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What is Cloud Mining Software, How does it works?
Cloud mining software is an application to mine cryptocurrencies digitally, without any use of energy-consuming hardware. To understand the working of cloud mining software, we need to first get through WHAT IS CLOUD MINING?
Cloud mining is a way to mine cryptocurrency, like Bitcoin, and related by renting or purchasing tools, in the form of computational power, from a third party cloud miner, who takes care of those tools on your behalf. With cloud mining, you don’t need to have a heavy mining system or software which makes it easily accessible to audiences from any part of the world.
In other words, Cloud mining allows mines to easily make cryptocurrencies from blockchain on a cloud network. Furthermore, the accessibility of cloud mining helps new traders as well as investors to make transactions easily, even if they have a little technical knowledge of the platform.
The point to note down is cloud mining works only on the PoW (Proof of Work) algorithm and not on the PoS(Proof of Stake). However, some of the PoS based services let users gain some profit by assigning their coins to other validators which act the same as Cloud mining.
The biggest advantage of cloud mining is the reduction of direct energy consumption by hardware to mine the coin.
How Cloud Mining Works:
To understand how cloud mining works, you need to know the technicalities behind it and how it works. The major technical aspect is Blockchain.
A blockchain is a series of chained data blocks that contain key pieces of data, including cryptographic hashes.
The first thing to know is that two things are central to the concept of blockchain: public-key encryption and math. To create Blockchain, we need to understand some terms.
Nodes: These are the edges of a network that include servers, systems that exist within a blockchain.
Miners: Individuals who add unconfirmed blocks to the blockchain by solving them. Once a winning miner verifies a block, they get rewarded with a cryptocurrency.
Transactions: It is the process of exchanging cryptocurrencies between two parties. Each separate transaction gets bundled with others to form a list that gets added to an unconfirmed block. Subsequently, each data block is verified by miner nodes.
Hashes: It is a fundamental component of every block in blockchain These are the cryptographic functions that allow nodes to validate every mining transaction.
Nonces: This is the war everyone is fighting for. Typically Nonces are random or non-repetitive numbers or a value that miners are trying to solve. This value is added to the hash of each block of the blockchain.
Working Protocol: Also known as Consensus algorithm is a series of code that help nodes in a distributed network to verify data. The very first Consensus algorithm was PoW or Power of Work.
Blocks: Blocks contain the list of completed transactions. Blocks once made, can’t be modified. The reason is modifying the blocks, meaning changing the recognized hash code of a block, which is accepted within a p2p network.
Blockchain: Block chain is the collection of blocks listed in chronological order. As the blocks can not be modified, they provide the ultimate transparency to users.
Unleashing Cloud Mining Models :
The earlier form of mining has some problems associated with it, for instance, double-spending problem, malware, and high energy cost. The basic principle of cloud mining software’s’ is to overcome those issues and allow everyone to mine cryptocurrency easily without owning the ASICs system.
If you are interested in getting involved with Bitcoin or cryptocurrency mining but don’t know where to start, cloud mining is a great option where you can begin to understand the technical aspects while still getting involved in the space.
However, these cloud-mining works on 3 types of models which are described below:
Hosted mining machines: This is the most accepted form of cloud mining. However, in this case, users or clients can borrow or lease ASIC or even physical hardware on rent and pay a monthly basis charge on it. The advantage of renting helps users to eliminate the unwanted electricity cost that is required to run the machines. Although they lease the machines, it is the responsibility of users to maintain the equipment. Another advantage of this model is, users can choose the machine depending upon their type of budget and requirements.
Hosted Mining Platform: Think of the cloud services like Amazon EC2, just like we can choose the type of EC2 instance, depending upon the type of our system requirements, Same way we can choose the templates according to the quantity and requirement of our service. All this function requires configuring the server just like we do on amazon AWS, and we can have full access to our programmed model. Nonetheless, this model has several pros.
The very first advantage is, energy is consumed as per the user’s need of mining which was not in the traditional case where heavy GPUs and memory were accessed regardless of the requirement which subsequently raises the energy consumption of coin mining.
Another advantage of this model is, users can program their server according to their competency and can have high control over their budget which cuts off their additional charges which directly means, they only pay for instances they use. Also, they can anytime widen or lower the number of instances used.
The third and biggest advantage of this model is its in-built security feature. These cloud instances contain by default security that offers protection from malicious viruses present over the internet. Also, users can configure additional firewalls, if required.
Leasing Hash Power: Users can lease hashing power from the mining pool, which is provided by many companies, and based on that users can pay them as per their profitability. However, earnings are directly proportional to the hash power owned.
This model is also most used because you can start mining even if you don’t have your mining hardware.
Hash Power: The amount of computing power being consumed by the network while mining.
Working of Cloud Mining Software:
The process of mining is divided into 5 parts. Let’s understand exactly how cloud mining or crypto mining works.
- Block chain is all and all based on Transactions. However, these transactions are verified and validated before, in order to complete. Furthermore, the process of verification is done by computers which solve complex problems to get things done.
- Then all the transactions are listed up and added to the unconfirmed blocks of data. The advantage here is, users are saved from double-spending, which means the transaction is permanently recorded and can not be altered.
- Once all the data is added to blocks, a hash code is generated by combining the most recent header and a nonce. This hash is then verified by the miner node. However, if you are able to solve that hash, every node on the network would be informed about it.
- After every node in the network has data of a new hash, they verify the unconfirmed block by checking the accuracy of the hash.
- The most recent block is then added to the last blockchain, as it represents a one-way linked list that is made from the last node. And Kudos, your proof of work (PoW) algorithm is now complete and you have done an ultimate job that would separate you from the crowd. Nevertheless, the process is definitely lengthy and time-consuming.
Merits of Cloud Mining system:
- You don’t need any technical knowledge to get started in the mining process.
- You are paying according to your system needs.
- One don’t have to spend additional time and cost on buying mining hardware and taking care of the equipment.
- You can start mining right away and get into crypto world.
- One can earn passive income.
- You don’t need to spend a high investment for crypto mining.
Final Words
So far, we have seen how cloud mining is a much better alternative to traditional mining systems in terms of energy-saving and budget. No doubt, cloud mining is a future way of trading. Zeligz’s Cloud Mining Script is recommended!
