While some people may have heard about Bitcoin mining, others don't know what it means. If you want to get into this business and become a crypto miner, then you should know what mining is, how it works and why it is so important for cryptocurrencies like Bitcoin and Ethereum.

In simple words, mining is just a process that verifies transactions on the blockchain network and adds them to an immutable public ledger known as the blockchain. This ledger contains information about all past transactions that have ever been made on the network since its inception in 2009 when Satoshi Nakamoto released his famous white paper named "Bitcoin: A Peer-to-Peer Electronic Cash System."

The first block was mined by Satoshi himself, but since then, millions of people worldwide have been involved in this process because it allows them to earn some profit by simply using their computing power to solve complex mathematical problems.

One of the most common questions people ask about mining cryptocurrency is whether it's better to mine on your own or on a cloud mining platform. While it's true that mining with hardware can be more profitable, it also requires a lot of investment in terms of time and money. Cloud mining, on the other hand, is much easier to get into, but it's less profitable over time.

So, Hardware Mining Vs. Cloud Mining Crypto: Which is Better for you? This article explores the two types of mining and which is better for you.

What is Cloud Mining?

Cloud mining means that instead of buying expensive hardware you need to keep at home, you rent capacity from an external provider and pay only for what you use. This way, you can start mining without technical knowledge or investing much money into equipment.

Cloud mining providers usually offer various contracts with different duration, ROI (return on investment), and prices depending on how much hash rate capacity they offer. Most contracts last 1-3 years, so they are unsuitable for short-term investments but can give a good return over time if the market conditions are right.

There are two types of Cloud Mining:

Hosted Mining

This means that you rent hashing power from another person's server who provides it for a fee. You don't need to worry about how the hardware works or maintains itself because that's all done by your host provider. However, the downside of this method is that your earnings will depend on your host provider's success rate in finding blocks and solving them faster than other miners to get more rewards from crypto-coins networks.

Virtual Private Server Based Mining

In this type of mining, you rent one or more virtual private servers from a VPS service provider like Amazon Web Services (AWS), Google Cloud, or Microsoft Azure and then install your own mining software onto them.

This gives you complete control over everything that happens within your virtual private server (VPS), including choosing what kind of hardware to use, how much hashing power to buy, and where to point it for maximum profits. The downside is that if you don't know what you are doing, it can be difficult for someone with limited knowledge of how these services work and how they operate.

Cloud Mining Pros

  • No upfront cost required - You only pay for what you use when you use it, which makes it easier to scale up or down your mining capacity based on your needs or just to test out how profitable mining can be for you without risking any capital in case things don't work out as planned.
  • No maintenance fees - You don't need to worry about fixing broken parts or replacing components that become obsolete in case of hardware failure since all maintenance costs are covered by the cloud mining company itself so that you can focus on what matters most - earning more money!
  • No need to worry about power consumption - Cloud mining companies handle all power costs for you.
  • Reduced risk of theft and hardware failure - Your hardware is not exposed to the elements, so there's no risk of theft or damage from weather or other natural disasters (floods, hurricanes, earthquakes).
  • Easy setup - Most cloud mining providers have software that makes it easy to start mining immediately with little technical knowledge. Just download the software, connect it to your wallet address and start earning coins!

Cloud Mining Cons

  • Cloud mining is a risky investment, as the cloud mining provider may disappear with your money.
  • You do not own your own equipment.
  • You have to trust the cloud mining company and its data centers.

What is Hardware Mining?

Hardware mining is a process where miners use specialized hardware devices to solve complex mathematical puzzles, which allows them to verify transactions on the blockchain network and earn cryptocurrency rewards in return for their work. These devices are called ASICs (application-specific integrated circuits) and are available for purchase online or at local computer stores.

The main advantage of using an ASIC miner is that it has a high hash rate which means that it can solve more puzzles per second than a regular CPU or GPU would be able to. This leads to more profits in return for your work, but there are also other advantages:

  • High efficiency – ASICs have been specifically designed to perform one task only, and they do so with great efficiency. There are no additional components besides the ones necessary for this specific task, and this makes them much more energy-efficient than regular computers or graphics cards
  • Low maintenance – GPUs require constant monitoring and frequent software updates because they run 24/7, whereas ASICs only need power from your outlet. There’s no need for any additional cooling or maintenance costs.

