# What is Cloud Mining? {% hint style="info" %} **Cloud Mining** is the process of cryptocurrency mining utilizing a remote datacenter with shared processing power. This type of cloud mining enables users to mine bitcoins or alternative cryptocurrencies without managing the hardware. The mining rigs are housed and maintained in a facility owned by mining company and the customer simply needs to register and purchase mining contracts. Since cloud mining is provided as a service, there is generally some cost and this can result in lower returns for the miner. Users of hosted mining equipment can either lease a physical mining server or a virtual private server and install mining software on the machine. Instead of leasing a dedicated server, some services offer hashing power hosted in data centers for sale denominated in **Gigahash/sec (GH/s), Megahash/sec (MH/s) or Terrahash/sec(TH/s)**; users either select a desired amount of hashing power and a period for the mining contract or in some cases can trade their hashing power. **Cloud Miners** become participants in a mining pool, where users purchase a certain amount of "**hash power**" (TH/s, MH/s or GH/s). Each participant earns a pro-rata share of the profits in proportion to the amount of hashing power rented. {% endhint %} {% hint style="info" %} ### Let's understanding the Cloud Mining :arrow\_heading\_down: Cloud mining leverages cloud computing for the purpose of producing blockchain-based cryptocurrencies. Cloud computing, more generally, is one of the fastest-growing technology trends wherein computing services such as processing, server capacity, database services, software, and file storage are accessed via the cloud, over the Internet. Such companies charge on a usage basis just like we pay for our water or electricity usage. On the other hand, mining is the backbone of the cryptocurrency model, such as bitcoin. It is the process by which transactions are verified and added to the public ledger, known as the blockchain. It is also the means through which new coins are released. A combination of the two opens the world of mining to people at distant locations with little or no technical knowledge and hardware infrastructure. {% endhint %} {% hint style="info" %} ### Cloud Mining Models :arrow\_heading\_down: Hosted mining is the most popular form of cloud mining. In this model, the customer purchases or leases mining hardware located in a miner's facility. The miner is responsible for maintaining the equipment and ensuring that it functions as performed. Through this model, customers have direct control over their cryptocurrency. The economies of scale of a mining farm ensure that expensive costs associated with mining, such as electricity and storage, become manageable. But there is a considerable upfront cost associated with this type of mining. Leased hash power is another model that is used in cloud mining. In this model, hash power, or computing power associated with a cryptocurrency, is leased from a mining farm. Customers get a share of the farm's overall profits from mining cryptocurrencies. [According to reports](https://en.wikipedia.org/wiki/Cloud_mining), leased hash power is a popular form of mining for [altcoins](https://www.investopedia.com/terms/a/altcoin.asp) (i.e., cryptocurrencies other than bitcoin). The process requires a person to open an account with a cloud mining company via its website and select certain things like the contract period and hashing power. While there are advantages to cloud mining, such as less investment in hardware and recurring costs, the process also has several disadvantages. For example, industry scams have proliferated rapidly with the popularity of cryptocurrencies. Then there is the prospect of diminishing profits. Altcoins especially are vulnerable to demand, and a reduction in their hash power could lead to fewer profits for miners. Cloud mining models also promote the centralization of cryptocurrencies, otherwise a decentralized ecosystem. {% endhint %} {% hint style="info" %} ### How Cryptocurrency Cloud Mining Works :arrow\_heading\_down: Mining for cryptocurrencies such as bitcoin, whether via the cloud or locally, does not actually involve any mining. And while this process does generate new cryptocurrency tokens that are awarded to miners, the mining operation serves a much more crucial purpose for maintaining the security of a distributed ledger such as a blockchain. Bitcoin mining is performed by high-powered computers that solve complex computational math problems; these problems are so complex that they cannot be solved by hand and are complicated enough to tax even incredibly powerful computers. When cryptocurrency miners add a new block of transactions to the blockchain, part of their job is to verify that those transactions are accurate. In particular, bitcoin miners make sure that bitcoin is not being duplicated, a unique quirk of digital currencies called “[double spend.](https://www.investopedia.com/terms/d/doublespending.asp)” With printed currencies, counterfeiting is always an issue. But generally, once you spend $20 at the store, that bill is in the clerk’s hands. With digital currency, however, it's a different story. The miners use their computational power to solve cryptographic puzzles that prevent double spend in a decentralized manner. {% endhint %} --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://hashash-app.gitbook.io/hashash-app/what-is-cloud-mining.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.