Cloudmining 101

[Puppet]

Hi Puppet,

Please update Hashie's rating: https://bitcointalk.org/index.php?topic=822446.msg9599671#msg9599671

-Sahra

I dont see whats there to update. So you are now reselling amhash, which is already rated. Your own so called hashrate remains as unproven and dubious as before (there is more than a sliver of irony in the fact you tout AMhash's provable hashrate). So all the red flags still apply.

To be honest, Im at a loss why anyone would buy amhash through you.

[Rupture]

Zeushash has a ridiculous referral program:

[raskul]

Hi Puppet,

Please update Hashie's rating: https://bitcointalk.org/index.php?topic=822446.msg9599671#msg9599671

-Sahra

I dont see whats there to update. So you are now reselling amhash, which is already rated. Your own so called hashrate remains as unproven and dubious as before (there is more than a sliver of irony in the fact you tout AMhash's provable hashrate). So all the red flags still apply.

To be honest, Im at a loss why anyone would buy amhash through you.

i signed up and got 10GH/s free. if it ever accrues 1BTC i'll buy the 20GH/s required for cash-out 
i won't hold my breath!

[Puppet]

What percentage of hash power does a company have to show to satisfy your curiosity, because obviously it's not about just showing the data center.

For the record, the pictures show 160 Antminers S4 and 192 Antminers S3 in a single row.

I hadnt seen those. I dug some deeper and found enough evidence to suggest they do indeed run a serious mining operation. Ive upgraded their rating to "possibly legit" as there still too many red flags IMO.

[Puppet]

Zeushash has a ridiculous referral program:

thx, updated their rating.

[Puppet]

i signed up and got 10GH/s free. if it ever accrues 1BTC i'll buy the 20GH/s required for cash-out 
i won't hold my breath!

LOL. Some freebee. Ill give you a PH if you want, I just wont let you cash out .

[raskul]

i signed up and got 10GH/s free. if it ever accrues 1BTC i'll buy the 20GH/s required for cash-out 
i won't hold my breath!

LOL. Some freebee. Ill give you a PH if you want, I just wont let you cash out .

does it come with bouncy pie charts and meaningless graphs?

[Puppet]

i signed up and got 10GH/s free. if it ever accrues 1BTC i'll buy the 20GH/s required for cash-out 
i won't hold my breath!

LOL. Some freebee. Ill give you a PH if you want, I just wont let you cash out .

does it come with bouncy pie charts and meaningless graphs?

Yeah I can do it on condition you order and pay for another imaginary 2PH for a really low price.
And you agree to my terms that I can adjust mining fees whenever I feel like it.

[Anduck]

How about https://hashprofit.com/?

[Puppet]

At first glance, I see no proof of mining. No public mining addresses, no convincing pictures. They claim to be mining with GPU's, so lack of endorsement I think can be forgiven. They list a postal address, but I cant verify if its legitimate and their domain is once again whoisguard protected. So far, Id say thats enough reason to avoid it.

[dyask]

Hi Puppet,

Please update Hashie's rating: https://bitcointalk.org/index.php?topic=822446.msg9599671#msg9599671

-Sahra

I dont see whats there to update. So you are now reselling amhash, which is already rated. Your own so called hashrate remains as unproven and dubious as before (there is more than a sliver of irony in the fact you tout AMhash's provable hashrate). So all the red flags still apply.

To be honest, Im at a loss why anyone would buy amhash through you.

<Insanity ON>

So they could lose 9% + $1.10 when they sell it?   That has to be cheaper than HavelockInvestments! Right?     On the bright side if they sell more than $110 worth it is cheaper than GAW's cut ...    

<Back to normal>

I've been invested in Hashie for over a month now.   Outside of good customer support, they don't have much going for them.    So I haven't been adding to my investments.   Heck I totally loath BTCjam and I have 25 times as much invested there as I do in Hashie.   It is just sad.  

