{"id":1754,"date":"2018-03-03T13:27:25","date_gmt":"2018-03-03T13:27:25","guid":{"rendered":"https:\/\/atozcrypto.org\/?p=1754"},"modified":"2018-03-03T13:28:19","modified_gmt":"2018-03-03T13:28:19","slug":"is-cloud-mining-really-a-ponzi-scheme","status":"publish","type":"post","link":"https:\/\/atozcrypto.org\/is-cloud-mining-really-a-ponzi-scheme\/","title":{"rendered":"Is Cloud Mining Really a Ponzi Scheme?"},"content":{"rendered":"

Whether\u00a0Bitcoin<\/a>\u00a0mining is profitable is not a simple question to answer. With community discord that\u2019s almost as hot-blooded as the\u00a0block size debate, one will notice that even after delving into digital currency technicalities for months, there is just no general consensus on the profitability of cloud mining.<\/p>\n

For those who are unaware,\u00a0Cloud Mining<\/a>\u00a0is the process of\u00a0Bitcoin<\/a>\u00a0mining utilizing remote servers with a shared pool of processing power owned by a Cloud Mining company. It sounds extremely convenient, but cloud mining can become a bit of a messy deal given the concept\u2019s rough start.<\/p>\n

We\u2019ve heard it all before:\u00a0companies disappear with user funds, paying out early investors once new ones join, and making a run for it weeks later, which leads the average investor from avoiding the common year-long contracts.<\/p>\n

Or the argument that\u00a0Bitcoin is too volatile<\/a>\u00a0to start with, making the profits highly unpredictable. The investment required for personal bitcoin mining is risky on its own, so imagine that risk compounded when trusting a third party with your money.<\/p>\n

Lone-Wolf Bitcoin Mining vs. Cloud Mining<\/h3>\n

To settle this dispute, CoinTelegraph spoke to parties on both sides of the bell-curve: Marshall Long, CTO of\u00a0Cryptsy<\/a>, and Alex Gromov of\u00a0Hashflare<\/a>. When asked about the benefits of cloud mining over normal mining, Long explained:
\n\u201cThe reality is this. Many large scale miners, including\u00a0Mintsy<\/a>\u00a0and\u00a0FinalHash<\/a>\u00a0work very hard to get cheap electric rates. In fact these electricity rates can be worked down very low sometimes under US$0.02\/kWh. Now the average rate for a \u201cdecent\u201d price in the USA is around US$0.08\/kWh. But because big miners can leverage their capital in a way that can convince Power Companies to give them great rates, this allows them to pass on savings AND profit to customers.\u201d<\/b>
\nWhile Gromov raises another undisputable advantage: the price.<\/p>\n

\u201cIn case of a purchase the user is very limited in choice by the technical offer from the seller. As an example, let us suppose the cheapest machine that vendor offers \u2014 is a 1 TH\/s miner. Even though at this moment the equipment has become much cheaper than a few years ago, you may see this option is not for everyone, especially if you are just getting started with Bitcoin.<\/p>\n

\u201cIn this case, it\u2019s a lot easier to take advantage of cloud mining services, where you can find out what bitcoin mining is at a basic package of literally 10 GH\/s equal to less than 5 dollars.\u201d<\/b><\/p>\n

The Current State of Cloud Mining<\/h3>\n

There\u2019s no way around it: Cloud mining is going through rough days.<\/p>\n

\u201cMany users, after having a bad experience, have lost faith in the possibility of fair mining in the cloud, and thus all new projects are now greeted with a great deal of skepticism,\u201d adds Gromov.<\/p>\n

This, however, could be good for entrepreneurs eager to plug the leaks in the outdated cloud mining model. To keep up with a consumer base that is more aware by the second, serious companies will need to become \u201cfar more transparent and the companies that don\u2019t will fall to the way side,\u201d says Long.<\/p>\n

Mintsy, in an effort to protect users who are afraid of investing too much in cloud mining, have enabled them to\u00a0sell user-to-user contracts on the website\u2019s marketplace<\/a>. Marshall argues that the point behind this resides in the fact that \u201cwhen cloud mining companies empower their customer base utilizing new technologies everybody wins. An agile cloud mining company both has customer loyalty and the dynamics required to operate effectively in bitcoin.\u201d<\/p>\n

Spotting the Ponzi Schemes<\/h3>\n

Hashflare.io has a simple answer to finding out whether or not the cloud company you\u2019re interested in contracting with is a scam:<\/p>\n

\u201cIf you draw an analogy between recent projects that have deceived their clients and closed down, you will notice that they all share several traits: short lifespan and the promise of a very high ROI, such as 200-400% per year.\u201d<\/b><\/p>\n

This hype, which has little to do with actual mining, can be avoided if users invest instead in cloud mining companies that are also \u201ca manufacturer of related equipment, such as: HashCoins for HashFlare, AntMiner for Hashnest, and KnC for KNC Cloud.\u201d<\/p>\n

Mintsy sees this a little bit differently, by employing proof-of-hashrate where customers can view \u201cthe blockchain and see proof that we have the hashrate we say we have and that we are running on full reserves and not double selling hashrate.\u201d<\/p>\n

The overall legality and regulation of Bitcoin cloud mining is still not clear, making it even more of a risky investment, but the technology behind most of the big companies listed above is interesting to say the least. While this is a very challenging time for legitimate cloud mining companies, it is very interesting to see healthy competition acting as a driving force behind the development of digital currency mining. to find out more: www.hashflare.io<\/p>\n

Previously posted on cointelegraphe.com<\/p>\n","protected":false},"excerpt":{"rendered":"

Whether\u00a0Bitcoin\u00a0mining is profitable is not a simple question to answer. With community discord that\u2019s almost as hot-blooded as the\u00a0block size debate, one will notice that even after delving into digital currency technicalities for months, there is just no general consensus on the profitability of cloud mining. For those who are unaware,\u00a0Cloud Mining\u00a0is the process of\u00a0Bitcoin\u00a0mining …<\/p>\n","protected":false},"author":1,"featured_media":1757,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"pgc_meta":"","_bbp_topic_count":0,"_bbp_reply_count":0,"_bbp_total_topic_count":0,"_bbp_total_reply_count":0,"_bbp_voice_count":0,"_bbp_anonymous_reply_count":0,"_bbp_topic_count_hidden":0,"_bbp_reply_count_hidden":0,"_bbp_forum_subforum_count":0,"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0},"categories":[18],"tags":[],"aioseo_notices":[],"yoast_head":"\nIs Cloud Mining Really a Ponzi Scheme? - AtoZcrypto<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/atozcrypto.org\/is-cloud-mining-really-a-ponzi-scheme\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Is Cloud Mining Really a Ponzi Scheme? - AtoZcrypto\" \/>\n<meta property=\"og:description\" content=\"Whether\u00a0Bitcoin\u00a0mining is profitable is not a simple question to answer. 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