Jun 19, 2015 05:24 PM
(This post was last modified: Dec 11, 2016 08:00 AM by XMR.)
Original raw post: http://pastebin.com/raw/L5GwWcgi
Original BCT Thread
A useful site providing a list of cloud mining services the owner(s) have deemed untrustworthy: http://www.badbitcoin.org/thebadlist
The same site, but the trustworthy providers: http://www.badbitcoin.org/safelist/index.htm
Thanks to AlirezaVF for this site! 🎉
Everyone here is focused on ROI, hardly anyone seems to care if these companies are legit. The majority of cloudmining websites don't 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) isn't mining, then it's impossible on average for the investors to profit. Early investors might, but only at the expense of later
ones and only if the ponzi can survive long enough. If no mining is going on, then there is nothing to generate those profits. So don't 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 don't think because its been running for 10 months, that it has to be legit either. Unlike traditional ponzis, mining ponzis don't 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 dollars. Just for running a website. So the fact they are still paying out doesn't prove they are legit, its actually far more likely they are still paying out
because it maximizes their profits ( update: pbmning meanwhile collapsed: https://bitcointalk.org/index.php?topic=887871 qed.).
Of course that can't 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) ponzis before did.
[img]http://i.istockimg.com/file_thumbview_approve/49263522/3/stock-illustration-49263522-poof-cartoon-exclamation.jpg[/img]
Be smart. Think before you invest. Don't trust *anyone* with a referral link in his signature.
1) No public mining address / no user selectable pool.
A cloud mining company that won't let you direct the hashrate to your pool of choosing and can't 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 wouldn't. If a (cloud) mining company cant get any asic vendor to post such endorsement, you should assume they don't 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 of. Mind you: pictures can be faked. Picture don't prove current
ownership. So like all criteria listed here, by themselves they are by far insufficient proof.
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 doesn't limit sales or make public how much hashrate they sold vs what they have (provably) deployed should be considered 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 signature.
6) Anonymous operators (WHOISGUARD)
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 would have to be bat shit crazy to trust them with your money.
7) No exit strategy
If you can't sell your position, you can't get your money out. That's the ideal case for a ponzi and allows it to run for a long time.
8) Bonus point for "guaranteed profit"
So far, I've only seen bitcoinmaker.ch do this. If anyone guarantees you a bitcoin denominated profit, and especially a 30+% one, you can be sure its a ponzi, all the other
criteria become unimportant. There is no such thing as certain profit when it comes to mining, no one knows how the network will evolve, or what btc exchange rate will do. If
anyone could somehow be certain of making a 30% profit, they wouldn't need your money (and they wouldn't give the profit to you).
9) Invalid/undefined units of hashrate
If a cloudmining service sells hashrate in units other than x hashes per second (Mh/s, Gh/s, etc etc) such that you don't know how much actual mining power you have, it should
immediately be considered suspicious. If the company was legit, it wouldn't have to conceal the true amount of mining power being rented out to its customers.
Examples include CLD and TeraX.
Feel free to post corrections or additions.
Proving a ponzi
A ponzi is defined by the absence of a mechanism to generate revenue or profits (in this case: mining hardware). Proving something is a ponzi would therefore require proving a negative. You can not prove a negative, so in theory it's possible any of the companies I labeled as "ponzi" are in fact mining. This also means that it's possible that any company I labeled as "legit" are not mining. But that's like saying in theory its possible unicorns do exist or that its possible that Nigerian Prince who emailed you yesterday, really inherited a $500M gold mine concession and wants to share it with you. You can not prove that's not true either, but to most sensible people the complete absence of evidence is a very compelling reason to dismiss the claim, and thus certainly reason enough not to invest there.
Original BCT Thread
A useful site providing a list of cloud mining services the owner(s) have deemed untrustworthy: http://www.badbitcoin.org/thebadlist
The same site, but the trustworthy providers: http://www.badbitcoin.org/safelist/index.htm
Thanks to AlirezaVF for this site! 🎉
Cloudmining 101
Everyone here is focused on ROI, hardly anyone seems to care if these companies are legit. The majority of cloudmining websites don't 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) isn't mining, then it's impossible on average for the investors to profit. Early investors might, but only at the expense of later
ones and only if the ponzi can survive long enough. If no mining is going on, then there is nothing to generate those profits. So don't 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 don't think because its been running for 10 months, that it has to be legit either. Unlike traditional ponzis, mining ponzis don't 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 dollars. Just for running a website. So the fact they are still paying out doesn't prove they are legit, its actually far more likely they are still paying out
because it maximizes their profits ( update: pbmning meanwhile collapsed: https://bitcointalk.org/index.php?topic=887871 qed.).
