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Cloud mining VS Home mining Part 1. Disadvantages of home mining

It is not only technically difficult but requires significant investments to assemble your own farm. You may rent capacity from large mining companies instead to avoid risks and work input. Nevertheless, disadvantages of this method are up for discussion since long time ago. People say that the whole cloud mining industry is too full of risk and deception, and we’ll try to sort it out.

There is an alternative choice between “own” and “rent” in different scopes of our activities. For example, house and transport – because public transport is some kind of rent too.

Everyone makes its own decision. By owning a car you take responsibilities connected with payments and it’s not worth buying for people who rarely drive, it’s more convenient for them to use a taxi. But for those who have driving as a part of their job it’s important to have a car.

The same with farms, not many people are able to owe them because of complexity and high value.

First issue. Assembly difficulty

To set up your own farm you have to buy required devices and also assemble is from pieces. Even a ready-made miner needs much technical and physical effort in its installation and setting from you. There will also be too much noise and heat even from a single device to put it in the room where you live. You may place it on your balcony but there is a possibility of overheating in summer. You have to change your wires to work with high capacity. 

In addition to assembling you have to set up a software which is special for each sort of coins and besides for some of them it’s still too volatile. To solve this problem you may install specialized software that will help you mine different types of coins. There is, for example, Coinswitcher from Trident-Hermes that shifts from one coin to another in order to make your mining the most profitable.

Second issue. High risk rates of investments.

There is not only a significant investment of money in assembling your own farm but also high rates of risk.

Firstly, cryptocurrency exchange rates are unpredictable and you may lose your money instead of gaining it because of high value of electricity. For example, in Russia 2018-2019 even the most profitable currency Etherium(ETH) from http://whattomine.com didn’t allow you to multiply your investments significantly but today it does because of a sensitivity of exchange rates. Autonomous miners who had started setting up their farms in 2017 came up with a crisis by the end of the year.

Secondly, there are risks of overestimation of your qualification. There are cases of people who wasn’t able to realize the difficulty of setting up their farm but who had already bought a video card and other component. For example, it turned up that they don’t have a right place to locate it. Of course, you can sell the component of your farm but it won’t bring all your money back.

Thirdly, there is a risk of emergency. Mining farm is a new technological system and reliability and safety standards of it are still processing. This is an extreme condition in which modern information devices work. Farms consume capacity from 2 kW and even higher and work day and night. It produces risks with which a standard laptop user is not familiar. That’s why those risks are often undervalued.

Third issue. Scaling problems

Even if the farm were set up, it wouldn’t always be possible to expand it. A small farm of 8 video cards produces too much noise and heat for a living room. The solution may be to place it on the balcony.

Typical 8 video cards mining-rig

But the balcony is not suitable for systems with 16-32 video cards because of overheating in the summer and high electricity consumption. Capacity of such farm is estimated as kW’s and is comparable with peak power of a kettle. The difference is a kettle has a short period of its work and a farm is on round-the-clock. Does or doesn’t your power cable allow such load, it might be overheated, shut down by emergency or even put on fire by incorrect contact with the farm. And to avoid summer overheating you will have to equip your balcony with refrigerating system or keep your farm off during hot periods of the day but disadvantages of those solutions are obvious.

In case you want to expand your farm to 40-56 video cards with electricity consumption up to 10 kW you have to change the wiring and electricity panel component in your apartment and this may draw the attention of your neighbors and electricity company. In spite of ambiguous position of mining in the law of Russian Federation citizens have prejudges about it. In case of amendment of the law your farm will become an easy target for tax and other authorities. That may be followed by an obligation to set a refrigerating system on your balcony.

An industrial farm indoors

A larger expand of your farm at home is hardly reliable and takes huge investment and professional equipment. But such condition still doesn’t give a guaranty of climate safety and good terms with your neighbors and other people. You need a garage or the whole industrial building to assemble a farm but this leads to problems with risk of diversion and necessity in constant protection.

Shortly speaking, even an accurate set up of a farm from 10 kW and higher requires increasingly disproportionate investments and labor input.

Cloud mining. Is it worth?

Taking into consideration disadvantages of home mining specified before many people will refuse to set up(or expand) their own farm but retain their willing to take part in cryptocurrency business. Well, there is still an opportunity to rent capacity from mining companies(so-called cloud mining). But it often becomes a target of criticism.

Many have luck of understanding in economy, so they don’t know why miners lease their farms if it yields an income?

The rent lower than exchange rates is unprofitable for lessor while the rent higher than exchange rates is unprofitable for lessee, the same currencies are more accessible for him on the market. So the price should be to the limit of recoupment.

Is it true? What benefits it gives to be a lessee? Is it possible to gain large sum of money doing cloud mining? We’ll tell you in the second part of this article.