Cloud mining: how it works, advantages, and pitfalls

Cryptocurrency is the first asset in the world that users can mine independently. However, mining requires the purchase of expensive equipment and is also associated with the risk of equipment failures and operational errors, further complicating the process.

In addition, not all users have access to cheap electricity, which affects mining profitability. Cloud mining is an alternative to the traditional method of cryptocurrency mining.

Cloud mining — what is it and how does it work?

Cloud mining is a way of mining cryptocurrency without owning equipment. Instead of purchasing and setting up a mining farm, a person rents computing power (hashrate) from a company and receives a share of the reward for mined blocks together with other participants in the network that operates on the Proof-of-Work mechanism.

Cloud mining provides passive income, for which it is sufficient to pay the provider for renting capacity for a set period.

To start cloud mining, a user needs to register an account on the provider's website, choose a suitable contract, and pay the rental cost. Immediately after that, the cloud mining contract will be activated, and cryptocurrency will begin to be credited to the account on the platform.

The period for crediting cloud mining rewards will depend on the specific platform. As a rule, the accrued cryptocurrency can be withdrawn at any time; however, many cloud mining services set a minimum withdrawal amount.

Cloud mining supports all well-known cryptocurrencies that operate on the Proof-of-Work mechanism:

Note: the list of cryptocurrencies available for cloud mining depends on the specific provider.

What are the differences between cloud mining and other methods of cryptocurrency mining?

With classic mining, the user independently purchases equipment and handles its installation and configuration or turns to specialists for assistance. With this approach, the user has full control over all processes and income but also bears all associated risks. For example, equipment failures related to overheating.

When using cloud mining, all processes, including troubleshooting equipment issues, are handled by the provider. The user only pays for the services and receives income; however, part of the income may be deducted to cover service fees. The commission amount depends on the specific provider.

Advantages and risks of cloud mining

The main advantage of cloud mining is complete passivity: the user pays for rented capacity and receives rewards for cryptocurrency mining.

Another advantage of cloud mining is the low entry threshold. The cost of specialized mining equipment (ASIC devices and graphics processing units) can reach tens of thousands of dollars. Cloud mining allows you the purchase contracts for as little as $10. Moreover, the user can quickly accumulate funds for new contracts and reinvest their income in them.

In addition, cloud mining serves as an alternative for users in regions where access to cheap electricity is unavailable, making digital asset mining difficult. A client can connect to a cloud mining platform from almost anywhere, provided there are no restrictions from the company itself.

A separate advantage of cloud mining concerns legislation: a user can withdraw profits and pay taxes, without the need to register a business and bear all related expenses for cryptocurrency mining. For example, in the Russian Federation, with classic mining, it is necessary to register a mining farm in a separate registry if its power consumption exceeds a certain threshold.

One of the main disadvantages of cloud mining is the lack of flexibility and control over the equipment used to mine crypto assets. The fact is that cloud mining users, in many cases, cannot change the contract terms: terminate it early or switch the coin being mined. With independent mining, it is possible to switch to mining another cryptocurrency that supports the same consensus algorithm as the original one. Alternatively, the equipment can be sold at any time if a decision is made to exit the mining sector.

In addition, with cloud mining, in the event of a drop in mining profitability, users risk losing income altogether. For example, if electricity costs equal or exceed the income from cryptocurrency mining, the cloud mining provider may stop crediting funds to the client's balance. Some cloud mining providers allow switching to other, more profitable contracts in such cases; however, in practice, this is rare.

Finally, with cloud mining, there is a risk of encountering fraud or service shutdown. One of the most striking examples is the once-popular cloud mining provider Hashflare, which suddenly "scammed" — at one point suspending the operation of its platform and the withdrawal of crypto assets for clients.

What cloud mining services exist in 2026?

As of February 2026, there are both standalone services focused on cloud mining cryptocurrencies as their primary business and divisions of companies with broader profiles.

Many well-known mining pools and cryptocurrency exchanges provide their own cloud mining services. This option is perhaps the most reliable for users interested in cloud mining. Such companies are less exposed to the risk of bankruptcy, since their range of services extends beyond cloud mining alone.

Among cloud mining providers, one can highlight solutions from major exchanges (such as Binance Cloud Mining, KuMining, and Gate Cloud Mining), mining farms (such as ViaBTC), and specialized services (such as BeMine and Hashmart).

Note: some services may have their cloud mining contracts sold out and unavailable for purchase at the moment.