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.

  • Brad Tobias

    Sounds like there is one way to fix it. Shut down, liquidate assets, reimburse investors/clients or make them happy. What matters most? Clients. Then figure out the rest.

    • Brad Tobias

      And no, I am not a client of Genesis.

  • Disclaimer: I am not a client of Genesis.
    But quite frankly, cryptocurrency mining can become unprofitable due to unforeseen circumstances. If you can’t take the heat, get out of the kitchen. Go buy your own cryptos, trade them and see how you can get smacked on the top of your head. You want guaranteed profits? Where Dey Do Dat At? NOWHERE! Regardless of the alleged hacking event, you weren’t guaranteed anything. No reimbursements. No concessions. No nothing. Understand what you are getting involved in. Make the decision to accept the risk … NOT JUST THE REWARDS. It’s a 2 way street baby. When you are making profits, you are happy. When those profits decrease, then you are being scammed and they are now a ponzi? REALLY? Git da heck outta heah!

    But some IPO stocks on NASDAQ or NYSE. Throw in a bunch of cash. When that company goes bust, do you call it a Ponzi? No? You write that crap off as a loss when you file your taxes. Grow up and get some balls!

    • Mike Palmer

      Yeah, if you request funds back from Genesis, they say the same thing “Get out of the kitchen”. I can move money in and out of many other currencies or ICOs rather easy. Genesis refuses to grant refund requests eventhough it is stated that either party can cancel in their contract. That’s the part that’s the scam. You can’t get out of the kitchen even though it’s on fire.

      • Genesis is not an exchange. They are in the mining business, right? And how do you move money in and out of ICOs or out of “many other currencies”? I am confused. You mean in and out of exchanges, right?

        • Mike Palmer

          Exchanges, yes, secondary sales for ICOs, stocks, forex, IPOs, you can trade in and out of. We can’t even sell our contracts to other customers. Even if you buy equipment for a business, you can sell it to recoup some loss. So, if this is an “investment” then there should be some recourse to get my money back (as it explicitly states in their contract), especially if you request a refund within a couple days of initiation. However, if I am buying mining equipment as my initial deposit has supposedly been spent, then I should be able to get the equipment. But, can’t. They explicitly state that you can get a refund in their contract, but it is a Chinese company operating in Iceland, but the contract states rulings must be done in a German court. Meaning there is nothing any of their customers can do make them uphold their end of the contract. On top of this, there being little to no evidence on the blockchain of actual activities. There is money moving in and out of exchanges, but nothing that looks like mining. But that doesn’t make it a ponzi scheme, what makes it a ponzi scheme is that first, they tell you how to calculate the ROI on their products, but that does not include fees or an increase in difficulty. They intentionally mislead customers with inaccurate calculations. So, you think it’s going to make a profit but won’t, then you find out to make a ‘profit’ you must reinvest the disbursements on an ongoing basis and/or promote the product on an affiliate level. Their top tier ‘investments’ look like they will make a profit, but won’t even return half of the invested coin value. Their lower tier products that some people are buying in the hopes to see a return on their small amounts of BTC is just straight thievery. Never expected a big return on it, just expected it to be close, but from the moment you buy the product it loses half or more of it’s value and there is no way to get out of it, eventhough they say you can.

          • Spencer Rhodes

            In other words, if the market does not favor your investment, you want to be able to leave them holding the bag, and walk away with 100% of your initial investment. Did I read that right?

          • Mike Palmer

            No, you read that wrong. I want a refund as stated in the contract. We are not investors per the agreement, only customers, and it allows for a refund for ‘good cause’. Good cause: Lack of Daily payments as stated in the contract. I have yet to receive daily payments and have had this contract a little over a month. I want the remainder that I paid in returned, minus their processing fee as stated in the contract. “the Service Provider ensures that it maintains all facilities and the relevant supplies in good working order” I want a return b/c they’ve been hacked, had issues paying b/c of BCC (which they knew was coming and should have been prepared for), and provide terrible customer support. Not what I would consider “good working order”. It is rarely this difficult to get a return per the contract from legitimate companies. I just want a refund per the contract I agreed to.