Of course that can't 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) ponzis before did.
[img]http://i.istockimg.com/file_thumbview_approve/49263522/3/stock-illustration-49263522-poof-cartoon-exclamation.jpg[/img]
Be smart. Think before you invest. Don't 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 won't let you direct the hashrate to your pool of choosing and can't 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 wouldn't. If a (cloud) mining company cant get any asic vendor to post such endorsement, you should assume they don't 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 of. Mind you: pictures can be faked. Picture don't prove current
ownership. So like all criteria listed here, by themselves they are by far insufficient proof.
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 doesn't limit sales or make public how much hashrate they sold vs what they have (provably) deployed should be considered 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 signature.
6) Anonymous operators (WHOISGUARD)
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 would have to be bat shit crazy to trust them with your money.
7) No exit strategy
If you can't sell your position, you can't get your money out. That's the ideal case for a ponzi and allows it to run for a long time.
8) Bonus point for "guaranteed profit"
So far, I've only seen bitcoinmaker.ch do this. If anyone guarantees you a bitcoin denominated profit, and especially a 30+% one, you can be sure its a ponzi, all the other
criteria become unimportant. There is no such thing as certain profit when it comes to mining, no one knows how the network will evolve, or what btc exchange rate will do. If
anyone could somehow be certain of making a 30% profit, they wouldn't need your money (and they wouldn't give the profit to you).
9) Invalid/undefined units of hashrate
If a cloudmining service sells hashrate in units other than x hashes per second (Mh/s, Gh/s, etc etc) such that you don't know how much actual mining power you have, it should
immediately be considered suspicious. If the company was legit, it wouldn't have to conceal the true amount of mining power being rented out to its customers.
Examples include CLD and TeraX.
Application of these criteria to some cloudmining companies
Feel free to post corrections or additions.
Puppet Wrote:Ponzis that have already collapsed as predicted:
CodePBmining.com 1+2+3+4+5+6+7 => 7/7 = Ponzi
Lunaminer.com 1+2+3+4+5+6+7 => 7/7 = Ponzi
coinsoncloud.eu 1+2+3+4+5+6+7 => 7/7 = Ponzi
Cryptomine.io 1+2+3+4+5+6+7 => 7/7 = Ponzi
hashie.co ("gen1") 1+2+3+4+5+6 => 6/7 = Ponzi
bitcoinlabmining.com 1+2+3+4+5+6+7 => 7/7 = Ponzi
ltcgear 1+3+4+5+6 => 5/7 = (very) suspicious
hashprofit.com 1+2+3+4+5 => 5/7 = (very) suspicious
minethatcloud.com 1+2+3+4+5+6+7 => 7/7 = Ponzi
CoIntellect.com 1+2+5+6+7 => 5/7 = (very) suspicious
terabox.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)
chabatmining.com 1+2+3+5+6+7 => 6/7 = Ponzi
Ecrypto.co.in 1+2+3+4+6+7 => 6/7 = Ponzi (+ confirmed scam, they are no partners of cex.io)
GenerateBTC.com 1+2+3+4+5+6+7 => 7/7 = Ponzi
Likely Ponzi scams that have yet to collapse:
Codecloudminr.io 1+2+3+4+5+6+7 => 7/7 = Ponzi <collapsed>
cloudmining.website 1+2+3+4+5+6+7 => 7/7 = Ponzi
Skycoinlab.com 1+2+3+4+5+6+7 => 7/7 = Ponzi (+ organized by serial ponzi scammer: ?topic=583177.msg10298730)
btcslice.com 1+2+3+4+5+6+7 => 7/7 = Ponzi (+ pays out in reversible paypal ?)
