Cryptomining is essential for creating new cryptocurrencies and functioning blockchain networks. However, the increased complexity of cryptomining drives the need for specialized, cost-effective infrastructure to mine cryptocurrencies.
Enter the cloud: Cloud computing has become critical for cryptomining, making cloud cryptomining popular among miners.
This article describes cloud cryptomining, its history, and the types of cloud cryptomining. It also explains the benefits and risks of cloud cryptomining — and why monitoring is critical in order to:
- Eliminate cyberattacks.
- Manage costs.
- Increase cryptomining performance.
What is Cloud Cryptomining?
Cryptomining is the process that verifies transactions using complex mathematical algorithms and adds new records of transactions on cryptocurrency blockchain networks. It is a competitive process that rewards the winner with cryptocurrencies such as Bitcoin, Ethereum and transaction fees.
In the past, cryptomining required specialized hardware, software, and a significant amount of electricity to power the mining operation.
Today, cloud cryptomining utilizes remote cloud computing resources to mine cryptocurrencies. Individuals and organizations can rent cloud computing resources from cloud computing providers like Amazon Web Services and Microsoft Azure for cryptomining. It eliminates the costs for expensive hardware, software, and electricity.
Why did cloud cryptomining become popular?
With the introduction of Bitcoin in 2009, cryptomining, which was initially carried out using standard desktop computers, started to gain popularity. When the competition for cryptomining became more intense and difficult, special tailor-made hardware like ASICs (application-specific integrated circuits) and GPUs (graphics processing units) were used to improve the efficiency of mining.
For a long time, companies and individuals had to invest large amounts of money in hardware, software and electricity for cryptomining.
The proliferation of the cloud has made cloud computing services viable alternatives to traditional mining methods, offering greater scalability and efficiency. Cloud cryptomining eliminates the need to manage expensive hardware and software for maintenance. It allows renting out high-performance computing resources using pay-as-you-go models, enabling cryptominers to scale their mining operations based on their needs.
Finally, cloud cryptomining enables users to mine multiple cryptocurrencies simultaneously. It offers more opportunities to expand their mining businesses.
Types of cloud cryptomining
Cloud cryptomining is currently performed in two ways: host mining and renting hash power.
Host mining is the process of leasing or buying a ‘rig’ on a mining farm. The users must pay for the used power of the rig, typically calculated in gigahashes per second (Gh/s) and terahashes per second (Th/s). 1 GH/s is equivalent to 1 billion hashes per second.
Miners usually choose the rig power between 500 and 1,000 giga hashes per second. The users will also have to pay for the setup and maintenance of the rig.
This technology allows users to reduce costs by utilizing sufficient electricity. Additionally, it:
- Offers more control over the management of the hired rig.
- Increases the possibility of finding a new block by transferring the generated hash to mining pools.
- Empowers users with more control over the money they earn, as it only charges for the maintenance and setup of cloud mining services.
Renting hash power
Unlike host mining, renting hash power is similar to buying shares from a cryptomining company. In this method, crypto miners can rent only a part of the hash power from a cryptomining farm.
Unlike in host mining, you do not need to pay for the setup and maintenance of the rig. However, you must pay a subscription fee and get the required percentage of the profits. The mining farm generates cryptocurrency as a reward for discovering new crypto blocks. Then, you will get your share based on the percentage of the hash power you have rented.
Benefits of cloud cryptomining
Cloud cryptomining provides an easy, reliable, and cost-effective way to mine cryptocurrencies than traditional cryptomining, which uses specialized hardware and software. Here are the most notable advantages of using cloud computing to mine cryptocurrencies.
- Cost reduction. Cloud Cryptomining eliminates the need to buy, operate and maintain special hardware and software. It saves the initial capital required for maintenance costs and buying the necessary machines. Additionally, it reduces the electricity and cooling costs required for cryptomining. We can say that cloud cryptomining significantly reduces the costs of the entire crypto-mining process, allowing even small businesses to afford such operations.
- No specialized knowledge. Traditional cryptomining requires specialized knowledge for setting up, operating and maintaining the machines, as well as performing cryptomining. It can take a significant amount of time to grasp these skills. Such specialized knowledge is unnecessary for cloud cryptomining, as the cloud provider manages it.
