Cloud mining is not mining on your computer. Cloud Mining is the process of bitcoin 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.
They have the mining rigs in a big warehouse usually in an area with cheaper electricity. Hashflare, for example, is in Estonia. You're leasing their computers to mine for you so you don't have to worry about running your own rigs and the hassles this entails.
Thanks, that makes things clearer