It's pretty easy to check the boxes yourself
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.
FAIL
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.
FAIL
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.
PASS
4) 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.
FAIL
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.
PASS/FAIL*
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.
PASS
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.
PASS
18 ) Bonus point for "guaranteed profit"
PASS
On the face of it then, they do pretty well.
*The pass/fail on this is because Dragon seem to have changed their structure since appearing to be a naked MLM product, as described
here in June last year.
So that's the trees, what about the wood?
Things have changed a lot in the two years+ since Puppet started this thread. Difficulty and price have sky rocketed and as you full well know from Genesis discussions, the main question about cloud mining is the ratio of gross earnings to maintenance deductions, and whether a contract or agreement has any convertable value.
Dragon don't detail what their maintenance charge is (would probably be a good idea to add this to the list as question 9).
1They do say that
they offer the option to take delivery of your mining equipment. How this works if you buy a small contract is unclear. What would they deliver against a 540 Gh/s redemption?
Also since this thread started the MLM industry has discovered bitcoin mining. It's an ideal product for them in a lot of ways: they can baffle newbies with science, then offer to take care of all the difficult bits for you ("just give us your money"), payment in bitcoin allows them to hide, ROI's can be unofficially promised but never materialise, and they can just cancel contracts or make them unprofitable by adjusting 'costs' or terms without any legal comeback.
Dragon seems to be organized by a large
South African based MLM operation with a pretty checkered track record.
Would I invest in a Dragon cloud mining contract?
I wouldn't piss on them if they were on fire.