- Easy set up. Cloud mining reduces the burden of setting up and maintaining the crypto-mining infrastructure since the cloud provider handles them. Thus, you can kick-start the mining process.
- Efficiency. Cloud service providers possess the latest technologies for cloud mining and storage, enabling efficient cryptomining.
- Scalability. Cloud services are designed to be scalable and flexible. They can automatically increase or decrease the mining power according to your mining requirements without any manual intervention.
- Increased resiliency. Cloud cryptomining is equipped with all the necessary resiliency technologies, like backups and disaster recovery strategies. Thus, they reduce the risks of hardware and software failure during the mining process.
Risks associated with cloud cryptomining
Even though cloud cryptomining brings several advantages for businesses, there are some risks associated with it. Here are the risks you must consider when using cloud computing for your cryptomining process.
You do not have visibility on the rented machines as you rent mining power from third-party cloud providers. Therefore, scammers can take advantage without providing remote servers for cryptomining. The takeaway here? It is critical to rent from a trusted and reputable source.
Besides, cloud cryptomining involves storing a large volume of cryptocurrencies, which has become a common target of cyberattackers. Thus, it is important to check all the cyber security measures of your cloud provider to prevent data breaches and cyberattacks.
Limited control over the infrastructure
Cloud cryptomining does not offer unlimited control over the mining hardware and operations. Instead, you have to depend on the service providers to maintain and operate them.
While it is advantageous on one side, you will have less flexibility to change them as your requirements change. Additionally, the downtime of the service provider can negatively affect your mining plans and expectations.
Cloud cryptomining requires users to commit to a contract based on the subscription plans of their cloud provider. However, there can be rapid fluctuations in cryptocurrencies since the cryptocurrency market is highly volatile.
It will be difficult for you to adjust your plans when there are downfalls in cryptocurrency profits. So, cloud cryptomining will not guarantee expected profits.
The regulations related to cloud cryptomining are subject to change over time. You must ensure your service provider proactively addresses compliance risks and meets changing regulatory requirements.
The role of monitoring in cloud cryptomining
Now that we understand the technologies and risks that come into play here, let’s look at how a holistic monitoring approach can help.
Identify & eliminate cryptojacking
Cryptojacking is a common cyber threat associated with cryptomining. It refers to the unauthorized use of devices like edge computers and servers used for cryptomining and creating cryptocurrency without any permission.
Cryptojackers can also exploit security vulnerabilities on edge computing devices provided by cloud providers. When such devices are hijacked and used for cryptomining, you will notice…:
- An increased usage of computing power
- A performance downgrade of edge applications
Perhaps worse, cryptojackers can get hold of other cloud instances, like EC2 instances related to cryptomining, and spin up hundreds of new instances. It results in expensive cloud costs for the account holder.
Monitoring your cryptomining systems for suspicious activities is critical for eliminating such risks. It includes monitoring changes to your cloud infrastructure, like the unusual spinning up of new instances or network traffic patterns using machine learning.
You must ensure that the cloud services you use for cryptomining operate within your budget. Always monitor and keep track of your costs. This includes monitoring for unexpected increases in resource usage or network traffic.
Additionally, cryptomining requires a significant amount of computing resources, such as CPU, memory and storage. You will have to pay additional money for any more resources required. Thus, monitoring resources helps ensure that your mining operation runs smoothly without exceeding your allocated budget.
Identify performance bottlenecks
Monitoring can also help you identify performance bottlenecks or areas for improvement, like which areas need additional resources. This process allows you to increase the efficiency and profits of cryptomining.
Cryptomining is not risk free
Cryptomining is a critical operation to increase the number of cryptocurrencies. Cloud cryptomining allows people to rent remote cloud resources for efficient and flexible cryptomining. There are two ways to carry out cloud cryptomining: host mining and renting hash power. Cloud cryptomining brings many benefits, such as reduced costs, easy setup and scalability.
However, there are also some risks associated with cloud cryptomining: cybersecurity, the impacts of market volatility, and regulatory risks. Monitoring is a best practice in cloud cryptomining as it allows you to manage your budget and identify and rectify performance bottlenecks while eliminating cryptojacking.
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