AI Trading

In an era like today, where every single one of our activities is linked to the internet, allowing the functioning of everyday life requires the use of cloud technology. Although we do not know who did it for the first time, someone once thought of using cloud tech to mine cryptocurrencies, and here we are. Welcome to 2022 where cloud mining is one of the most trending topics in the cryptocurrency industry. What exactly is it and how could you potentially benefit from knowing about it? That is what we cover in this article.

Let’s add some structure to the article first. We will be guiding you through what is Cloud Mining by going through a few key points under the context of cloud mining in the following manner:

  • What is Cloud Technology?
  • What is Mining?
  • What is Cloud Mining?
  • What benefits does cloud mining have as opposed to traditional methods?

Starting off with a brief introduction. When we stated that cloud technology allows for the function of your everyday life, we really meant it. Everything from hospitals storing information about their patients in a manner where their doctors can access it easily online, to giant tech companies storing all the photos you upload on their website, cloud technology is behind all of them. It is this very key component that allows the function of the topic in the discussion today, Cloud Mining.

What is Cloud Technology?

Cloud technology refers to the practice of using computers, other than the one being used, to store and process information. As it involves the use of computers, cloud technology can be used for a variety of purposes. As mentioned earlier, it is used everywhere from hospitals to even Facebook itself. Cloud Technology involves using computers of a certain power (where power is calculated in processing speed, processing capacity such as RAM and ROM, etc.) to complete a certain task. This means that if, for example, a person or an institution does not have the hardware or the space to store the hardware required to carry out certain computational tasks, it does not need to. Time to change the way we execute things from the old traditional way.

AI Trading

Thanks to Cloud Computing, they do not need to have the high-power and large-space consuming computers as they can remotely access other computers on which the very computational task can be carried out. It is after the processing has been done, that users can access the processed data online. These computers are built especially for high-performance tasks in mind, and although low computational power computers are also available via cloud technology, the point to be noted here is that all kinds of computers can be used to deliver the specific needs of each user.

These computers are accessed by users which are usually companies, via the internet. It is due to the processing of data being done over the internet that cloud computing gets its name from. The symbol ‘cloud’ is used to symbolize the internet in flowcharts and other diagrams used in Computer Science. Cloud Computing hence means computing that is done over the internet. To bring the explanation into context with what has just been mentioned earlier, cloud computing is essentially using allocated devices over the internet to carry out processing, storage, networking or other relevant tasks.

Companies which offer cloud computing services usually charge others for using their computers.

Hence, two safe assumptions can be made about Cloud Computing; one is that it allows users to carry out tasks which they themselves cannot carry out on their own computers, and second that it as cloud computing is an industry that has come a long way, different services can be offered by cloud computing companies to carry out the tasks you specifically require.

These two assumptions which are actually pretty basic facts to almost every person familiar with the Information Technology industry are key facts to remember when we come to what exactly cloud mining is and how every piece of this puzzle snaps in place to give you a good idea of what cloud mining is. It is a hotly-debated topic in the cryptocurrency sphere with us giving you concerns on two of the major sides of the argument in this article.

What is mining?

To ensure you get a complete grasp of what cloud mining is, it is essential to understand mining itself. “Mining” refers to using hardware, to solve highly complex mathematical problems important to the maintenance of the blockchain of a cryptocurrency. As the problems are highly complex, the hardware needed to mine, at most times, needs to be heavy-duty. Mining allows the maintenance of blockchain as in cryptocurrencies using blockchain technology, the record of all transactions taking place is shared across all the “nodes” of the network. Simply put, a cryptocurrency using blockchain technology ensures there is a public ledger which can be accessed by anyone.

Now this public ledger is permanent and is not alterable. This is one of the key reasons blockchain currencies are trusted by many, as the currency is not controlled by a single entity and all transactions are there for the public eye to see. There is indeed a veil of anonymity in terms of the personal information of the parties carrying out a particular transaction, however such currencies are known as decentralized. Decentralized currencies do not have a single entity controlling them.

