Venturing into the world of Bitcoin and cryptocurrency can be a daunting task. A lot of investment opportunities present themselves, but not everything should be trusted. Especially when it comes to cloud mining, it is best to stay away from such offers altogether.
Avoiding Cloud Mining Scam is Easy
Contrary to what some people may want others to believe, there are a handful of genuine Bitcoin cloud mining providers. Those are vastly overshadowed by the number of shady projects, however. Distinguishing between the two types is not too difficult, once one knows what to look for exactly.
Genuine companies will often favor transparency above anything else. They will show their mining hardware, have a trustworthy company registration number, and may even provide a free trial at times. Additionally, they have often built up a strong reputation over the years, and are not showing up out of the blue.
Additionally, the genuine cloud mining providers often have a verifiable partnership with one or more ASIC hardware providers. These are the companies building and selling the necessary hardware to begin mining cryptocurrency. Numerous large-scale operations exist around the world.
The Telltale Signs of a Cloud Mining Scam
A lot can be learned from looking at a cloud mining provider’s company information. Not just in terms of the company number, but also where its physical address is concerned. If one finds an address for the company that leads to an apartment building, for example, there will be no mining operation whatsoever.
Secondly, performing a WHOIS search on a domain name is always worthwhile. Doing so is completely free, yet will show when the domain was registered and who it may belong to. In a lot of cases, scams claim to exit “for years” yet only registered their domain a few weeks ago. Clearly a red flag.
Third, there is no way to make a lot of money quickly with cryptocurrency cloud mining. Whether it is Bitcoin or any of the altcoins, there is no way to provide guaranteed daily or monthly returns. A lot of cloud mining services claim users will earn 1-3% of their investment per day. This is unrealistic, and primarily a sign of a Ponzi Scheme.
Last but not least, there are always limitations as to how much hashpower one can buy or sell from cloud mining providers. Any company offering “unlimited” plans is lying. Hardware limitations are always in place, whether one wants to acknowledge them or not. Any claims of “unlimited” is often a warning sign.
What About Referral Programs?
This is always a dicey aspect of any business model. Providers claiming how affiliates will earn value based on their referral’s earnings are often best avoided. However, those who provide a certain percentage of your referral’s hashpower as a bonus to you, are often telling the truth.
After all, it is much easier to allocate unused mining power compared to spending actual money. There is always some controversy when it comes to affiliates. As long as the bonuses offered to affiliates remain somewhat reasonable, there shouldn’t be too much to worry about. Be cautious about which cloud mining services one promotes, though, as you may end up costing other people a lot of money.