Hardware Mining pros

  • Complete Privacy & Ownership - With hardware mining, you completely control your crypto assets. You decide when and where to transfer your coins; no one can interfere with that process.
  • Flexibility & Choice - You can use any type of hardware for mining purposes – from smartphones to laptops, desktops to graphics cards, etc. You don’t have to buy expensive equipment to start mining cryptocurrencies.
  • Low entry cost. You can start mining with as little as $100, which will get you a GPU that can mine a few dollars’ worths of crypto daily — enough to pay for itself in just a few months.
  • No additional costs - Once you’ve got your hardware, there are no other ongoing costs (apart from electricity).
  • Hardware is easy to scale - If you want to increase your earnings, all you need to do is buy more GPUs. 

What hardware is needed for hardware mining?

To mine cryptocurrency with your own rig, you will need:

  • A specialized ASIC miner (or GPU) - This is your setup’s most important piece of hardware. If you’re serious about making money from crypto, this is what will make or break your efforts. You can get started with a CPU, but eventually, you’ll need something more powerful to keep up with the competition.
  • Some form of cooling system - Cryptocurrency mining puts a huge strain on processors and GPUs, so they must be kept cool at all times. Some people use water cooling setups; others opt for air conditioning or open windows!
  • Power supply unit - The power supply unit (PSU) needs to match your needs and budget. You can start simple with just enough power for one GPU, but eventually, expand it as needed (and as long as your wallet allows).
  • A mining pool that allows users to mine various cryptocurrencies (including Ethereum).
  • An anti-static wristband and anti-static mat (to prevent damage to your equipment).
  • A cryptocurrency wallet — this might be on your desktop or mobile device or an online wallet service like Coinbase or Blockchain.

Hardware Mining Cons

Hardware mining rigs are expensive to set up, especially if you want to build one from scratch. You will need to buy all the materials and assemble everything yourself, which can take some time and effort. This also means you will have to pay tax on any profit you make from hardware mining.

What cryptocurrencies can be mined?

The following list contains some of the most popular cryptocurrencies that can be mined:

  • Bitcoin (BTC) – The first official cryptocurrency was released in 2009 by an anonymous developer, Satoshi Nakamoto. It is still one of the most valuable cryptocurrencies on the market today.
  • Ethereum (ETH) – Ethereum was developed by Vitalik Buterin and launched in 2015. It has since become one of the top cryptocurrencies on the market because of its ability to execute smart contracts and decentralized applications (DApps).
  • Litecoin (LTC) - A clone of Bitcoin created by Charlie Lee in 2011. Litecoin uses scrypt as a proof-of-work algorithm instead of SHA256, which was used by Bitcoin at the time it was created. This allows for faster transaction times than Bitcoin while maintaining security through decentralization because of its ASIC-resistant nature.
  • Zcash (ZEC) - A privacy-focused coin that uses zero-knowledge proofs called zk-SNARKs to anonymize transactions on its blockchain network so they cannot be traced back to their originator.
  • Bitcoin Gold (BTG) - A hard fork of Bitcoin that aims to make mining more decentralized by using GPU instead of ASIC hardware.
  • Monero (XMR) - An open-source cryptocurrency focused on privacy, decentralization, and scalability.
  • Dash (DASH) - A private digital currency with instant transactions based on Bitcoin Core but offers more advanced features like PrivateSend and InstantSend.

Hardware Mining Vs. Cloud Mining Crypto: Which is Better?

Now that you have sufficient information on both mining systems, it’s time to decide which one suits you best.

If you are looking for an investment that will give you stable returns, cloud mining is the way to go. Cloud mining allows you to rent out processing power and mine digital currency without owning any hardware or software. This means that the loss is minimal even if a cryptocurrency crashes and doesn’t affect your profits.

On the other hand, if you want complete control over your mining operations and want to manage every step of the process, then hardware mining is the right choice for you. Therefore, you must consider all these factors before starting your mining journey.

Conclusion 

We hope you enjoyed this guide! There is a trade-off between control and convenience when you decide to mine bitcoin or other cryptocurrencies.

If you choose to mine cryptocurrency on your own by purchasing the necessary hardware and software, then you will have a significant amount of control over how your mining software runs, but if something happens to your computer due to a glitch in the software or an update , it could mean that you won't be able to access your mining equipment for a period.

On the other hand, cloud mining gives the user significantly less control over its mining process, but because it is run remotely over the internet, it eliminates many problems relating to crashes and overheating.