          • I see your points now that you’ve spelled out the scenario clearly. Thank you

    • OccamsLawnService

      Is showing your ass to people is something you do habitually, or was it something you decided to do just here, just this one time?

      You clearly know jack-all about the topic.

      • Repeat that in English please and this time bow down when you address me.

  • dreamworks2050

    Thanks for the info!

  • aecelot greenwood

    Honestly, I really don’t believe they are scamming people. However, their PR needs much improvement. They provide way – way – too little information for their customers.

    As soon as the hack was found, or better, any kind of problem is come across, let your customers know. Share your difficutlies and how you plan to overcome them. Be transparant en provide information. It will calm everyone down, people will be much more patient. I do really not understand their approach to this, ecenomically it is just not smart.

    By depriving people of updates you give room for speculation, fear and distrust. The very things that are your archenemy as a trust-based company.

  • Bobi

    Of course its a ponzi/scam.. When you get paid to bring other people into this scheme it’s clear sign that the company is fake and will operate until new users are signing up and paying the older users. Cloud mining just doesnt exist..

    • Sizzle

      Those commercials… All that eqipment.. just what is all that then?

  • Spencer Rhodes

    I’ve heard this baseless accusation leveled against Genesis Mining over and over again and I don’t buy it. Nothing but FUD.

    • Mike Palmer

      Do you have a contract or are you just speaking with no basis? I have a contract and tried to get out of it very shortly after it began b/c it explicitly says that customers can request refunds, but they do not honor them or their contract.

      • Spencer Rhodes

        I have 4.95 TH/s BTC mining that’s been paying out regularly other than their recent payment system issues, which have been brought current for me as of yesterday.

        • Mike Palmer

          Have you calculated any return on your investment? I haven’t heard anyone who has made more than they put in. The value of btc has gone up, but I’d be interested to know if you’ve seen any profits in btc or just ever decreasing payouts. I think they are intentionally misleading people through how they suggest calculating profitability and are not actually engaging in mining activities.

          • Spencer Rhodes

            I couldn’t yet say since I’ve only recently been scaling into their BTC mining contracts. The trivial 2.5 MH/s of DASH mining that I secured a year ago and forgot about until a couple months ago has already paid more than double what I invested, which in itself is a trivial sum, around $45 worth of DASH so far, but more than I invested.

            The thing is, anybody who shows you math and tells you that your investment is guaranteed to bring you a certain return by a certain date is, if not foolish, then certainly a con artist. Bitcoin mining in particular has had a very slim profit margin until just a few months ago. Any time the price levels off or drops, that margin again narrows. Returns for a given hashpower will diminish as more hashpower joins the network, which happens every time mining becomes just a little more profitable due to a price rally. Anybody who decides to devote compute power to the bitcoin network, is making a strong vote of confidence for the future of Bitcoin. I do it because I’ve looked at how the software works, I’ve read Satoshi Nakamoto’s whitepaper, and I think it’s fucking geneius! Bitcoin, and cryptocurrencies in general, are a technology with the potential to turn the entire global banking system on its ear. Bitcoin is to money, as the printing press was to written language, only this revolution is happening much faster because the technology is already freely available to everyone.

            I’ve heard too many people cry scam after they bought a 0.2 TH/s bitcoin mining contract (thinking they were going to get rich?) and wondering why they have to wait so long for their first payment. Perhaps they’d prefer if their mining revenue went entirely to the network transaction fee it would cost to send them their revenue daily? I think most people just don’t understand how high risk, low reward cryptocurrency mining is most of the time. I have 3 6GB GeForece1060s sitting right here next to me that collectively are earning less than $6.00 per day. My single RX 470 barely generates $1.50 per day. Just a few months ago, when GPUs started flying off the shelves, that same single 470 was earning almost $5.00 some days. Then more hashpower joined the Ethereum and Zcash networks and things returned to normal.

