Background
In the past, ordinary users of cryptocurrency generally invested in two kinds of markets, one where they go directly to the secondary market to buy assets, commonly known as the cryptocurrencies. The other form relates to the buying of hardware equipment used for mining. Generally speaking, buying cryptocurrencies has a low rate of return but contains high risk. Knowledgeable investors in the market would rather choose to put their money in mining in pursuit of more stable income.
However, the disadvantage of purchasing mining machines for mining is that the threshold is high. First of all, you have to have some knowledge of software and hardware of mining machines as well as adequate knowledge about the right sites to connect to. After purchasing mining machines, it is a big investment to construct the mining network, pay electricity charges and hire workers. Therefore, for ordinary users, cloud computing mining has become a better choice.
What is cloud mining?
Cloud mining generally means that the platform side forms a package with specific computing power scale, time and currency through investment or integration of mining machinery resources. Investors can quickly purchase and join in mining activities, and the platform side regularly issues the corresponding settlement income to the investor’s account, without worrying about a series of problems such as mining machinery selection and custody mine selection.
For ordinary users, the biggest advantage of cloud mining is that it simplifies the process and reduces the entry threshold. Compared with the huge cost of purchasing hardware mining equipment, users only need to buy computing power on the platform to participate in mining. On the other hand, cloud mining does not require participants to buy mining equipment but is sold based on the size of computing power, hence, the investment cost is lower, and retail investors with limited capital can also participate.
Generally speaking, cloud mining is an operating model that enables the platform side to achieve a win-win situation with investors. The platform side can package the mining services and sell them to the users, thus providing continuous cash flow and mitigating the impact of currency fluctuations. At the same time, users are saved from the burden of buying mining equipment, deployment, maintenance and other related costs.
But why do today’s users shun cloud mining? Despite the growing popularity in the crypto market, cloud mining is still lagging behind.
Is the calculator I bought really mining?
A big part of this is due to the lack of transparency.
Such questions arise from existing concerns that users have with cloud mining system. Some so-called cloud mining platforms launched a number of cloud mining projects for Bitcoin, Ethereum and several cryptocurrencies and claimed that users could achieve 20% yield within a few days. At the same time, these platforms have also designed a “pyramid” mechanism for multi-level commission, thereby attracting a significant number of speculative investors who are looking for high returns. It turned out that some of these projects were not supported by hardware mining equipment.
As for cloud computing power, the operation of mining machine purchase and operation is completely controlled by the platform, and the buyers of computing power know little about its actual operation. This means that even if there are oversold and false mining machines on the cloud mining platform, it is difficult for investors to know the real situation before purchasing.
Although some platforms will release a lot of hardware mining photos on their official websites, and claim to allow investors to visit the site, in fact, not many users will actually visit the site in person, which leaves considerable space for dark operations in cloud computing platform. Even if there are users who really want to visit the site, the platform may also take users to the hardware mining sites of big established miners that they are already in bed with, leaving little room for users to prevent being defrauded or protect their investment.
In addition, many contracts signed by cloud computing platforms and users have no protection clauses. If the mining machine encounters the so-called “force majeure”, the risk of stopping operation is borne by users. Take Filecoin as an example. There is a pledge and punishment mechanism for the storage and mining of Filecoin. The storage of the project side needs 24 hours to keep running for a long time. If the rules are violated, the pledged currency may be confiscated in whole or in part. If the platform causes the mining machine to stop operation due to some reason such as “force majeure”, the users can only be dumb and have no choice but to speak bitterly.
Give me the money back. I won’t play！
Another reason why cloud computing power is not popular is liquidity. This problem will not be paid much attention when the market is good. When the currency price falls, the coins obtained by users can not meet the price expectation. At this time, many people will choose to hold back and hope to sell them when the market is good. At this time, there is a problem. Users have more and more coins, but less and less cash flow. After all, you can’t buy vegetables in the supermarket with bitcoin.
At this time, some users will choose to quit mining, return their computing power to the platform or resell it to obtain cash flow. But the reality is that the vast majority of cloud computing power platforms have no exit mechanism. When users choose half-year or one-year services when purchasing computing power, they can’t return or resell them during this period, and they can only wait until the service expires before exiting.