This, although is a brilliant concept, however ensuring it rolls out the way it is planned involves solving a very crucial problem; the processing of transactions. As cryptocurrencies are currencies only because we can engage in transactions using them, and the fact that there is no single entity controlling the entire currency, there needs to be a way to process transactions and update the public ledger. This is done via mining. It is the processing of these transactions which make up the bulk of the “highly complex mathematical problems” a certain computer must solve in order to mine.

Whichever computer solves the problem first, is given the next block of the cryptocurrency and the process is repeated again. “Block” refers to the set of problems. If the entire blockchain can be assumed to be a public ledger then each block can be referred to as a page of the ledger. Once it is processed or “mined” then it is not alterable or changeable in any way. This ensures the integrity of the promise of carrying out transactions openly of a blockchain currency.

As the user who carries out mining, or “miner” puts in their computational power for the maintenance of the blockchain, there must be some incentive offered so that the blockchain is in turn maintained by its “miners”. This incentive is usually some amount of the cryptocurrency itself and mining is the main method via which new units of some cryptocurrencies come into circulation. Hence, mining itself is very essential to the formation and maintenance of cryptocurrencies.

Now two key takeaways from the aforementioned explanation of mining are: One, that it refers to using advanced computer hardware solving complicated mathematical problems for the maintenance and formation of the blockchain and new units of cryptocurrencies respectively.  Secondly, it is essential that the miner’s computer solves the mathematical problem first in order to be rewarded the next block of blockchain to be mined.

These two key takeaways are going to be the next set of pieces of the puzzle described earlier and joining these two with the former two will give us a good grip on what exactly cloud mining is.

What is Cloud Mining?

Cloud Mining is the use of cloud technology in order to mine cryptocurrencies. Cloud here now, refers to our explanation of cloud technology where a computer or in most cases multiple computers are accessed over the internet by a certain user who then uses these computers to mine cryptocurrencies. These mining activities, as mentioned earlier, involve the solving of high-level mathematical problems.

Ready for the most satisfying part? Lets connect all the pieces together now. It was mentioned earlier that mining often requires the use of sophisticated hardware in order to carry out solving complex mathematical problems. This sophisticated hardware is usually expensive with prices climbing peaks everyday as there is more and more competition in the market to mine and to get mining equipment.

Now, remember the point about why cloud computing is such a brilliantly innovative concept which allows the functioning of many things that make your everyday life better? It is that cloud computing can be utilized by users which may be companies or institutions to carry out high-level computational tasks that they themselves would not be able to carry out with their equipment. This one symbiotic relationship between the needs of mining and the ability of cloud computing is what makes cloud computing worth discussing.

As we know that cloud companies are ones whose entire business model depends on providing the computational power required by their users, they themselves are best equipped to carry out high-level mathematical problems that need to be solved in mining. In fact, it is very true that there do exist separate cloud companies which market themselves solely to miners and present themselves as “cloud mining companies”. The cloud mining industry is a very active topic of discussion in the cryptocurrency world with a lot of different opinions being thrown around in different directions and we will be coming to some of that along the course of this article.

Let’s now connect the remaining pieces of the puzzle as well. Remember the need for correct timing when it comes to mining? It was stated that a computer solving the very mathematical problem must be the first to come up with a solution to that problem, and only then will it be rewarded by another block of blockchain data to be mined.

This means the user will have to ensure they have top-notch hardware suited for its durability as well as speed. Such hardware, which we call sophisticated, is expensive. Hence, there are strong likelihoods that such expensive hardware, for which there is also increasing competition, will be accessible to most people.

This is where cloud mining comes into play as cloud technology ensures there is the right kind of computer or computers available in order to carry out the task required. This means that if the task is time-based, cloud technology companies can ensure that the hardware they are offering is perfect given the cryptocurrency being mined. This allows the user to mine with a cloud computer specification that delivers them the results they are expecting, or to put it the other way around; the fact that there are specific hardware qualities of cloud computers, it becomes easy to determine an approximate profit.

What benefits does Cloud Mining have as opposed to traditional methods?

