Cloud mining is the process of cryptocurrency mining utilizing a remote datacenter with shared processing power.
This type of cloud mining enables users to mine bitcoins or alternative cryptocurrencies without managing the hardware.
The mining rigs are housed and maintained in a facility owned by mining company and the customer simply needs to register and purchase mining contracts or shares.
Since cloud mining is provided as a service, there is generally some cost and this can result in lower returns for the miner.

Bitcoin (abbreviation: BTC[a] or XBT[b]; sign: ₿) is a protocol which implements a highly available, public, permanent, and decentralized ledger.
In order to add to the ledger, a user must prove they control an entry in the ledger.
The protocol specifies that the entry indicates an amount of a token, bitcoin with a minuscule b.
The user can update the ledger, assigning some of their bitcoin to another entry in the ledger. Because the token has characteristics of money, it can be thought of as a digital currency.