions to earn block rewards and transaction fees.

To demystify the process further, computers try and solve complex transaction-related algorithms. Solving these algorithms earns a computer the right to add a block of Bitcoin transactions to the Bitcoin blockchain. Therefore, mining plays an important role in ensuring that the Bitcoin network is decentralized and functional. Mining replaces the centralized supervisory role that banks play in traditional transactions. 

There are different types of mining to fit the needs of different types of miners. For the purposes of this analysis, the focus will mainly be on cloud mining as distinguished from hosted mining. Both are variants of mining, which essentially involves powerful computers playing the decisive role. 

Let’s explore cloud mining first;

So, What Exactly is Cloud Mining?

The concept of cloud mining sounds a lot like cloud data storage. 

This is a form of mining that utilizes a large-scale mining data center that pools together investor funds and shares the proceeds of mining among them, depending on the amount of investment. 

Usually, the cloud mining operation sets up and maintains the mining rigs beforehand and offers participants the chance to register and purchase mining contracts readily. 

Cloud mining is a lot like purchasing shares in a company. You don’t get too concerned with how the company is managed but get dividends periodically. The amount depends on how much the board decides and the performance of the company.  

This is assuming that the cloud mining operation you settle on is professional.

Upon making an investment, the cloud mining company will allocate you hashpower that determines the amount of rewards you earn. The cloud mining operation typically has some charges as fees before transferring the proceeds of mining to the accounts of investors. Cloud miners justify the fees as charges for maintaining the mining equipment and electricity.

The contract terms vary depending on the cloud mining service. Individuals have to be careful with cloud mining operations because some lack transparency. This is because the power structure is quite centralized with investors buying into the operation. 

Before choosing a cloud mining partner, go through their terms carefully, especially what is written in the fine prints.

Because it is markedly different from Hosted mining. 

What is Hosted Mining? 

Hosted mining often gets compared to cloud mining. Alternatively, some make a distinction without a difference. 

These are two different concepts, the primary difference being the level of control a user exerts over their mining operation. In cloud mining, you invest according to the terms of the cloud mining operations without owning the mining equipment and can always be booted out by the cloud miner with no recourse.

For hosted mining, you essentially purchase mining equipment and have a professional hosted mining service store the equipment for you. The equipment is yours and the facility that hosts your gear is regulated with identifiable executives with proof of address. 

It is not very different from hardware mining at home with only slight modifications. 

These modifications include natural cooling and cheap renewable power that a professional hosted mining like Advanced Mining provides.

As such, a hosted mining set-up is simply an extension of hardware mining. There is a better level of transparency than a cloud mining operation. The person who purchases mining equipment is more involved in the mining process and retains control of the mining equipment.

Comparison between Cloud Mining and Hosted Mining 

It is easy to see why people confuse these two concepts. Both involve the use of data centers that are distant from the home of the investor/miner, respectively. 

They both try to lower the cost of mining by utilizing cheap power and cooling. 

Cloud mining offers the advantage of economies of scale. For a person who wants to get some mining proceeds, cloud mining offers an immediate start because the hardware is already available. That said, it may take a while to become eligible for dividends. 

Cloud mining contracts are often multi-million dollar operations. They require a considerable initial investment to ensure a relatively stable hash rate from the get-go. The mining contracts offered to investors also help to stabilize the operation. 

Both of these modes of mining exist for the convenience of the user. Bitcoin mining at home is a logistical nightmare because of the maintenance the equipment requires.  Activities like cooling and performance monitoring are a bit technical, and the ordinary person would probably not cope with such high demands. 

Hosted mining takes some time to become profitable. There is no fixed timeline because crypto prices vary, and mining difficulty constantly adjusts regularly.  

Level of Control as the Main Distinction

The main advantage of hosted mining over cloud mining is the level of control a person exerts over the mining operation. In cloud mining, you are happy to go along with the terms of the cloud mining operation while hosted mining involves you all the way.

A person learns quite a bit more about cryptocurrencies in a hosted mining setup. A professional outfit like Advanced Mining is more educative with emphasis on stability and a long-term focus on creating a passive income stream. 

Cloud mining is more focused on the speculative aspect of Bitcoin, with most users signing up on the promise of making Bitcoin, or the fiat equivalent fast.

This is a promise some investors take up readily. There is often little accountability from cloud mining operations as to how the numbers come up. 

Obviously, some are more transparent than others. However, due to the fact that profits are distributed from a centralized operation, there is always room for being shortchanged. Besides, the charges that some cloud mining operations slap on users are arbitrary and could end up seriously undercutting the profit margins.

For a hosted mining setup, you own the mining equipment and can get it shipped to you at any time. This is an extra level of insurance because you could eventually sell your mining equipment should you ever decide to stop mining. 

In summary, hosted mining effectively makes you a Bitcoin miner, from a remote location. This is an empowering setup designed to ensure that mining is easier and more efficient. It is inaccurate to mix up cloud mining and hosted mining. From the aforementioned, it is clear that hosted mining is better for a user who wants transparency and more control over their mining enterprise.

Mine Bitcoin with Advanced Mining for the Best in Hosted Mining 

Advanced Mining offers an opportunity for individuals seeking to mine Bitcoin to get started. 

We offer an opportunity to purchase state-of-the-art mining equipment that ensures your operation is competitive.  To ensure that mining is efficient, we have data centers in areas of North America with natural cooling and cheap renewable mining.

The mining landscape will only get more competitive with time. Bitcoin is getting ever closer to its total supply of 21 million. Advanced Mining offers the competitive edge mining at home could never achieve, and a level of transparency cloud mining operations cannot offer.

Visit our Mining Shop today to get started with hosted mining!