There are various types of Bitcoin scams in existence today, although one of the most prominent ones comes in the form of cloud mining companies. Granted, there are some legitimate businesses in the Bitcoin cloud mining world as well, although most of them can be counted on the fingers of one hand. Digital currency enthusiasts will need to be vigilant when dealing with these types of companies, although there are certain warnings signs most of the scams will have in common.
Bitcoin Cloud Mining Scams Are Plentiful
One of the things to keep a close eye on when looking at Bitcoin cloud mining companies is verifying whether or not they can back up their claims. The central principle of Bitcoin cloud mining is renting the hashpower generated by Bitcoin mining hardware, which is either owned by the company selling cloud mining contracts, or rented from individual miners.
However, a lot of businesses are not all that transparent about where their mining power is coming from. Buying tons of mining hardware and hosting it at a data center is quite expensive, even when the company offering the contracts has been an established player for quite some time. An alternative form of provider is a manufacturer of mining hardware themselves, although those are much harder to come by these days.
But that is not the only part that users will need to be aware of. Most Bitcoin cloud mining companies will offer users a quick return on investment, regardless of the current Bitcoin value or mining difficulty. Mining digital currency can never be subject to a fixed rate, as there are different factors causing fluctuations in current network hashpower, the price per BTC, and the mining difficulty.
Any website claiming to offer a fixed USD value or investment percentage every day or week is most likely a scam. Mining US$2 worth of Bitcoin today will not be possible tomorrow, as it may be worth US$1.93 or even US$2.14. One can just never tell how the mining situation will evolve, as others miners are joining and leaving the network every day.
Another warning sign on the wll is how some Bitcoin cloud mining providers will offer user a free reward when signing up. Most of these sites will provide that reward in a different digital currency – usually DogeCoin – which is next to worthless. Not that there is anything wrong with offering potential investors a gift, but there is no reason for legitimate companies to resort to such tactics for attracting new customers.
Last but not least, the best advice anyone can give you when looking for Bitcoin cloud mining companies is doing your own research. Type in the company name in Google, and see if any reviews pop up. Check other Bitcoin resources as well, such as the various forums and subreddits. Trust your gut feeling as well: if the offer does not feel genuine, don’t go for it.
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