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Author Topic: Cloudmining 101  (Read 23340 times)
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November 29, 2014, 11:24:19 AM
 #201

I have said it before, why pay someone else for overpriced BTC that you can only acquire back over months if not longer or at all?  Just use an exchange and be done with it.

You assume a fiat payment, which very few cloudmining companies even accept, and a desire to convert fiat to btc.
But if you buy a cloudmining contract with BTC, how is the above statement different from when buying hardware with BTC?

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Cloud mining is not mining in the original sense of the word.  It is a waste of time and money...your money.

It probably/usually is. But then the same could be said for asic hardware. Very few people ever achieved a BTC denominated profit.
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November 29, 2014, 05:04:46 PM
 #202

I have said it before, why pay someone else for overpriced BTC that you can only acquire back over months if not longer or at all?  Just use an exchange and be done with it.

You assume a fiat payment, which very few cloudmining companies even accept, and a desire to convert fiat to btc.
But if you buy a cloudmining contract with BTC, how is the above statement different from when buying hardware with BTC?

Quote
Cloud mining is not mining in the original sense of the word.  It is a waste of time and money...your money.

It probably/usually is. But then the same could be said for asic hardware. Very few people ever achieved a BTC denominated profit.

I agree on both points.  It never made financial sense to mine after the beginning of 2014.  Very few people were seeing the old profits of even a year prior and even less could keep them.  What happens now is a mystery as these large conglomerates appear to be more after fiat than anything else.  I await all future dumps with fiat handy. Smiley

Tired of substandard power distribution in your ASIC setup???   Chris' Custom Cablez will get you sorted out right!  No job too hard so PM me for a quote
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November 29, 2014, 10:09:15 PM
 #203

Cloudmining 101

Everyone here is focused on ROI, hardly anyone seems to care if these companies are legit. The majority of cloudmining websites dont do any mining whatsoever. They pay out old customers via coinmixers from revenue that comes from recruiting new ones. This is the common definition of a ponzi scheme. No surprise, to keep the game going they usually heavily emphasize referrals and signature campaigns to make you do their dirty PR work.

Now why would you care if these companies are mining or not? All that matters is they pay out, right?
Wrong.


If the company (or more aptly: scammer) isnt mining, then its impossible on average for the investors to profit. Early investors might, but only at the expense of later ones.  If no mining is going on, then there is nothing to generate those profits. So dont be fooled by low prices or high payouts. Ponzi miners will drop prices as low they need to keep the game going until one day they vanish.

And dont think because its been running for 10 months, that it has to be legit either. Unlike traditional ponzi's, mining ponzi's dont risk a bank run. You cant get your money out if you begin worrying, so they can run a fairly long time.

Take PBmining,  they have been around since the beginning of 2014 and havent failed to pay so far. Does that prove its not a ponzi? Hardly. Based on their own stats, in the past month they sold ~1.5  PH worth of contracts. Good for around ~2200 BTC. During that same month they paid around 1600 BTC in dividends. A net profit of  ~600 BTC or nearly a 1/4 of a million dollar. Just for running a website. So the fact they are still paying out doesnt prove they are legit, its actually far more likely they are still paying out because it maximizes their profits:  they are still getting far more revenue from new victims than they are paying out.

Of course that cant last. At some point the new sales will slow while the owed dividends keep going up. Once the latter becomes bigger than the former, guess what the anonymous operator will do? The same thing lunamine, coinsoncloud, pirate, bitcoin-trader and countless other (mining) ponzi's before did.



Be smart. Think before you invest. Dont trust *anyone* with a referral link in his signature.

Criteria to help you spot a cloud mining scam/ponzi.

1) No public mining address / no user selectable pool.
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 very likely 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 should assume 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. Mind you: pictures can be faked. Picture dont prove current ownership. So like all criteria listed here, by themselves they are by far insufficient proof.

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.

Application of these criteria to some cloudmining companies

Feel free to post corrections or additions.

