Bitcoin/altcoin cloud mining: be careful

in #bitcoin7 years ago

Dear cloud mining lovers,

you should be very careful concerning cloud ming.
There is a very nice article concerning cloudmining on Bitcoin talk:
https://bitcointalk.org/index.php?topic=878387.0

There are 8 things, which most time are very alarming and showing that the cloud mining operation could be a scam:

  1. No public mining address / no user selectable pool.
    Nowhere you can see the blocks this mining pools create. Every block created is shown on the blockchain.

  2. No endorsement from any asic vendor
    No asic vendor has officially confirmed that this cloud mining site uses its hardware.

  3. No relevant pictures of their hardware and datacenter

  1. Open ended IPO / fractional reverse mining risk
    Unless the cloud mining is operated by the asic vendor himself, you can not sell an unlimited amount of hashrate. Hardware takes (usually a long) time to order, arrive and deploy. Any company that doesnt limit sales or make public how much hashrate they sold vs what they have (provably) deployed should be considered suspicious.

  2. Referral programs and social networking
    Referral programs, especially ones that pay almost 10%, are a huge red flag. The mining market is cut throat with razor thin margins. No real company can afford to pay 10% referrals on below market cloudmining prices. Referral programs almost always serve only to feed the ponzi and provide financial incentive to posters to lie about the true nature of the company. Never trust anyone with a referral link in their sig.

  3. Anonymous operators
    If the operators are hiding behind whoisguard, provide no provable identity and especially when, like in some cloudmining cases, they use demonstrably false ID or company registration information, you have to be nuts to trust them with your money.

  4. No exit strategy
    If you cant sell your position, you cant get your money out. Thats the ideal case for a ponzi and allows it to run for a long time.

8 ) Bonus point for "guaranteed profit"
So far, Ive only seen bitcoinmaker.ch do this. If anyone guarantees you a bitcoin denominated profit, and especially a 30+% one, you can be sure its a ponzi, all the other criteria become unimportant. There is no such thing as certain profit when it comes to mining, no one knows how the network will evolve, or what btc exchange rate will do. If anyone could somehow be certain of making a 30% profit, they wouldnt need your money (and they wouldnt give the profit to you).

The only site which doesn't fullfill any of these numbers is hashnest. There you know that it is the site of ASIC manufacturer Bitmain. You can buy and sell your mining power every time.

Even on Hashnest I would not recommend to cloudmine Bitcoins since the difficulty is rising too fast. Your mining shares prices decrease too fast.

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