Crypto mining, when employed correctly, can be an excellent passive stream that requires very little maintenance. However, where hardware-based crypto mining is very management-intensive, this begs the question: how is crypto mining passive income?
In this article, we’ll cover what crypto mining is, the different types you can use, and how to turn it into a passive income stream.
Let’s get started:
Crypto mining is the process through which an individual verifies blockchain transactions; said individual is then awarded cryptocurrency as payment.
If that all sounds confusing, let’s break it down:
Most cryptocurrencies use a blockchain to ensure that all transactions involving that cryptocurrency are legitimate. These transactions can be anything from trading to buying and selling.
A blockchain is made up of a series of blocks, each containing a list of transactions that have been verified. In order for new transactions to be verified, they have to be confirmed by a person like you. The process through which said transactions are verified is called crypto mining.
How Does Traditional Crypto Mining Work?
In traditional crypto mining, cryptocurrency is produced through a series of computer processes. To earn crypto, mining rigs (the computers you use to mine) have to solve complex mathematical equations using specific software.
Unfortunately, traditional crypto mining is incredibly complex. It puts a lot of wear and tear on your computer’s hardware and constantly requires high levels of electricity. This makes it difficult to do sustainably. To avoid these high costs, cloud mining has become an attractive option.
What is Cloud Mining?
Cloud mining works the same as traditional crypto mining. But, instead of using your own equipment, you rent your computing and processing power. This allows you to mine without having to dedicate your own computing power. This also removes the need for you to manage, repair, update, and replace your own equipment.
Essentially, the provider you choose builds a rig designed to mine cryptocurrency. You are then given the choice between two services: you can either take the rig and do the mining yourself while renting it, or you can purchase their mining services.
How Does This Help to Make Crypto Mining Passive Income?
In order for something to truly be considered passive income, it needs to be all or mostly hands-off. A good rule of thumb in determining whether income is passive or not is whether you spend more than 5 hours per week managing it. If you do, it’s not considered as such.
We mention this because there are circumstances where cloud mining is not technically passive income. If all you’re doing is renting the rig so you can do the mining yourself, you’re still required to put a significant amount of time into the project.
However, many rig providers also offer mining-as-a-service. This allows you to outsource your crypto mining and remain almost completely hands-off completely.
Cloud Mining For Passive Income FAQ
Q: Is there a minimum investment to start cloud mining?
Depending on the company you choose, there may or may not be a minimum investment required for you to begin. Some companies, such as ECOS, are great for beginners and have a relatively low minimum investment. Others, such as BitDeer, are higher to prompt larger returns.
Here are a few cloud mining companies and what their minimum required investments are:
Q: What other fees are associated with cloud mining?
Aside from the initial investment, there aren’t many other fees associated with cloud mining. Some mining companies may take a percentage of the cryptocurrency generated using your investment, other than that you should encounter many others.
A company called Genesis Mining has a daily maintenance fee of USD $0.03 per TH/s (terahashes per second) for their Radiant Classic package. This same company, however, also has a package called Radiant Zero, which has no daily maintenance fee.
Q: How often can I withdraw my mined crypto?
Again, this varies per company, but many will allow you to withdraw each day given you meet a minimum withdrawal amount. This minimum withdrawal amount, however, may also be variable depending on the cryptocurrency being mined. Keeping with our Genesis Mining example, Bitcoin’s minimum withdrawal amount is 0.0015 BTC.
Q: How do I withdraw my crypto funds?
Many sites will give you the option to withdraw to your choice of several different locations. The most common is your crypto wallet. However, some will also allow you to withdraw to your Paypal, Mastercard, debit card, or through wire transfer. In the event that your method of withdrawal cannot accept cryptocurrency (such as your debit card), the crypto will be first converted into your currency before being deposited.
Q: Which cryptocurrencies can be mined through cloud mining?
Depending on the site used, you may have the choice to mine many cryptocurrencies, or only a select few. The most common you’ll see are Bitcoin, Ethereum, Litecoin, and Dash. With larger cloud mining providers, however, you could see anywhere from 10 to 100 cryptocurrency options.
How To Get Started Crypto Mining for Passive Income
Getting started with cloud mining is relatively easy. Given that you have already set aside an investment amount, all you need to do after finishing this article is find your cloud mining provider, decide what cryptocurrency you want to mine and sign up for the package that best suits your needs. That’s it!
Psst! If you’d like to learn a bit more about crypto first, check out our latest post: Cryptocurrency Explained: What Every Crypto Beginner Should Know. Or, get started with our totally-free, learn-all-about-crypto modules!