Home or cloud mining. What to choose?

We compare profitability of extraction of crypto-currency using own equipment and using a cloud.

The beginning of the self-production of cryptocurrencies may seem like a very complicated process to many. For example, you will have to understand the specifics of the algorithm of the currency of interest. In addition, mining equipment can cost thousands or even tens of thousands of dollars.

Faced with these difficulties, many are wondering: is there an alternative to self-mining? The answer is simple: yes, and this Mining on the power of cloud storage. Today we will compare both options and determine which one is more profitable in the long run.

Cost of equipment for home mining

So, the purchase of equipment for independent mining is usually associated with significant costs at the very beginning. First of all, it is necessary to determine its full value. It depends not only on the cryptocurrency that is supposed to be mined, but also on how flexible and powerful the system should be.

To extract bitcoins (Bitcoin), you may need a specialized ASIC-miner. As a rule, they are much more expensive than conventional graphics cards and processors - but more powerful. But, despite the high production rate, a big drawback of ASIC miners is the impossibility of reprogramming them. In other words, if the cryptocurrency hashing algorithm changes (for example, as a result of hard forks), the equipment will instantly become useless. As a result, you may suffer serious losses that will hit the profits and may even lead to losses.

Recently, this is exactly what happened with the Monero miners. After the hard currency of the crypto currency, they lost the opportunity to extract XMR with the help of ASIC-miners, and the devices simply became unnecessary (this goal was pursued by the developers of crypto-currency, carrying out the network update). The producers of ASIC-miners for mining crypto-currency on the algorithm Cryptonight suffered: they had to sell their devices for a pittance.

In contrast to ASIC miners, graphics cards and processors can usually be reprogrammed and adjusted for changes in the algorithms of the extracted cryptocurrencies. However, it is worth noting that now in cryptomir there is a tendency to modify the algorithms for ASIC-mining resistance. For most miners, this means reducing both upfront and current costs.

Buying a basic set of equipment allows you to determine whether mining will be profitable and is the most optimal step. However, many prefer to buy several mining kits at once in the hope of increasing profitability. Even in the face of rising prices for crypto currency, starting with several mining installations should be extremely cautious, since any additional equipment will increase the payback time of the project.

Of course, we should not forget about other factors, for example, the cost of electricity. They vary depending on the location of the equipment, so you will have to calculate them yourself.

The cost of cloud mining

Compared to independent home mining, the cost of cloud mining is much easier to calculate. Most companies monthly charge users a subscription fee, the amount of which depends on the specific crypto currency and speed of hashing of its network (this is clearly seen in the case of such popular cloud services as Genesis Mining and HashFlare).

For example, the cost of a two-year contract for the production of airwaves with Genesis Mining currently starts from $ 1520 for 40 MH / s to $ 12 960 for 360 MH / s. And HashFlare offers a one-year contract for the production of air at a price of $ 1,8 for 100 KH / s.

Be sure to read the reviews and calculate the projected profitability of cloud mining. The fact is that many services have extremely low profitability, and some are generally scams.

Profitableness of home mining

It is impossible to say for sure how long investment in equipment or cloud mining will pay off, but it is necessary to carry out at least approximate calculations. According to the experience of many miners, one can say that one should not count on profit in the first 3 − 6 months. The payback period in 10 − 15 months looks more realistic. Much depends on the cryptocurrency quotes, the cost of electricity and the type of equipment. On the Nicehash website, you can use a calculator to calculate profitability.

The profitability of cloud mining

From discussions on the Reddit forum, reviews and profitability calculators, it follows that cloud mining is not too popular or profitable. For example, as of 30 in May 2018, the payback period for HashFlare Scrypt and SHA-256 for cloud bitcoin mining takes 3828 and 3983 days, respectively (or slightly more than 10 years). The extraction of esters at Genesis Mining facilities is even less profitable - the investment pays off in about 25 992 of the day (70 + years). In both cases, cloud mining loses by itself.

The main problem of cloud mining is the need to pay a monthly fee regardless of the market situation (it is especially hard to do when prices fall). The benefits of cloud mining will increase if the market returns to rapid growth (as it did in December). However, it is simply impossible to predict when the next bull trend in the cryptocurrency market will begin and end.

If you compare cloud mining with self-mining, the choice becomes obvious. In the case of the latter, even in a falling market, the bulk of expenses are paid in advance and are not repeated. Of course, you have to pay for electricity, but there are many regions in the world where its cost is low and mining is legal. In other words, even in a falling market, mining cryptocurrency on its own equipment is more profitable than cloud mining.

Conclusions

Despite the high costs at the outset, mining on their own equipment is much more profitable than cloud mining. Perhaps the biggest (and perhaps the only) advantage of cloud mining is ease of use. So you can avoid complex hardware configuration and unpredictable electricity costs.

However, in the cryptocurrency community there is a perception that if a user is not able to set up his own mining farm, it is better for him to become an investor and buy cryptocurrencies directly in the market, rather than trying to make money on cloud mining.