Mining Bitcoin can and has earned people a lot of money. The lure of mining a Bitcoin block and hitting that jackpot is prevalent, but most people don’t have the equipment to become fully-fledged miners. This is where Binance’s Bitcoin Cloud Mining feature can help. But how does this work, and is it really safe?
How Cloud Mining Works on Binance
Binance is no longer just a cryptocurrency exchange. The platform has massively diversified over the years, offering features like staking, liquidity farming, and even a payment card. Binance has offered mining pools to its users for some time but is now also giving you the option of cloud mining.
Crypto mining equipment can be very, very pricey, which makes mining inaccessible to certain people. Bitcoin mining, in particular, can rack up huge initial costs, with ASIC miners costing thousands or tens of thousands of dollars.
But this doesn’t mean mining is completely off-limits. With so many people unable to afford a full crypto-mining venture, the cloud mining niche filled the void.
In a nutshell, crypto cloud mining involves paying another individual or company a fee to mine crypto on your behalf. This means that you don’t need any kind of mining hardware, such as a GPU, CPU, or ASIC miner, to mine cryptocurrency. In return for your payment, the recipient will use their hardware to mine for you.
Cloud mining platforms typically use mining farms to serve their customers. Mining farms consist of hundreds or thousands of dedicated mining devices, each working away to get that block reward. However, some cloud mining platforms don’t own these farms and instead, rent out hardware usage to mine for their users.
Cloud mining platforms often give you the option of choosing a higher or lower hash rate and the time you’d like to subscribe. Binance currently sells a 180-day Bitcoin cloud mining plan with a minimum hash rate of one tera-hash per second (Th/s). At the time of writing, the minimum rate starts at $10.7280, which consists of a $9.5580 electricity fee and a $1.1700 hash rate fee.
With this rate and at this price, Binance states that the estimated reward is 0.00000237 BTC daily ($0.06). When your contract is up, this will leave you with just under $11.
But one Th/s is the minimum here. If you wish, you can boost your hash rate to be in with a better chance of making more money. If you signed up for a 180-day contract with a 20 Th/s hash rate, you’d be looking at a daily profit of 0.0000474 BTC. This would equate to $1.36 daily at the time of writing, leaving you with $246 at the end of your six-month contract.
But, as you increase your hash rate, your fee will also increase as the mining farms use more power on your behalf. So there’s a give and take to consider here.
There’s also a 2.5% mining pool fee applicable to those using the cloud mining feature, as well as a 1.5% management fee.
At the moment, Bitcoin is the only cryptocurrency available on Binance’s cloud mining feature. You’ll need to create your own Binance account and verify your identity before using this feature.
Is Cloud Mining Better Than Typical Mining?
There are pros and cons that come with both cloud and physical mining that you should be aware of. Let’s start with the former.
A big plus of cloud mining is that you don’t have to commit to highly expensive hardware. We have an in-depth explainer on why Bitcoin mining is so expensive, but, in short, the vast majority of the overall cost comes from hardware costs.
Even the cheapest viable ASIC miner costs at least a thousand dollars, with new and high-end models often exceeding $10,000. GPUs can also be very pricey, especially if you want to purchase multiple to build a mining rig. But Bitcoin can no longer be mined efficiently on GPUs, so ASICs are a must in this specific scenario.
Even if you’ve got this much to spend, crypto mining is not a sure thing. You can spend thousands on equipment just to find that the mining difficulty is very high, and you’re already lagging behind, and the network is overrun with other miners looking to grab the same reward as you. The ongoing electricity costs of powering your mining hardware will also come at a cost, as you have to leave it running around the clock to act as a full node.
Mining, especially on larger blockchains like Bitcoin, is extremely competitive, so many struggle to make a decent profit, even with professional hardware. Cloud mining, on the other hand, doesn’t require you to make large financial commitments. Without the need for hardware, you can save yourself a vast amount of money, and you don’t have to take any big risks, either.
But cloud mining isn’t all green flags. There are…
Read More: What Is Binance’s Bitcoin Cloud Mining Feature? Is It Safe?