When crypto used to be new in the market, there was a lot of buzz of the mining. And plenty of earlier proof of work were being mined using the cloud mining. And those crypto still to the date continue to exist on the cloud. I wanted to cover this topic due to the fact that world has slowly changed to staking and cloud mining now serves in stake and validator node world too. 

As the cloud mining has moved into the larger ecosystem of serving the blockchain. It has variety of means through which it serves the consumers - staking, validator node, ledger serving and producer rewards. So how does this all work out. 

In this post, I wish to cover these points along with the risks that are coming out in the cloud mining as the blockchain evolves. 

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 ![](https://i.imgur.com/PuvBiN0.png) 


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Cloud mining in the past used to be exclusive to the proof of work blockchains. But now with the proof of stake, anybody can create their node, they can serve validator and also producer rewards in context of content blockchains. This is done by hosting the virtual private server with enough RAM and regularly growing disk size. This is the current form of the cloud mining. 

So what are the risks of the Cloud Mining?

### Rugpull Validators
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These are the people who take your stake and then mine the rewards and then don't distribute them. Many validators ran away by taking rewards of many stakers in the past. So things had to change A lot of nodes then later were designed in such way that they would be forced to distribute the staked rewards and the validator could not force his own means to distribute the rewards. So this change now only allows the validators to set the percent which match with the network of validators. 

### Service Fees Scam
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Let's assume that you have the stake on a validator node. And they are charging you 10 to 20 percent of the service fees. This is where they are taking their server bills out of all the stakers. And this is a scam because going above and beyond the set market rate is a bad for the consumers. Upto 5 percent of the service fees is reasonable and any higher than the amount set here would only hurt the stakers who trust the validators. 

### Regulations
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EU is now taking the anti cloud mining stance. And it does not want the crypto currency mined on their soil. Same has been the case for many other coins and the blockchains which are served in some places. So in near future there are going to be centralized cloud mining where people would be doing this instead of decentralized services for cloud mining.

### Fraud Cloud Miners
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There is this industry of the HYIP plans which makes use of the cloud mining as a means through which mining is being exploited. They create the service and fake create the staking and the sending token service and once they have your staked coins as direct send, they just run away. And that has been one of those scams which are out there since the invention of crypto.

### Volatile Return
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Don't expect the cloud mining making your rich. Most of the time such minersare going to give you 4 percent to 10 percent APR. And this does not cover your monthly bills either. So the coins just remain locked in and you have to wait to destake and move. But the market volatile nature has been the case for low performing coins. Top coins like polygon, ethereum, bitcoin and others do have decent rate most of the time, yet they can be unreliable too. 

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Cloud Mining serves a decent purpose of mining the coins while using the power of the stakers to pass the transactions. And in due process people make reward money. But all of this comes with issues and safety risks for your investment. Do your own research. 




Posted Using [InLeo Alpha](https://inleo.io/@esmeesmith/cloud-mining-risks-of-cloud-mining-crypto)