How to make a profit with cloud mining ? When does cloud mining make sense ?

By Gunnar | https://crypto-hashpower.com/

You can find a lot of answers when researching these questions on the internet. Some are outright wrong, some even emotional.

As a matter of fact, the answer is really simple. You can only make a profit with cloud mining if you are doing solo mining and have a bit of luck.

Why is this the case? First of all, you need to know that in crypto mining there are various ways in which the miner is rewarded or paid for using a mining pool (see also our FAQ).

(1) With solo mining, the miner only receives a reward if he himself actually finds a block of the coin he mines; otherwise there is no reward at all.

(2) In “normal” pool mining, the miner tries to find a block together with the other miners in the pool. However, if a block is found, the respective miner is not entitled to the reward alone, but shares it with the other miners in the pool. There are various methods for distributing the proceeds from the block find. The most important one are “payment per share” (PPS) and “payment per last n shares” (PPLNS). Ultimately, these methods are based on the fact that the miner is rewarded depending on his (average) work input for the block discovery (measured by his hashrate and mining time). The principle of “work must be rewarded” still applies here. With normal pool mining, the miner therefore receives a secure reward for his work as part of the work of the entire pool, whereas solo mining is more risky venture where it is uncertain whether the miner will receive a reward for his mining at all. But when he finds a block, the solo miner gets the entire reward for finding it.

When mining with the PPS and PPLNS payment method, the principle <work must be worthwhile> still applies.

However, the downside of PPS/PPLNS payment is that it is only worthwhile if the payment from the pool for the work input is higher than the costs of the work input provided. As with any other economic activity, the miner must carry out “due diligence” and check whether his “mining company” will make a profit at all. And if so, how high it is. This is done by comparing the costs that the miner has to incur to provide a certain hashrate in a certain period of time with the income that he then receives from the mining pool for this work input. 

 (a) If the miner has one or more crypto mining devices (ASIC), he can calculate his own costs by taking the power consumption of his ASIC miner and multiplying it by the electricity costs incurred. For example, a Bitmain Antminer S19j Pro 104 TH has a power consumption of 3068 W. With electricity costs of 0.08 USD/KWh, this results in costs of 5.9 USD per day. At the current Bitcoin price (18.01.2025: 103600 USD), the S19j Pro with a hashrate of 104 TH/s achieves a daily Bitcoin yield of 6.2 USD. If the costs of the electricity are deducted from this, this results in a profit of USD 0.3 per day. The profit may vary slightly due to the profit share charged by the mining pool itself and a variance in the average hash rate actually achieved by the miner. A list of the costs, yield and profit of various miners can be conveniently accessed here, whereby the electricity costs themselves can be entered.

With electricity costs of USD 0.08/KWh, an Antminer S19j Pro 104 TH currently (18.01.2025) generates a profit of USD 0.3 per day.

If the calculation shows that the electricity costs exceed the yield of mined bitcoins, the mining project is not profitable for the day in question, at least if the miner sells the mined bitcoins immediately after transferring them to their crypto wallet. If he does not do this and collects the proceeds in his wallet, he can (only) make a profit if he sells at a later point in time when a higher selling price can be achieved due to a price increase.

Anyone who cannot make a profit from normal pool mining because their own costs are too high must either wait for higher selling prices or leave it alone.

(b) With cloud mining, you know immediately how much money you will have to pay to acquire the hash power for the respective mining period before purchasing a specific hash power. You can then use a mining profit calculator to work out the extent to which mining is worthwhile if you want to carry out normal pool mining. You can find such calculators here and here, for example (enter the cloud mining hashrate for the 24-hour period and the minimum value of 1 W as the power consumption, as the price of electricity is already included in the price of mining. You can also enter 1 USD for the machine price).

I can already tell you the likely result of the comparison in advance: your cloud mining costs will be higher than the income you will achieve through crypto mining. The reason is simple: every provider of cloud mining services wants to earn money with their offer. They must first recoup their own costs (electricity, VAT, repair costs for the miners, acquisition costs for the miners, advertising costs, website costs, payment of payment service providers) and also want to make a profit. With cloud mining offers, you can therefore only actually make a profit with normal PPS/PPLNS pool mining if the provider has made a mistake in the price, i.e. is charging far too little for their service. Or if the cryptocurrency you are mining rises in price quickly, so that you can make a profit by keeping the mined coins as a result of the price increase.

You can therefore best compare the purchase of cloud mining services with temporary workers that you want to use for your own purposes. The use of temporary workers is only worthwhile if the workers can generate a profit compared to their costs during the respective rental period.

With cloud mining, you ultimately use “hired workers” to mine coins in a mining pool. You must always ask yourself whether you can make a profit with this.

(c) You can definitely make a profit with cloud mining offers. Namely if you do solo mining. This is because solo mining does not follow the rules of “normal” pool mining, where you only receive a reward in the amount that reflects your own hashing performance. You do not receive regular remuneration, but you do receive a very high reward when you find a block while mining. The value of the block fund has the highest value in Bitcoin mining: 3.25 BTC, which currently corresponds to over USD 300,000 (as at 18/01/2025). Whether you find a block while mining depends on your hashrate and your luck. Statistically speaking, the probability of finding a block is naturally low. But de facto you can find a block at any time, perhaps just a few hours after you start mining. Hoping for a Bitcoin block find is therefore a bit like taking part in a lottery. However, the chance of a block find is (currently) greater than the chance of winning the jackpot in the lottery.

With a bit of luck, cloud mining pays off. But only if you are mining solo.

With other coins such as Bitcoin Cash (BCH), eCash (XEC) and Fractal Bitcoin (FB), the probability of a blockfund is significantly higher than with Bitcoin. Some of our customers have achieved the “feat” of a BCH blockfund after just a few hours of mining, earning a block reward of over 1000 USD. Your profit was much higher than the cost you paid for cloud mining with us. 

Our conclusion: with a bit of luck, cloud mining is worth it. But only if you are solo mining.

If you have any questions, please do not hesitate to contact us.