Bitcoin Mining is a decentralized computational process that serves two purposes and are as follows: (1) It confirms transactions in a trustful manner when enough computational power (effort) is devoted to block; (2) It creates (issues) new bitcoins in each block. It goes like this, first it verifies if transactions are valid. Then it will bundle transactions in a block. Next, it selects the header of the most recent block and insert into the new block as a hash. Fourth, it solves the proof of work problem. And lastly, when the solution is found, the new block is added to the local blockchain and propagated to the network.
Proof-of-Work is a method to ensure that the information (the new block) was difficult (costly, time consuming) to be made. On the other hand, mining difficulty is a measure of how difficult it is to find a hash below the target value (a 256-bit number) during the Proof of Work.
Cloud mining or cloud hashing enables users to purchase mining capacity of hardware in data centres. Bitcoin cloud mining enables people to learn Bitcoins without managing hardware, software, electricity, bandwidth or other offline issues. Then all Bitcoin mining is done remotely in the cloud. This enables the owners to not deal with any of the hassles usually encountered when mining bitcoins such as electricity, hosting issues, heat, installation or upkeep trouble.
Source : https://www.bitcoinmining.com