            I mine because I have great confidence in the future of cryptocurrency as a technology. Most people don’t see that potential, just as most people in 1991 didn’t see where the potential was in a few geeks computers being able to send letters to each other over the telephone lines.

            If you want to know about my ROI with Genesis, ask me again next year. But I will again explain at that time how past performance does not indicate future results, and anyone who tells you otherwise is either foolish, or a con artist.

          • Mike Palmer

            So you dont know anything about their larger BTC mining contracts and haven’t decided to calculate if it’s profitable. Thanks for that.

          • Spencer Rhodes

            It’s disingenuous to level an accusation, present zero proof, and then demand that someone else disprove it. That’s the same obnoxious logic that loud-mouthed bible thumpers like to throw around.

          • Mike Palmer

            Sure buddy, whatever. I asked you a direct question and you didn’t have an answer but instead told me about your views on crypto that everyone who’s investing in crypto shares. If you don’t think there’s any legitimate base for concern about the legitimacy and viability of Genesis Mining as a company, you are just as blind as that loud-mouthed bible thumper. I can show you how difficult it is to get a refund, how their company is setup to prevent any recourse, how they’ve been hacked, how poorly they responded to customers after the incident, how inconsistent they’ve paid out lately, how poorly they planned for a fork though we knew it was coming, how they suggested using Coinwarz to calculate profitability with no fees/difficulty adjustment, how unprofitable small contracts are, how risky larger contracts are b/c of all I’ve mentioned above, how there’s little evidence of an actual mining operation on the blockchain, and how you need to promote the products and reinvest to see a profitable return. That’s my evidence, I just want a refund b/c I do not feel like the product promoted is the product delivered. Whether you agree with it or not doesn’t mean its disingenuous or zero proofed. I’d be happy to post some links (or checkout r/GenesisMining) , but the discussion with you seems like it’s more about your need to be right than to actually discuss or look at evidence.

          • Spencer Rhodes

            That’s because my opinion is just so much better than yours. 😉

          • Well all of the negatives you’ve listed above, I am rather flabbergasted that you sent them money for mining profits! Did you find out all of this AFTER you spent your money and are now having buyer’s remorse? Just curious…

          • Mike Palmer

            Yeah, all this happened after I bought the contract (def would not put money into this company now or any time in the near future). I wouldn’t call it buyer’s remorse, I’d call it a company not fulfilling their contract and misleading customers. Buyer’s remorse seems more like I just changed my mind.

          • Everything you wrote happen just a few/couple of days after you purchased the contract? WOW! That’s crazy, eh? That’s a whole lot of happenings in such a short time!

        • OccamsLawnService

          Maddoff’s large clients were the last to get the scam, too.

        • MIchelle washignton

          so do i and not received a cent sept 15 still lat payments

  • Atorres Torres

    is paying to me, not every day only they send payments every 2 to 3 days, is not scamming

  • Wieger Kunst

    Very bad service. I have a Ether contract since arpil 2017 and a Monero contract since June 2017. In the beginning the Eth went ok. But, 3 weeks after ordering the Monero contract all payouts stopped. The Eth payouts were halted for more then a month (July) after which they started again but the missing month July is still not payed out. Monero is still not payed out since July (almost 3 months). After a lot of support calls, of which still no one is answered, I do not trust this company anymore. All LinkedIn profiles from the CEO, CTO are removed, and direct e-mails to the management are also not answerd. Very very very bad service. At the moment after 6 months, my investement of a few K USD are far from beiing earned back and the mining decreases per day (and they do not pay out).

  • Sizzle

    So far 2 months ( 58 days) with GM. Genesis mining has provided every payment so far. Im at 50% of my initial investment. 2 more months and ill be getting into the profit. Dont know if i want to continue investing just incase it is a ponzi… But if not… the possibilities seem too great to ignore.

  • Kostas Spanos

    Hello guys, can anyone recommend a good pool for mining altcoins?
    I really liked the Genesis-mining site and how easily you could configure everything.
    Its a pitty that they start to fuck it up with those payments, so any other recommendations where we could enjoy risking our money before they ll fuck it up too, would be nice 🙂 Thanks