Bitcoin Miner Hosting vs. Cloudmining: The Authoritative Guide
Bitcoin Miner Hosting vs. Cloudmining Which should you choose?
As we all know, Bitcoin mining has become, and is becoming more and more centralized and commoditized as time goes by. Large-scale bitcoin mines are springing up like mushrooms, concentrated in the few places in the world where electricity is cheap and the climate is cool.
With this move towards centralization, home miners are losing ground day by day.
Many of these home miners who don’t have the luxury of living in a place like Iceland still would like to participate in the mining ecosystem. After all, it’s mining that is the driving force behind Bitcoin. Mining is what keeps an accurate and secure ledger of all the Bitcoin transactions which have taken place,
How then can an average Joe still support Bitcoin and maybe make a buck at the same time?
Cloudmining vs. Bitcoin Miner Hosting
As it stands, these marginalized miners now face two choices: buy cloud mining contracts, or the more complicated option of having their miners hosted. If you’re going to have your miners hosted then you’re going to have to buy hardware. That alone can be a huge challenge.
Obstacles for Owning/Hosting your own Miners:
You have to Find the Right Batch
1.) You have to sit down, and figure out which batch of hardware is best to buy. You’ll have to evaluate which hardware is cheapest per GH, and which is the most energy efficient.
Did you order from a scam company?
2.) You pray to God that the company you order your hardware from is not a scam. *cough* Alpha Tech
Will it arrive on time?
3.) You hope and hope that the hardware that you order actually arrives on time, and not months after the promised shipment date (after the manufacturer has possibly mined with it.)
Will your miner meet its promised specifications?
4.) You hope that you’re lucky enough that the hardware that you ordered, actually meets the specifications that were listed when you ordered it (hashrate, power draw, etc.)
Will your miner die?
5.) You yearn and long for stable hardware that doesn’t have lots of bugs and doesn’t just die and stop working.
Can you get cheap Hosting?
6.) This is where ASICSPACE may be able to help you. We're building a data center, with prices starting at $95/kw/month, but we offer discounts if you meet certain criteria.
See more info about hosting with us:
If you’ve made it this far, will you even make a profit?
7.) Finally you hope the price of Bitcoin holds up, and that the network difficult doesn’t increase so fast that you don’t ROI on your hardware.
With these obstacles, one would think cloud mining would be the go-to option. Why worry about co-locating your hardware when you can buy hashrate straight from the cow’s tit.
Unfortunately it's not that simple. Cloudmining, where they take all your money upfront, and give you back little bits of it over time, makes it a breeding ground for Ponzi Schemes.
I've already expressed my doubts about GAW miners.
Remember Bernie Madoff, the investment broker, who was convicted of running a Ponzi scheme? People would invest in him, and he would give them back 10% returns a year... of their own money. His Ponzi scheme cost his investors Billions.
Gavin Anderson, a prominent and well respected Bitcoin developer, had this to say about about cloud mining:
“I suspect many of [the Bitcoin cloud mining companies] will turn out to be Ponzi schemes.”
In response to the controversy that Anderson's statement made, Marco Streng, CEO of the leading cloud mining outfit Genesis Mining, had this to say in an email to CoinTelegraph:
"There is no way for any mining company to prove that they really own the hardware."
"At Genesis Mining we do our best to be as transparent as possible: we publish information about the company founders on our webpage, have a registered company and frequently appear at conferences all over the world. Furthermore, we publish pictures of our mining operation, to prove that we own huge amounts of hardware."
So what is Average Joe Miner to do?
If Marco Streng is right, and there's no way for a cloud mining co. to prove that they actually own hardware, then buying a cloud mining contract seems to be a grim gamble indeed.
My advice: have your miners co-located. You can then know that you own a real piece of the Bitcoin network and not a fictitious contract.
Buy hardware that is in stock from reputable manufacturers like Spondoolies or Bitmain.
Do you have your own opinion? Feel free to post it in the comments section below.