Code:
Lunaminer.com         1+2+3+4+5+6+7      => 7/7 = Ponzi already collapsed
CoIntellect.com       1+2+3+4+5+6+7++    => 7/7 = Ponzi ( + requiring likely malware/wallet stealing software)
coinsoncloud.eu       1+2+3+4+5+6+7      => 7/7 = Ponzi already collapsed (https://bitcointalk.org/index.php?topic=853837.0) apparently
Cryptomine.io         1+2+3+4+5+6+7      => 7/7 = Ponzi
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
grmining.com          1+2+3+4+5+6+7      => 7/7 = Ponzi
terrabox.me           1+2+3*+4+5+6+7*    => 6/7 = Ponzi ( pictures are not convincing to me for now, exit strategy involves  60+ days stall tactic)
bitcoincloudservices  1+2+4+5+6*+7       => 6/7 = Ponzi ( + founded by known scammer  https://bitcointalk.org/index.php?topic=860400.msg9638868#msg9638868)
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+~7           => 4/7 = Possibly legit
genesis-mining        1+4+7              => 3/7 = Probably legit
Megamine.com          1+4                => 2/7 = Probably legit
Cex.io                4                  => 1/7 = 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. By and large, cloud mining has not been profitable historically, and I dont expect it  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.

Also, being rated as legit here doesnt guarantee you anything. All it shows is that said company has provided reasonable evidence it is a real company and your investment is backed by actual hashrate. It doesnt guarantee they wont scam you, and it certainly doesnt imply anything about profitability.

Nice list but why 4/ for cex.io?
They only sell the hash rate they have from their new equipement, don't they? You can buy a lot of hash rate to existing customers that want to sell but in that case you are buying existing equipment too.

Hopefully some cloudmining companies like cloudminr will prove to be legit.


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November 29, 2014, 10:32:31 PM
 #204

Nice list but why 4/ for cex.io?

Because I havent been able to find how many TH they sold vs what they have provably deployed themselves. I havent found the former number at all (maybe if you have an account there you can?) and the pool stats only seem to show a combined total of their own hashrate and other ghash.io pool users mining there. So how do we know they didnt oversell ? Judging by the price they probably didnt, but thats hardly solid evidence.

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Hopefully some cloudmining companies like cloudminr will prove to be legit.

couldminr? Rofl, fat chance.
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November 29, 2014, 10:51:54 PM
 #205

Is hashie.co really that unsafe?  They are selling AMhash shares, so they are affiliated with ASICminer, or are they not?
Should I buy AMhash shares off them or havelock investments?  It seems like less of a hassle to just buy off them Tongue

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November 29, 2014, 10:54:07 PM
 #206

the rating for hashie is for their own "gen 1", for which no proof whatsoever exists, nor any endorsement from AM.
AMhash itself seems pretty legit, why they are reselling through something as shady as hashie is beyond me.
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November 29, 2014, 11:24:14 PM
 #207

the rating for hashie is for their own "gen 1", for which no proof whatsoever exists, nor any endorsement from AM.
AMhash itself seems pretty legit, why they are reselling through something as shady as hashie is beyond me.

Would you guys recommend that I purchase off havelock investments instead then?  I've actually asked AMhash on this forum, and they told me the AMhash bought on hashie.co can be transferred to havelockinvestments at a later date, which is why I invested in them in the first place. 

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November 29, 2014, 11:52:43 PM
 #208

Would you guys recommend that I purchase off havelock investments instead then?  I've actually asked AMhash on this forum, and they told me the AMhash bought on hashie.co can be transferred to havelockinvestments at a later date, which is why I invested in them in the first place.  

I recommended to amhash they sell their own shares directly. Having to chose between a shady and likely illegal (outside panama) exchange and a almost certain scam operation, doesnt make this very appealing. Now in practice,  either way should work as amhash should be able to honor the contract regardless if HL or Hashie disappear, but I cant in good conscience recommend either.
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November 30, 2014, 02:04:41 AM
 #209

Would you guys recommend that I purchase off havelock investments instead then?  I've actually asked AMhash on this forum, and they told me the AMhash bought on hashie.co can be transferred to havelockinvestments at a later date, which is why I invested in them in the first place.  