Relative investments:  (Of sites included here, except BTCjam which I just mentioned)
Hashie:   1 x
CEX.io:    1 x
BTCjam:  25 x
GAW:      500 x
LTCgear: 2500 x

Okay this has been fun, but I have to get back to figuring out what I'm going to tell my wife if LTCgear does turn out to be a Ponzi scheme!

[skuser]

Okay this has been fun, but I have to get back to figuring out what I'm going to tell my wife if LTCgear does turn out to be a Ponzi scheme!

I can at least estimate that based on insane number of sales ltcgear made with his new 'product' (monitoring his shopping cart page shows 800+ sold in last 24 hours) there's high possibility that there will be more dividend payments because growing LTC difficulty can cause this pyramid work a bit longer as was explained. Even If he already sold 1000 GHs he only needs 150000 LTC this week to pay dividends which he collects in sales within one day.

BTW even now you can buy from him 350+ items at once if you wanted 60 GH/s of SCRYPT miners and had $250k USD spare cash - easy like that lol

[yvv]

i signed up and got 10GH/s free. if it ever accrues 1BTC i'll buy the 20GH/s required for cash-out 
i won't hold my breath!

LOL. Some freebee. Ill give you a PH if you want, I just wont let you cash out .

They do allow you cash out if you buy 20Ghs. You still have your free 10Ghs when you buy. It would be ridiculous if they payed you just for signing up.

[SDRebel]

Criteria to help you spot a cloud mining scam/ponzi.
Feel free to post corrections or additions.

1) No public mining address
A cloud mining company that wont let you direct the hashrate to your pool of choosing and cant prove its actually mining bitcoins itself, is almost certainly a scam. There is no reason to hide mining address or not sign blocks. None.

2) No endorsement from any asic vendor
Asic vendors will gladly make a simple post to show the company in question is a significant customer of theirs. Its free advertisement for them and it helps their customer grow their business, so there is absolutely no reason they wouldnt. If a (cloud) mining company cant get any asic vendor to post such endorsement, you can bet they dont have any hardware to mine with.

3) No relevant pictures of their hardware and datacenter
There is no reason not to provide such pictures, except of course, if there is nothing to take pictures off.

4) Open ended IPO
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 extremely suspicious.

5) 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.

6) 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.

7) 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.

lets apply the above criteria to some well known cloud mining services:

CoIntellect.com         1+2+3+4+5+6+7++  => 7/7 = Ponzi ( + requiring likely malware/wallet stealing software)
cloudmining.website 1+2+3+4+5+6+7      => 7/7 = Ponzi
PBmining.com          1+2+3+4+5+6+7      => 7/7 = Ponzi
cloudminr.io              1+2+3+4+5+6+7      => 7/7 = Ponzi
hashie.co                  1+2+3+4+5+6          => 6/7 = Ponzi
ltcgear                       1+3+4+5+6              => 5/7 = (very) suspicious (info welcome)
Zeushash                  1+2+3+4+5              => 5/7 = (very) suspicious (info welcome)
GAWminer                1+4+5                       => 3/7 = Possibly legit
genesis-mining         1+4+7                       => 3/7 = Probably legit
Cex.io                       4+6                           => 2/7 = Probably legit
Megamine.com         1+4                           => 2/7 = Probably legit
KNCloud                   7                               => 1/7 = Legit
Hashnest                  (*after merge)           => 0/7 = Legit
AMhash                                                     => 0/7 = Legit
Cryptx PETAmine                                      => 0/7 = Legit

Not rated yet:

Cloudhashing.com    2?+4?+7?   (looking in to it, feedback welcome)
hashprofit.com          1+3+4+~6+7     (looking in to it, feedback welcome)


Disclaimer: being legit does not equal being a good investment. Cloud mining has never been profitable historically, and I dont expect it ever will.  I do not recommend you invest in (cloud) mining at all, but if you do, at least invest in a company that will actually contribute to securing the blockchain and is not extremely likely to just steal your money.

