Do cloud/virtual mining outfits even need to be mining bitcoin at all?

[freebit13]

I've been thinking about this for a while and is there any reason to believe these cloud mining outfits are even mining bitcoin?

Do users ever get to see the shares they submitted and blocks they were involved in solving?
Do users get payouts in bitcoin or fiat only?
If there are bitcoin payments are they from newly generated coins or spent coins?

I was just thinking one could set up a system which takes the current difficulty and works out how many shares would have been submitted with the hash rate subscribed to and credits the users account with the appropriate bitcoin amount without ever having mined anything. It could then make payouts in fiat or bought bitcoins... if they'd bought bitcoin with the initial investment from the customer when they signed up; they would have made a profit.

Just a thought anyways 

[1715334868]

1715334868

[1715334868]

1715334868

[1715334868]

1715334868

[krampus]

I proposed exactly that in this post recently (plus more detail in subsequent posts on the same thread). In short, I think that with clever market manipulation, you could IPO some "virtual" GHs shares and just give people some of their BTC back in proportion to the current difficulty. As long as the first month's "mining revenue" (per GHs) is less than half of what you IPO'd the shares for, the asymptote would never approach 1 and you'd pocket the difference. Well, as long as difficulty keeps going up, otherwise you'd be screwed.

In fact, I can't see how this would be any different than what cex.io is offering now.

[freebit13]

Aha, props for getting it out there already, looks like the locals are not happy with you 

I'm just not sure if there is any evidence on the blockchain for the hashing these companies are doing or not, I'm honestly not going to waste my time investigating it any further.... if people don't want to listen then they don't want to listen, I guess...

Seems to be OK nowadays to sell someone else down the river as long as you can make a little profit and aren't left with the hot potato at the end of it all.

[krampus]

Aha, props for getting it out there already, looks like the locals are not happy with you  

I think the locals are just not happy that I was pissing in their cex.io punch. They are clinging to the belief that because someone can theoretically make money there, it must be good. Personally, I think their grasp of math and logic is outpaced by their greed and misplaced faith. Oh well, no skin off my nose.

I'm just not sure if there is any evidence on the blockchain for the hashing these companies are doing or not

I think that would be easy enough to fake (or just obfuscate, or explain away) for someone with less scruples than myself. I don't think people are looking too closely at the source of their "miner income".

Seems to be OK nowadays to sell someone else down the river as long as you can make a little profit and aren't left with the hot potato at the end of it all.

This. Definitely.

[freebit13]

Aha, props for getting it out there already, looks like the locals are not happy with you  

I think the locals are just not happy that I was pissing in their cex.io punch.

Yeah, they are probably like "Shut up until I sell these gigahashes and then you can talk all you like" 

[freebit13]

I guess it's good to see others are onto the scam and it's always good to hear from people who have actually tried the service: https://bitcointalk.org/index.php?topic=382046.msg4629635#msg4629635