Bitcoin mining should not only be accessible to technicians. Some companies are working to make bitcoin mining as easy as setting up a basic streaming subscription.
The business model is called “cloud mining,” a name taken from “cloud computing.” The process is pretty simple and requires zero technical knowledge about computers or bitcoin mining.
If you can insert a credit card, then you have all the skills you need to start mining bitcoins.
The goal of these companies is to further decentralize bitcoin through the distribution of ownership of mining platforms and thus hash power.
There are a couple of competitors out there, so let’s take a closer look at each of their offerings.
Sazmining: BTC Mining Made Easy
An emerging company in the cloud bitcoin mining space is Sazmining. They are a state-based company that focuses on bitcoin mining with green and renewable energy. Their first plant gets electricity from a hydroelectric dam in Wisconsin, USA. Although they are still in their infancy, they have demonstrated their commitment to several principles that are of interest to customers.
Sazmining passes all its costs on to its customers in exchange for 5% – 15% of mining returns. Right now, an S19J Pro (100TH/s) can be purchased at Sazmining for $2,500 USD. Sazmining claims that they are selling platforms to their customers at cost. The idea is that Sazmining only makes money when their clients make money. Providing wagons to your customers at the lowest possible price is crucial to running a successful business.
In addition, you need to pay a monthly fee of $180 per month per plant to cover energy and maintenance costs. At the end of the day, this is no different from setting up a server on Amazon Web Services (AWS) or DigitalOcean or Google Cloud Services. Somewhere in the world lies the machine that these companies have set up to run your web applications.
Sazmining uses exactly the same business model, except with bitcoin ASICs (miners). When users receive their mining rewards, they are sent directly to the wallet provided by the user. Sazmining never holds user funds, which makes all the difference for some customers who prefer privacy and anonymity.
Compass Mining: Now Everyone Can Mine Bitcoin
Another company in the cloud mining space that has been around for a couple of years is Compass Mining. They are an established bitcoin cloud mining company with over 20 mining facilities throughout North America. Miners range from $2,050 on the low end and $9,100 on the high end. Similar to Sazmining, customers pay a monthly fee to cover the electricity and maintenance costs associated with hosting the rig.
Compass promotes a range of energy suppliers with many facilities above 50% green energy. Users have the freedom to select in which facilities they would like to mine, as well as in which currency they would like to mine.
The mined coins are deposited in the web wallet which allows users to deposit, convert or withdraw funds from the platform. This flexibility allows customers to have their premiums deposited into the wallet to be reinvested, pay electricity costs or withdrawn.
Is Bitcoin cloud mining worth it?
There are several variables that change whether cloud mining is profitable or not. The two big variables are the price of bitcoin and the global hashrate.
The higher the price of bitcoin, the more profitable mining is in terms of USD. The higher the global hashrate, the smaller the amount of BTC you will receive from each miner you own. Ultimately, the profitability of mining ends up being a delicate balance between how much you paid for your miner, how much you pay to run it, the price of BTC, and how many other people are mining bitcoin in the world.
Remember, bitcoin mining is a competitive endeavor among hundreds of thousands of participants around the world.
An average dollar cost strategy
One way to think about owning a miner with Cleopar or Sazmining is that it is an average dollar cost strategy. The monthly energy bill is how much it costs to buy your monthly reward in bitcoins. We put in place some concrete numbers to illustrate profitability, or lack thereof.
According to braiins’ mining calculator, 100TH/s will produce around 0.28 BTC over the course of 36 months. This is 0.007 BTC per month. At $23,000 per bitcoin and a monthly cost of $180, that’s a loss of $20 every month. However, if bitcoin is sitting at $100k per coin, then that same monthly fee of $180 allows you to buy $700 worth of BTC per month.
The break-even point would be around $25,000 per Bitcoin.
Final Thoughts on Cloud Mining
Some people say that it would be better to buy bitcoins directly, or the average cost of the dollar with the money you would use to buy a mining platform. For many people, bitcoin cloud mining is more annoying and risky than it’s worth.
Bitcoin miners are not very liquid, so once you have them, you have to commit to paying a monthly bill for them. The strategy is to eat the cost while your premiums are worth less than your monthly bill, then potentially sell once bitcoin becomes high enough to lock in an attractive return.
On the other hand, some people may enjoy the average dollar costs in bitcoins on autopilot. The hands-off bitcoin mining strategy is attractive to those who like to create passive income streams and watch the money flow in their wallets. Regardless of whether you buy a miner from Sazmining or Compass, the two companies are objectively helping in the global adoption of bitcoin by democratizing access to bitcoin miners. Now, bitcoin mining is really as easy as setting up a Netflix subscription.