If you want to acquire your first Bitcoins without purchasing them directly, the first thing that comes to mind is to buy an ASIC miner. However as mining becomes increasingly more difficult, the amount of machines required to mine efficiently can be quite an expensive investment. A new Antminer S19 PRO machine can cost USD 7,000 and setting it up requires a high level of professional expertise. That's in addition to finding a site to host your hardware and sourcing cheap, reliable energy, to power it. If you want to become a Bitcoin miner and one or more of those things are an issue, then Mining with cloud hashrate is the best option for you. .

What is cloud hashrate?

To put it simply, cloud hasrate divides the computing power of miner machines into separate units, and rents or sells equities in them. Users only need to purchase part of the equity to mine Bitcoin. They can make small or major investments while avoiding the tedious process of farm setup and maintenance operations. Compared with traditional mining, cloud hashrate providers have a professional support team as well as more reliable and cost-effective energy sources. This results in a shorter return on investment for end users.

Cloud hashrate enables anyone to start mining at the push of a button, using a computer or cellphone at home. In doing so, they can obtain cryptocurrency at a lower cost than purchasing it through a cryptocurrency exchange.

The cloud hashrate platform is able to minimize their own costs by purchasing mining hardware in bulk and building large-scale professional mining farms. This is a win-win scenario for both the platform and its users. That's one of the reasons why cloud hashrate has gradually gained traction, opening Bitcoin mining to the general public and becoming the preferred way to mine Bitcoin.

How to select a cloud hashrate platform?

Cloud hashrate has gained public recognition, but the providers are quite a mixed bag.

At present, cloud hashrate vendors are generally divided into two categories according to operating mechanism. The first is “self-owned" cloud hashrate platforms, where the vendor builds and invests in mining farms. They operate the mining machines themselves and sell the cloud hashrate produced. The second is "platform-based" cloud hashrate platforms, where the vendor recruits mining farm owners to inject hashrate into the platform and they then sell it on to end users. These vendors are intermediaries and they don’t own or operate miner machines.

The platform-based cloud hashrate involves a high level of risk, and many of them know little about the actual operations of the farms where they are sourcing their hashrate. Due to the absence of physical facilities, it is easier for these platforms to oversell cloud hashrate or create fake miner machines. It is difficult for investors to verify the legitimacy of the hashrate when subscribing to their services, as the platform can easily perform hidden manipulations.

Given this, the existence of a physical mining farm is the most critical aspect in deciding whether cloud hashing platforms can offer reliable cloud hashrate. Large mining farms with cloud hashrate also provide other services, such as hosting and farm operational maintenance. Users should beware of platforms that only operate a cloud hashrate business.

There are other important considerations when selecting platforms, such as industry reputation, availability of physical miner machines, hardware performance and brand endorsements. Bitdeer and Genesis Mining are currently the dominant cloud hashing platforms with the largest global market share.

Bitdeer, a subsidiary of Bitdeer Group, is a digital asset mining and cloud services platform. Founded by Jihan Wu, a well-known pioneer in the crypto mining industry, it has received investments from leading venture capital firms such as IDG and Sequoia. It provides a complete range of mining solutions and is backed by strong endorsements.

Is cloud hashrate Bitcoin mining profitable?

In order to ensure results are relevant and trustworthy, I interviewed Bella and Leo, users of Bitdeer services.

Bella decided to invest in cryptocurrency after a long period of observation, and her risk tolerance is relatively low. She considers digital currency to be a high-risk investment that requires rigorous risk control, so she chose the low-risk "Antminer S19 BTC Acceleration Plan", which is economically priced and only involves limited risk exposure. With the plan, the customer owns 100% of the profit before the investment is recovered, but profits will be shared equally between the user and the platform thereafter.

As shown on Bella’s expired order form, she purchased the 360-day accelerated plan on August 25, 2020. The service expired on August 22, 2021. The total investment is USD 1,000. After subtracting the hashrate and electricity costs, the total market value of Bitcoins that Bella received after profit sharing with the platform is USD 2,083, and the rate of return is as high as 108%.

However, such a high rate of return is partly attributable to the soaring Bitcoin price in the past year, so timing is a decisive factor contributing to the profitability of crypto mining - a bitter lesson that Bitcoin mining taught Leo.

Leo started investing in cryptocurrencies four or five years ago. He is a senior blockchain investor and believes Bitcoin will continue rising against the dollar. According to his Bitdeer order, Leo bought the “Antminer S19 BTC Classic Plan” on March 1, 2021 when the Bitcoin price was close to USD 50,000. The 120-day package expired on June 29, when the Bitcoin was around USD 35,000. After deducting expenses, the Bitcoins generated by Leo were worth USD 77,232. He sustained a loss of 3.4%.

He shrugged it off. “The loss would be 30% if I bought and held the Bitcoins. I only lost 3.4%, (so) it actually saved me money.”

Without hesitation, Leo decided to buy a 1,080-day S19 BTC Classic Plan immediately after the expiration of the 120-day plan. I learned that it was not the first loss-making deal for Leo, who had suffered losses at the height of Bitcoin price volatility in 2019, but each time he decided to reinvest for three reasons: 1) the overall cloud hashrate has declined substantially across the internet; 2) Bitcoin is bullish in the long-term; and 3) the returns generated by plans with long durations are high. The 1,080-day package currently sold on the platform, has a historical return rate as high as 208%. Even as a future wealth management investment, it is a real bargain to buy cloud hashrate now.

From the experience of the two interviewees, it is clear why cloud hashrate has become the first choice for ordinary investors who wish to mine Bitcoin. With a smaller initial investment, faster payback cycle and no technical barriers, Cloud Hashrate plans have made it easy to participate in the highly specialized task of Bitcoin mining. Customers only need to worry about the amount they want to invest and the rate of return.

Of the many types of cryptocurrency investment products and derivatives, cloud hashrate platforms offer a relatively prudent investment choice where the return on investment is high and the risk exposure is low. This has made it a popular choice among smart investors who manage millions of dollars. I would like to remind readers once again that before purchasing any cloud hashrate product, ensure that you have a reasonable understanding of the brand and size of the platform. That way you will avoid problematic service providers. Additionally, although a long-term bullish trend is expected, the digital currency market is still highly volatile. Users should make investment decisions based on their own risk control capabilities, while sizing opportunities presented by the cryptocurrency boom.