Cloud Mining is regarded as a modern method of mining as it solves a lot of problems mentioned above plus a few other problems being introduced into the mix now. Cloud mining is modern to traditional mining which is where a user houses all the equipment they need to mine their particularly chosen cryptocurrency. Traditional mining involves the user taking charge of maintaining the equipments’ proper functioning as well as other costs associated with it.

Traditional mining thus becomes an interesting polar side to look at and compare with cloud mining. As mining of any sort is based on the same underlying principle of solving complicated mathematical problems in the shortest amount of time possible and continuing that process over and over again in order to turn up with a viable amount of cryptocurrency as reward, both cloud and traditional mining have to meet the same challenge. In traditional mining, the user goes through the hassle of buying the expensive hardware required to carry out the operation first, then goes through the hassle of meeting the other associated costs too. This involves the electricity costs that are associated, which are relatively higher when mining is involved as mining requires a lot of actual electrical power in order to allow the hardware to run at a certain required capacity.

Another cost that is associated and is a bug to a lot of traditional miners’ minds are the cooling costs. Mining requires hardware to be functioning at high capacity and as they suck a lot of electrical power, they also give out a lot of heat. As the hardware involved is so sophisticated and hence, highly expensive, making sure they are not damaged by heat is a huge responsibility. This is usually carried out by installing cooling systems which have to suit each different mining machine specifically to ensure no damage is done. This adds another cost to the miner’s already tight revenue.

These costs are the major ones we have covered and it may be so that traditional miners may have to incur other costs as well such as Customs Duty Tax on imported parts of hardware or even damage-related costs too, and these costs end up decreasing the amount of profit certain miners can earn. It is to reduce these costs and increase revenue and hence, profits, that cloud mining was looked upon as an alternative.

Cloud Mining usually is carried out by computers in countries where there is a cold temperature so cooling isn’t that big of a cost to consider and it is carried out by computers in countries with cheap electricity costs. It is because these computers can be connected to the main user via the internet and the main user can stay up to date with the status of their mining process does the entire system of cloud mining become an effective one. These advantages of the placement of computers being used strategically to ensure other costs are as low as possible in order to carry out mining remotely make cloud mining to be a better option for many.

However, to be fair to traditional mining, there are some strong pros on the side of traditional mining as well. In certain circumstances, it may actually be more expensive to opt for cloud mining than to go through the large upfront cost of traditional mining and maintenance. It is true that some companies charge a fortune for cloud mining so choosing a reliable cloud miner is a task one needs to take very seriously before choosing.


At last, the conclusion. The entire article was written in order to answer the question “What is Cloud Mining?”. In order to answer that question effectively, we looked into the associated ideas involved and explained them in detail to the point their relevance to the main topic remained strong. In doing so, we explored the ideas of cloud technology, its purpose and its broad use in the grand scheme of our everyday life before coming back to how it was related to Cloud Mining.

We offered the same approach for discussing mining itself which needed redefining or re-explaining in terms of Cloud Mining. Two key takeaways were dissected from each Cloud technology and Mining which were interlinked to explain what cloud mining is. In the end, Cloud Mining was compared to traditional mining and this was solely done in order to offer viewers a neutral and a comparative understanding of what cloud mining is and how it could practically be implemented.

AI Trading produces top quality content for crypto companies. We provide brand exposure for hundreds of companies. All of our clients appreciate our services. If you have any questions you may contact us. Cryptocurrencies and Digital tokens are highly volatile, conduct your own research before making any investment decisions. Some of the posts on this website are guest posts or paid posts that are not written by our authors and the views expressed in them do not reflect the views of this website. Herald Sheets is not responsible for the content, accuracy, quality, advertising, products or any other content posted on the site. Read full terms and conditions / disclaimer.

Nathan Ferguson

By Nathan Ferguson

Nathan Ferguson is a talented crypto analyst and writer at Herald Sheets, dedicated to delivering comprehensive news and insights on the ever-evolving digital currency landscape. With a strong background in finance and technology, Nathan's expertise shines through in his well-researched articles and thought-provoking analysis. He holds a degree in Economics from the University of Chicago, and his passion for cryptocurrency drives him to stay up-to-date with the latest industry trends and developments.