▁ ▂ ▄ ▅ ▆ Cloudmining 101 (ponzi risk assessment) ▆ ▅ ▄ ▂ ▁

[Puppet]

hashcoin != hashfast

Hashcoin is a fairly shady company that sold/sells some 2 chip miners based on hashfast chip and makes promises (and sells) some larger miners with specs that cant be real (Ill believe 1TH/S and 0.6J/GH from a hashfast GN chip when I see it). Id be very wary of their cloudmining offering.

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[raskul]

hashcoin != hashfast

Hashcoin is a fairly shady company that sold/sells some 2 chip miners based on hashfast chip and makes promises (and sells) some larger miners with specs that cant be real (Ill believe 1TH/S and 0.6J/GH from a hashfast GN chip when I see it). Id be very wary of their cloudmining offering.

+1 the website says you can change pools (and they charge extra for this service)
I just received an SP31 from SP-Tech and it's pulling 0.53w/GH - this is tech which a full year more advanced than the golden nonce.

i agree, the entire hashcoin thing reads like a stinking scam.

[Puppet]

added hashcoin, didnt know their service was up for sale already. Some red flags I encountered:
- as mentioned above, user selectable pool requires undisclosed fee and its not even clear you can direct your entire hashrate
- No internal pool info or blockchain evidence that Ive seen
- pictures show generic datacenter but no miners whatsoever
- linkedin profile CEO suspicious, endorsements from coworker (who is listed as CEO in other company), company profile shows only 1 employee..
Ive also seen some of those profile pics before, but cant remember where.
- Unclear what asic supplier they use. If hashfast, lack of endorsement might be understandable, but where are they going to keep sourcing chips?

Its not a clearcut 100% scam, but the above should be enough to avoid it until they provide more compelling evidence.

[activebiz]

this is a great guide to help people make the right decision when joining a mining contract. it also help highlight reputable companies.
thanks a lot

[MrTeal]

Question about Genesis-Mining. You gave them a 1+4+7, can you point out where a Bitcoin hardware vendor vouched for them to satisfy #2?
Their pricing seems more reasonable, but unless I'm misunderstanding it seems like they're offering a lifetime contract with all fees included for $0.77/GH/s. That raises all kinds of red flags regardless of having a couple pictures of hashing boxes.

[Puppet]

Question about Genesis-Mining. You gave them a 1+4+7, can you point out where a Bitcoin hardware vendor vouched for them to satisfy #2?
Their pricing seems more reasonable, but unless I'm misunderstanding it seems like they're offering a lifetime contract with all fees included for $0.77/GH/s. That raises all kinds of red flags regardless of having a couple pictures of hashing boxes.

I dont remember, and wonder if I messed up. I removed them from the list while Im reviewing this, thx for pointing out!

edit: Marco reminded me where I saw it, its on their homepage, testimonials from spondoolies en zeus.
Granted, they could easily be faked, so I asked for a confirmation from the other party, but I would expect we'd have heard from Guy by now if that was faked.

Other points are being discussed.

[bitcoinmind]

it seems that your thread can be worthless .. It looks like soon all services will become scams..

Nonsense! Some are legitimate businesses and that includes AM Hash, but even Zeus and Genesis among some others.

It takes one click to oversell and instant ponzi

exactly what I was thinking .. of course nobody would want, but remember what happened to Mt. Gox ..

[l3sny]

Why hashie gen1 is a scam ? Can you please explain?

[UKBC]

Very interesting read and I have learned something from your post. To flip the coin the other way, you have shown what is a Ponzi scheme but could you not list companies in your eyes that is not a Ponzi scheme. I can't see any thread here on good mining companies as I would love to read. So if there is a link you or anyone can provide for me to help me invest my money wisely then please could you or others guide me in the right direction please ?

[l3sny]

The problem is that you cannot tell the difference between ponzi and legit business. You can starrt a legit business, show your hashrate and have your miners and at some stage you stop re-buying hashing power from the suppliers and go fractional mining only. Thus you will be partially ponzi partially legit.
The only thing I like is that those fake ponzi schemes are collapsing now in front of our eyes because of flat difficulty. And since they are not able to get new customers to continue their operation they just go belly up as PBmining did.

There is no chance to positively verify a legit mining operation, that's the paradox.

[UKBC]

13sny all that being said you must be mining with a company somewhere. What would your advice be. Do I try and mine from home and use too much electricity and burn my Mac to a cinder. Is there any alternatives for me to invest my money in to? I'm new to this forum. Not to Bitcoin and I did used to mine with a friend from his house but the profit was bearly breaking even.

I'm happy to be advised but if you mine, who do you mine with ? Even if you post me to some threads on this site. There is a lot of information on this forum and really don't know where to start to be honest.

[darkangel11]

There is no chance to positively verify a legit mining operation, that's the paradox.

Yes, there is!
If you show your mining address anyone can calculate how many coins you mined and how many you paid out to your clients. As long as the coins keep moving from the mining address to their clients, while the money the clients paid for shares go to a separate address, everything is fine.

