Jan 15, 2019 03:30 UTC
Jan 15, 2019 at 12:30 UTC
Are Cloud Mining Websites Scams or Legit?
If you are new to cryptocurrency and do not know a great deal about the mining process, then cloud mining could be your way to earning crypto riches. However, not all the cloud mining websites out there are legit, with several cases of Scams coming out in the past.
So, the obvious question is, Are the Cloud Mining Websites Scams or Legit?
We will try to analyze the various factors associated with the cloud mining process and see whether the promises made by them are legit or just clickbait.
What is Cloud Mining?
If you have been in the cryptogame, you might be aware of the term, mining, a process of block verifications of the cryptocurrency networks using Proof of Work, which fetches the miner a block reward in the form of cryptocurrencies.
As the mining difficulty increased with time, the types of equipment and energy consumption got costlier too. In became almost impossible for new miners and solo miners to run a mining rig, with the amount of noise and energy that the beast consumes.
In order to avoid the issue, big firms came up with a cloud solution, where the miners could buy computational power from these firms, without having to bear the burden of setting up an expensive mining rig. You buy a contract from one of these cloud mining firms and put it into the cryptocurrency you want to mine.
The cloud mining farms behind the offerings set up their data centers in countries like China where cheap electricity is available in abundance, and they pass on the cost cut to the users through mining profits.
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Is Cloud Mining Profitable?
Well, that totally depends on the mining goals, if you are going to mine a cryptocurrency like Bitcoin, whose mining difficulty and falling prices in the last year have forced solo miners to shut their operations, then there is a very thin possibility of you making any profits.
However, if you are new to the crypto realm and enthusiastic about the mining process and doesn’t have much knowledge of the same, then you may go for the cloud mining with an established and legit firm
What is This Scam Everyone is Talking About?
Every new business faces the biggest resistance because of the number of scams that crop up in the same time frame.
The same holds true for cloud mining websites as well, although there are various promising and legit websites which actually help its user to earn the crypto rewards through mining. But, at the same time various websites whose only purpose is to accumulate as much money as possible and run away.
There are no set parameters to check the legitimacy of the claims made by cloud mining websites. The other factors which make it impossible for any potential scam to be identified at earlier stages is the sophisticated way they function.
The scam website might promise you of having a huge mining rig setup somewhere in China and also return you a few first installments of your mining rewards, but once they have accumulated enough, they might vanish overnight.
Is There No Trust Worthy Cloud Mining Websites?
Well, there are quite a few, which has been in the industry for quite some time now, I am going to list a few of them here.
- Genesis Mining: One of the better known and established names in the cloud mining sector, Genesis has been in the business for almost 6 years now, established back in 2013. The firm has been known for providing contracts for multiple cryptocurrencies and has several verified data centers. Due to its popularity, it often remains sold out.
- Hashnest: Established in 2014 by the Bitmain, one of the largest producers of ASIC mining rigs and hardware, the firm is known around the world. Although the parent company is established in China, the cloud mining arm has various data centers all around the world.
- HashFlare: The HashFlare cloud mining firm has been in the business since 2013 and offers various hash rates for different cryptocurrency mining. The websites are currently facing issues with its Bitcoin withdrawal as many uninformed transactions has risen up. The firm has various detailed and registered data centers around the world, with photographic evidence.
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How To Identify Potential Cloud Mining Scams?
Any scam does not matter how sophisticatedly it has been planned, it would always leave a few red flags on the way. A user needs to be internet smart to find these shortcomings to avoid being duped of their hard-earned money. I am going to list a few indicators that you may look for, to make sure the Cloud mining website is not a scam.
- Look for the registered user attached to the domain name, usually, the fake websites always keep the registered user hidden from the public eye.
- The scam websites often register their website to give an illusion of legitimacy, however, if you dig a little deeper, the director is always a foreigner, which allows them to fake many identification requirements.
- The fake websites only make claims of about their hardware power, or data centers, make sure the firm you are investing in has verified data centers and rich history in the industry.
- The fake firms use the initial payment put in by the users to payout, giving an impression of their legitimacy. However, once they gain the confidence, they run away with tons of public money.
- Always check the mining profitability of different cryptocurrencies and see whether it is in sync with the promises made by your cloud mining firm, if there are big differences between the two, chances are its fake.
Pros & Cons Of Cloud Mining
Pros of Cloud Mining:
- Low Maintainance Cost
- User Does not have to wait for completing the hardware setup.
- Mining starts as soon as you purchase a contract or service from any of the available service providers
- No hash rate fluctuation
- Daily Payouts
Cons of Cloud Mining:
- There are plenty of scams out there.
- It’s completely different from setting up your own rig, thus the user won’t be able to learn anything about the mining process.
- Most of the legit websites availing the cloud mining services are either sold out or has a long queue before you can buy service for your choice of Altcoin.
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