I recommended to amhash they sell their own shares directly. Having to chose between a shady and likely illegal (outside panama) exchange and a almost certain scam operation, doesnt make this very appealing. Now in practice,  either way should work as amhash should be able to honor the contract regardless if HL or Hashie disappear, but I cant in good conscience recommend either.

huh?  Is there another site to invest in AMhashes directly?
Thanks,
monbux

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November 30, 2014, 02:21:31 AM
 #210

Very few people ever achieved a BTC denominated profit.

I did and do it in combination, daytrading and splittings. One year of BTC-interests is ten years of bank-interests. And don't forget: From the beginning of BTC-Mining till to the end of 2013 it was a very big Hype. Now I should invest in hardware-manufactures ... maybe because of the hype after christmas as every year.  Wink

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November 30, 2014, 02:52:36 AM
 #211

huh?  Is there another site to invest in AMhashes directly?
Thanks,
monbux

You are pretty much purchasing AMHash directly if you do it through Hashie - you can search for your hashpower on AMHash's official registry: http://amhash.com/hashie/index.php

Our generation 1 miners aren't a ponzi either. If they are, we'd charge no maintenance fees like Ponzimining and co.

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November 30, 2014, 03:51:48 AM
 #212

[quote author=picolo link=topic=860400.msg9693424#msg9693424 date=1417298955

Nice list but why 4/ for cex.io?
They only sell the hash rate they have from their new equipement, don't they? You can buy a lot of hash rate to existing customers that want to sell but in that case you are buying existing equipment too.

Hopefully some cloudmining companies like cloudminr will prove to be legit.
[/quote]The 4 is for the open ended "IPO" of mining capacity. It was likely given because it is unclear as to how much additional mining capacity they are selling.

I agree that they are most likely only selling actual miners that they have in their possession.
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November 30, 2014, 04:51:25 AM
 #213

just to let you know, CEX has itself a referral program, so it should have a 5 next to its name
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November 30, 2014, 08:40:35 AM
 #214

just to let you know, CEX has itself a referral program, so it should have a 5 next to its name

You're right, but its extremely limited (3%, non tradeable and applies only for as long as the referred customer mines, ie, he cant trade his shares either). If you combine that with the skyhigh prices at cex.io that imply a healthy margin, it doesnt really raise a red flag with me.
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November 30, 2014, 08:47:15 AM
 #215

Our generation 1 miners aren't a ponzi either. If they are, we'd charge no maintenance fees

At last, we have some proof:  you are charging money for it, so its not a scam  Roll Eyes
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November 30, 2014, 09:01:59 AM
 #216

just to let you know, CEX has itself a referral program, so it should have a 5 next to its name

You're right, but its extremely limited (3%, non tradeable and applies only for as long as the referred customer mines, ie, he cant trade his shares either). If you combine that with the skyhigh prices at cex.io that imply a healthy margin, it doesnt really raise a red flag with me.

Fare enough
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November 30, 2014, 11:12:34 AM
 #217

Here's my own mini addition to this debate: https://bitcointalk.org/index.php?topic=878323.0
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November 30, 2014, 11:14:37 AM
 #218

Fuck off you ref whore.
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November 30, 2014, 11:46:14 AM
 #219

Wow, ref is only on the 'if this sounds OK then why not use mine' basis. I'm aiming to contribute to what is a long-standing discussion on-going here concerning ponzis and what kind of investments might be sound, i.e. might small amounts that are spread across the cloud stand us better. That was my broad point anyway.
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November 30, 2014, 11:49:39 AM
 #220

Wow, ref is only on the 'if this sounds OK then why not use mine' basis. I'm aiming to contribute to what is a long-standing discussion on-going here concerning ponzis and what kind of investments might be sound, i.e. might small amounts that are spread across the cloud stand us better. That was my broad point anyway.

your referral links promote likely ponzi's
the purpose of this thread is to help people decide which are legitimate and which are not, it's not a referral fest.

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