Cloud computing is a relatively new technology that allows multiple users to share computational resources and data over the internet. It supports multi-tenant to meet the needs of users to access the resources at the same time, it improves the profitability of the cloud service provider. The Virtual Machine (VM) operates on the same core device that is the focus of any aberrant or malicious attack. These attacks may include data leakage, privacy breaches, and unauthorized access to cloud resources. The outsider attacks may be server spoofing, stolen verifier, password guessing, impersonation, and replay attacks at the cloud’s network layer. The insider attacks may be side-channel attacks to gain access to shared resources. A Self-Adaptive Honey Encryption (SAHE) method for stronger multi-level authentication in a cloud environment the hypervisor layer monitors the running cloud memory, CUP, communication port, and network infrastructure. Introduce the classifier mode to identify the attack and VM risk level (high, medium, and low) to improve the VM performance and attack identification. A rule-based mechanism to detect a side-channel attack by monitoring cache data access. Processes running on the VM can use the cache of another virtual machine, creating a cache conflict in the system. The cache-based attack on the Physical Machine (PM) creates the cache contention to mitigate the attacker’s data. We propose a novel rule-based authentication with the swam optimization method for shifting the resource from an optimized VM into a physical machine. The migration method for optimal PM makes the VM free from cache contention, and it also mitigates the cache side-channel attack in the cloud environment.