Disclaimer 2:  A mining ponzi doesnt necessarily have to collapse. Because mining is generally unprofitable, it is in principle possible some of the cloud mining ponzi's are just betting on that, and will pay out a large part of their sales revenue in synthetic mining revenue, instead of just running away with the money. Do ask yourself how likely that is, considering they hid their identities and lied about everything else. Also keep in mind this only works if due to ever increasing difficulty, the mining itself is indeed unprofitable, in which case, you will lose money anyhow.

I suggest a #8, do they send payouts to the address of your choice : for example ltc gear does, but gaw/zen and zoomhash (dunno about others) don't, so you don't really have your money until you withdraw if you can.

also, please put coinsoncloud as 100% ponzi as they stopped paying over a week ago (just so people know not to get close to it)

[SDRebel]

i signed up and got 10GH/s free. if it ever accrues 1BTC i'll buy the 20GH/s required for cash-out 
i won't hold my breath!

LOL. Some freebee. Ill give you a PH if you want, I just wont let you cash out .

They do allow you cash out if you buy 20Ghs. You still have your free 10Ghs when you buy. It would be ridiculous if they payed you just for signing up.

supposedly GAW is doing that with the free hashlet, but I haven't personally done it

[SDRebel]

Okay this has been fun, but I have to get back to figuring out what I'm going to tell my wife if LTCgear does turn out to be a Ponzi scheme!

I can at least estimate that based on insane number of sales ltcgear made with his new 'product' (monitoring his shopping cart page shows 800+ sold in last 24 hours) there's high possibility that there will be more dividend payments because growing LTC difficulty can cause this pyramid work a bit longer as was explained. Even If he already sold 1000 GHs he only needs 150000 LTC this week to pay dividends which he collects in sales within one day.

BTW even now you can buy from him 350+ items at once if you wanted 60 GH/s of SCRYPT miners and had $250k USD spare cash - easy like that lol

while the ltc difficulty is a built-in mechanism whose output (ltc payout) is reduced (almost continously), ltcgear does multiplications that make up for the difficulty drops. While that alone is another flag (because multiplications are a bit too good), that just removes the ltc difficulty is a factor for what could be considered a scheme (it may just be a smarter scheme )

[SDRebel]

About GAW, I don't think their pics/endorsement should count as evidence they are legit.

They claimed to have ~750-1000 GH/s worth of hashlets mining scrypt in Oct 2. At that time the entire litecoin network was 1037 GH/s.

I find it hard to believe the litecoin/altcoin network could sustain such massive dumping, and on top of that GAW found some mysterious way to make their payouts higher than normal the conversion rate from ltc to btc.

All the pics of GAW's hardware combined only account for a few % of what they are claiming. Someone counted ~300 x 40 MH/s units which is only 12 GH/s.

I could be wrong but I think you're considering the new Bitmain 5ph/s order as an endorsement but that is long after GAW claimed to be running several MW worth of hardware.

that was indeed a red flag. What they supposedly had vs ltc network rate...something was off

[yvv]

I suggest a #8, do they send payouts to the address of your choice : for example ltc gear does, but gaw/zen and zoomhash (dunno about others) don't, so you don't really have your money until you withdraw if you can.

This is what I hate about hashie and havelock the most. They don't have automatic payouts to the address of your choice, but even worse, their withdrawal fee is ridiculous.

[Keyser Soze]

Nice list Puppet.

Just like the old PMBs you would see around here, I would imagine that most cloud mining offerings are unprofitable, not actually mining or outright scams.

[SDRebel]

I suggest a #8, do they send payouts to the address of your choice : for example ltc gear does, but gaw/zen and zoomhash (dunno about others) don't, so you don't really have your money until you withdraw if you can.

This is what I hate about hashie and havelock the most. They don't have automatic payouts to the address of your choice, but even worse, their withdrawal fee is ridiculous.

wow, withdrawal fee? nasty