grmining.com 1+2+3+4+5+6+7 => 7/7 = Ponzi
bitcoinmaker.ch 1+2+3+4+6+7+8 => 7/7 = Ponzi
eobot.com 1+2+3+5+6+7 => 6/7 = Ponzi (+ possible malware/wallet stealing software)
hashwar.co 1+2+3+4+6+7 => 6/7 = Ponzi
bitrush.com 1+2+3+4+6+7 => 6/7 = Ponzi
Codenexusmining.com 1+2*+3+4+5+7 => 6/7 = Ponzi (Guy from Spondoolies says im wrong, but I cant score what I havent seen and he seems to confirm they have no hardware)
minerslab.com 1+2+3+4+6+7 => 6/7 = Ponzi (+ selling hardware that doesnt exist + using purchased "legendary" account)
bitcoincloudservices 1+2+4+5+6*+7 => 6/7 = Ponzi (+ founded by known scammer https://bitcointalk.org/index.php?topic=860400.msg9638868#msg9638868)
scrypt.cc 1+2+3+4+5+6 => 6/7 = Ponzi (preliminary assessment) <collapsed>
Kryptologika 1+2+3+4+* => */7 = Ponzi -> passthrough of AMhash which is defunct. Currently operating as fractional reserve/ponzi.
hashcoins.com ~1+2+3+4+7 => 5/7 = (very) suspicious (user selectable pool requires fee, dc pictures show no miners, linkedin profile doctored, hardware sales very
dubious,..)
Zeushash 1+2+3+4+5 => 5/7 = (very) suspicious
Rest:
CodeCryptsy MN 1+2+3+4 => 4/7 = Possibly/partially legit ( + no details on fee structure)
cloudmining.sg 1+2+4+7 => 4/7 = Possibly/partially legit
genesis-mining 1+4+7 => 3/7 = Probably legit (risk of fractional reserve mining)
Megamine.com 1+4 => 2/7 = Probably legit
Bit-x.com 1+4 => 2/7 = Probably legit (preliminary assessment, partnership confirmed by Bitfury)
pow88.com 1+2 => 2/7 = Probably legit (preliminary assessment)
KNCcloud 7 => 1/7 = Legit (but as hardware vendor, they broke their promise not to selfmine with more than 5% of customers hashrate )
Hashnest (Antpool/Bitmain/UMISOO) => 0/7 = Legit
Obsolete or suspended:
CodeAMhash => 0/7 = Legit (if you buy directly) / divs momentarily (?) suspended
Cex.io 4 => 1/7 = Legit
Cryptx PETAmine => 0/7 = Legit
GAWminers 1+4+5+~7 => 4/7*= Possibly/partially legit based on criteria set forth. Based on wider context: more suspicious than a nun squatting in a cucumber field
New Sites
Code
HashFlare - 1*+3+4+5+7 = 5/9 (very) suspicious (apparently you can direct hashrate to other pools but I haven't confirmed this yet, datacenter pictures show no miners, I can find no actual hardware being sold on HashCoins website, company backing HashFlare)
Sea Mining - 1+2+3+4+5+6+7+8 = 8/9 Ponzi (+ mining power is sold for more than 3x actual market value, profit calculator indicates profit rate more than 3x projected by other sites + formula)
BitMinister Ltd - 1+2+3*+4+5+6*+7+8+9 = 9/9 Ponzi (+ I haven't verified the whois data, the only datacenter picture in the intro video seems fake, I haven't seen any units of hashrate at all)
Minerport - 1+2+3+4+5+6+8+9 = 8/9 Ponzi (+ ROI is way too short, profit is constant and displayed during mining)
HashPit - 1+2+3+4+5+6+8*+9 = 8/9 Ponzi (+ twitter page basically admits this service is an HYIP)
BiteMiner - 1+2+3+4+5+6 = 6/9 PonziNew Sites (Collapsed)
Code
CLDMine - 1+2+3+4+5+6+7+8+9 = 9/9 Ponzi
HashOcean - 1+2+3+4+5+6+8 = 7/9 Ponzi
Topmine.io - 1+2+3+4+5+6+7+8+9 = 9/9 Ponzi (+ claim of "experts system of algorithms" giving "undeniable advantage" over other services)Proving a ponzi
A ponzi is defined by the absence of a mechanism to generate revenue or profits (in this case: mining hardware). Proving something is a ponzi would therefore require proving a negative. You can not prove a negative, so in theory it's possible any of the companies I labeled as "ponzi" are in fact mining. This also means that it's possible that any company I labeled as "legit" are not mining. But that's like saying in theory its possible unicorns do exist or that its possible that Nigerian Prince who emailed you yesterday, really inherited a $500M gold mine concession and wants to share it with you. You can not prove that's not true either, but to most sensible people the complete absence of evidence is a very compelling reason to dismiss the claim, and thus certainly reason enough not to invest there.
The poor remain poor by acting rich.