So at this time, it is impossible for users to say “return the money to me, I will not play anymore”. They can only passively cater to the platform. The problem is that small investors usually invest in cloud computing power, and their cash flow is not abundant. Especially when the currency price drops sharply, users do not have the right to decide to stop mining to reduce losses. This situation is very hard for this part of investment It’s not easy.
How to make computing power more transparent?
Ehash is the token representing the computing power of Ethereum. Each Ehash token always anchors the 0.01mhash/s hash computing power on Ethereum network. Each Ehash token has real Ethereum computing power support, in which all data are linked in real-time, open and transparent throughout the process. The actual mining power supporting Ehash value is transparent and searchable on the Mining Pool (such as fish pool f2pool). Users can view the real-time hash power through the mine pool address at any time.
Restricted by the openness and transparency of the blockchain, the platform can’t sell fake computing power without restriction, so as to avoid the system from evolving into a capital game of robbing the east to pay the west.
Ehash writes all the key data such as the anchored total computing power, the whole network Ehash data and Ehash mining output into the Ethereum smart contract. When the Ehash user starts mining, the smart contract will automatically record the computing power purchased by the user (the number of Ehash), and automatically transfer the Ehash mining income to the user’s address every day through the mining income distribution contract.
Users can check relevant information on the block browser, such as their own computing power, the total computing power of Ehash network and the proportion of their own computing power, so as to know their real computing power and income.
Smart contract can ensure the authenticity and validity of data on Ehash network, and the execution of smart contract is not subject to human interference and control. This ensures that all transactions between Ehash and users are open and transparent. In this way, users can fully grasp their own actual effective computing power, mining revenue and trading history in the platform, and reduce users’ trust in mining machines, computing power and revenue distribution. The loss caused by an opaque interest rate can effectively protect the rights and interests of investors.
How to make funds more flexible?
As mentioned above, cash flow is particularly important for small investment users.
Traditional cloud power is irreversible and non-refundable before the expiration of service, and has almost no liquidity. Ehash abstracts Ethereum computing power into a freely circulating token, which makes computing power have the same liquidity as cryptocurrency.
Anyone can participate in Ethereum’s mining by holding Ehash. If users want to stop mining, they can sell their Ehash in the second-hand market and collect cash quickly without waiting for the service to expire, thus making their funds more flexible. Ehash is equivalent to building a bridge between computing power and the secondary market, improving the liquidity of computing power, reducing the threshold for investors to invest in computing power, and increasing the exit channel for miners.
In addition to liquidity, the real core of investing in Ehash lies in its leverage. Investors can regard Ehash as a leverage of Ethereum that will not blow up its position. It can make you gain in a bull market and have cash flow in a bear market.
When the price of Ethereum rises, the yield of Ehash will also rise. The rise of yield will drive the performance of Ehash in the secondary market. The holders will get the excess income brought by the rise of Ethereum and Ehash at the same time, and the mining income of Ethereum will continue to accumulate during this period.
However, if the price of Ethereum falls in a bear market, investors can choose to cash out in time to keep their income. However, if they choose to continue to hold positions, Ehash can still bring continuous mining income to the holders and reduce the book loss of Ehash investment principal. For long-term investors, this is leverage that will not explode, and there is always cash flowing out.
Summary
In terms of business logic, cloud mining is a win-win situation for both the platform side and retail investors. However, due to the lack of traditional platform supervision and the pursuit of interests by human nature, cloud computing power is constantly distorted and destroyed. This has led to losses as people pursued gains at the expense of sustainable and cloud mining.
With the development of smart contract, Ehash has built a completely decentralized cloud mining market by adding some game methods, such as computing power tokens, revenue intelligent releases and token incentive mechanisms, among others. In this mechanism, the revenue generated and computing power is transparent and accessible by users. It does not only reduce the threshold for ordinary users to participate in cloud mining, but also solves the trust problem of users.
What’s more, Ehash abstracts the traditional cloud computing power into a mobile crypto token, which enables the capital deposited in mining to flow which improves capital efficiency and increases the income of users. Ehash’s vision is to become a powerful and resilient investment tool. In the next step, Ehash could be combined with DeFi to present a comprehensive and innovative financial product to the market.
