Genesis Mining Customer: Company Is Now Ponzi Scheme

Cryptocurrency cloud mining has always been problematic, both for companies and customers alike. Nearly every company in this industry is or turns into a major Ponzi scheme at some point. One of the few legitimate companies to date is Genesis Mining, but it looks like some of its customers are not too sure about the future of the platform. Genesis Mining’s recent payment issues and unfortunate hack have caused some delays, but the company is not going anywhere anytime soon.

Genesis Mining Fights an Uphill Battle

Pleasing cryptocurrency customers is virtually impossible, as every individual has different expectations and desires. Accommodating all of them is not feasible any longer, especially for cloud mining businesses. Genesis Mining is a solid company, and I know its CEO personally. There is no reason for this company to start scamming its users or pay them out less than expected.

The most often heard complaint about Genesis Mining is how its cryptocurrency cloud mining service is not necessarily profitable. That may certainly be the case, as customers buy into a one-year contract — or longer — without knowing what the future holds. The company provides its rates of return and fees upfront, which allow for some basic calculations to be made. In most cases those calculations turn out positive, but they do not necessarily take fluctuations into account.

There are other factors to take into account when it comes to cloud mining. First of all, there is the value of the cryptocurrency in question. Bitcoin and Ethereum fluctuate wildly in value, virtually every single day. A cloud mining company cannot control those prices, and if a major dump occurs, it is not at fault if customers earn less than expected. That is par for the course with any investment, but even more common in the cryptocurrency world. Signing up with a cloud mining service is a gamble with some calculations to back it up, but absolutely no guarantees.

Secondly, mining difficulty adjustments play an integral role in the process as well. Depending on how much mining power is present on the network at any given time, earnings from Genesis Mining may be higher or lower than previously expected. Once again, that is part of the gamble you take by signing up for cloud mining, and not something the company can control. Though it can be frustrating for customers to deal with, that goes on with every legitimate cloud mining company.

A recent Reddit post proclaimed that Genesis Mining had turned into a Ponzi scheme. The poster claimed this had occurred unwittingly, mainly due to the recent backlog in payments. Those payments were effectively delayed due to a hack that had emptied the company’s hot wallet a few weeks ago. Ever since then, Genesis Mining has been reimbursing clients, which is a painstaking process. Its daily payouts are not fully back just yet, but the team is working on it. Claiming that the company had pooled together money and built a mining farm to raise more money and buy more hardware is not necessarily false. However, that does not make them a Ponzi scheme, notwithstanding claims by this Redditor of having “no reserves”.

Indeed, there are a lot of wild — and often baseless —  theories floating around on the internet about Genesis Mining. It is also true the company may be dealing with a host of issues for which they were unprepared. However, there is no clear evidence of Genesis Mining having willfully defrauded its users. Not everything in the world goes as we would like it to, but that should not surprise anyone. Cryptocurrency cloud mining is a difficult business even when coin prices are on the rise. Everyone wants their ROI in six months or less, but they do not always take external factors into account.

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  1. Brad Tobias August 20, 2017
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