If you’re interested in Bitcoin and crypto mining, you might already know what mining is. But if you’re wondering how Bitcoins come into circulation, here’s a brief insight. Unlike traditional paper currency, Bitcoin is not printed or issued by a central government. The new Bitcoins are generated as a result of mining activity performed by miners.
Bitcoin miners use high-power computers and special software to solve complex computational math problems. The result of solving these complex equations is twofold. First, this process verifies every transaction on the Bitcoin network to make it trustworthy and secure. Secondly, as a reward for securing the network, new Bitcoins are generated.
The process of securing a blockchain network by completing complex algorithms is extremely complex and requires a significant amount of computing power. And that’s why the hashing power of mining equipment is crucial. With the rising popularity of Bitcoin and other cryptocurrencies, it’s becoming hard and resource-intensive to successfully mine these digital coins. When Bitcoin was launched, it was easy to set up a GPU rig at home and start mining. But over the years, Bitcoin grew into value and popularity. This resulted in a need for a more powerful and cost-effective mining setup.
Today, in 2019, there is a wide range of choices available for those wishing to mine Bitcoin and other cryptocurrencies. However, the best option for mining Bitcoin in this volatile market is colocation and cloud mining. If you want to ensure the efficiency of your mining operation and gain as much revenue as possible, you should consider either of these two options.
So, if you’re planning to enter the mining game, you can go for colocation and have your mining rigs hosted securely in a data center. The next option is to opt for cloud mining where you’ve to pay for using someone else’s rigs. Now, let’s take a look at these two popular mining methods.
The easiest way to understand the difference between these two forms of mining is by considering the concept of “owning vs. renting”. Cloud Mining is a method where you rent time, become a mining pool member and receive a portion of funds based on your mining performance. When you become a member, you pay a fee for using the equipment. Since you don’t own the mining hardware, you have little say in how the equipment is used or how effectively it runs. Initially, cloud mining offers a cost-effective way to mine Bitcoin because there is no cost for purchasing mining equipment. You simply pay for the electricity consumption and fees associated with mining. However, the field is awash in scammers so you may end up losing even your initial investment.
In this method of mining, you purchase mining hardware and place it in a secure facility. The data center provides you floor space, electrical power, an Internet connection, and several other facilities. It gives you peace of mind knowing that your mining rig is monitored 24/7. You don’t need to worry about noise, theft, high heat or soaring energy bills. The colocation facilities are built to be highly secure and efficient to operate your ASIC rigs. This is the best way of mining Bitcoin to gain long-term benefits.