[Mabsark]

Very interesting read and I have learned something from your post. To flip the coin the other way, you have shown what is a Ponzi scheme but could you not list companies in your eyes that is not a Ponzi scheme. I can't see any thread here on good mining companies as I would love to read. So if there is a link you or anyone can provide for me to help me invest my money wisely then please could you or others guide me in the right direction please ?

Look at the bottom of Puppet's list and you'll see the legit services:

Cex.io
KNCcloud
Cryptx PETAmine
AMhash
Hashnest(*after merge)

[UKBC]

Think you might have me a it wrong. Mining address ? My website is www.solesolutions-reflexology.co.uk I meant my patients pay me Bitcoin to my Bitcoin address. Bottom of my website shows I accept Bitcoin. But I do it by mobile phone when I see my clients.

I want to know how to get out the cloud mining trap of being scammed as I have cloud mining revenue ready to re invest but looking at other options. But so much information on this site It does make me rather confused. I just wNted to know if there was a half reputable site for mining. I would like to start GPU on my Mac but information here is rather short in respect to that.

[Puppet]

The problem is that you cannot tell the difference between ponzi and legit business. You can starrt a legit business, show your hashrate and have your miners and at some stage you stop re-buying hashing power from the suppliers and go fractional mining only. Thus you will be partially ponzi partially legit.
The only thing I like is that those fake ponzi schemes are collapsing now in front of our eyes because of flat difficulty. And since they are not able to get new customers to continue their operation they just go belly up as PBmining did.

There is no chance to positively verify a legit mining operation, that's the paradox.

This has already been discussed a few times. Any company can go rogue, or there could be other reasons why its no longer able to fullfill its contracts (bankruptcy, fire, meteor impact, whatever). But what few companies do is provide adequate evidence that they:

- do physically own the hashrate they are selling
- can be held accountable if they no longer fulfill their contract

And there is a HUGE difference between companies that can do that, and one's that dont even try.

[raskul]

Ewwww nobody gets to touch my feet.

[UKBC]

Thank you Mabsark, I did not see that Cheers :-)

One question why are some people on this forum rude. One chap on another thread said I am a newbie fake account. I did not understand why he said this to me. I grew up on trusting people until they do something wrong to you. I know a bit old fashioned and I get walked all over sometimes but some people on this site need better manners with posting to other people.

I guess a lot of people are cautious of new people on this site, to that I am starting to understand why since I have noticed a lot of trolls and fake people. Seriously some people on this site should hold back before being so forthcoming :-)

Thanks again for your help :-)

[l3sny]

There is no chance to positively verify a legit mining operation, that's the paradox.

Yes, there is!
If you show your mining address anyone can calculate how many coins you mined and how many you paid out to your clients. As long as the coins keep moving from the mining address to their clients, while the money the clients paid for shares go to a separate address, everything is fine.

Even if you have a public mining address you would have to be mining with your own miners on a pool. What if you use a hosted service elsewhere and bitcoins are being distributed among other participants and then redistributed to the shareholders minus the costs of maintenance? You would need to know not only the number of users but also the amount of shares each of them has. It cannot be solved that easily as you think.

[UKBC]

I'm learning a lot from you Puppet.

[l3sny]

The problem is that you cannot tell the difference between ponzi and legit business. You can starrt a legit business, show your hashrate and have your miners and at some stage you stop re-buying hashing power from the suppliers and go fractional mining only. Thus you will be partially ponzi partially legit.
The only thing I like is that those fake ponzi schemes are collapsing now in front of our eyes because of flat difficulty. And since they are not able to get new customers to continue their operation they just go belly up as PBmining did.

There is no chance to positively verify a legit mining operation, that's the paradox.

This has already been discussed a few times. Any company can go rogue, or there could be other reasons why its no longer able to fullfill its contracts (bankruptcy, fire, meteor impact, whatever). But what few companies do is provide adequate evidence that they:

- do physically own the hashrate they are selling
- can be held accountable if they no longer fulfill their contract

And there is a HUGE difference between companies that can do that, and one's that dont even try.

I do agree there is.

However:
-physical ownership is a kind of wrong argument. It excludes platforms using hosted services from another locations. CEX for example claims they host all over the world. You cannot say they physically own the hashrate. They just technically own the hashrate. So I believe there are many legit businesses hosting with third parties in some distant locations and they do not physically own the equipment as you put it.
-setting up a limited company solves this problem to the degree of the sum fixed in the funding contract (or extended further in the future if a company raises more capital). So technically I can set up an Ltd with $1,000 capital and my liabilities will be limited to this amount. Everything is correct according to law but to me it does not give the credibility.

I think it is a very valuable thread.

To sum up... I am responsible for kryptologika operations. We have been checked and challenged before and nobody was able to prove we are a scam. On the other hand we are reluctant to disclose the details of our hashrate, where we mine, and/or any relevant data that is required here. This is our company secret. Since we use physical silver we can only show you the pictures of the coins
I have offered Puppet an exclusive offer to provide him with undeniable proof we are mining and we posses the hashrate if he keeps it confidential.  He declined so the things have to remain as they are.