Cloud mining - Ponzi scheme?

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How profitable cloud mining is is a complex question, and it causes no less controversy in the community thanthe idea of ​​resizing the block.

For those who are not in the know, let's explain: cloud mining of bitcoins is carried out on remote servers in a common pool owned by the company that provides these services. It sounds very attractive, but, as with any successful concept, it has not been without a fly in the ointment.

History is as old as the world: Newly born companies make payments to early investors at the expense of new entrants and soon disappear with all user funds, leaving a black imprint on the entire industry. Investing in self-mining is risky in itself, imagine how aggravated the situation is when you have to entrust your personal funds to a third party.

Another important aspect is the high volatility of bitcoin, which makes any attempt to predict mining profitability almost useless.

Mine: on your own or in the cloud?

CoinTelegraph tried to understand the issue,talking to people who know firsthand about working in the industry: Cryptsy CTO Marshal Long and Alex Gromov of Hashflare. Here's how Long points out the advantages of cloud mining over conventional mining:

“The reality is this: many big miners, including Mintsy and FinalHash, work hard to get cheap electricity. Electricity tariffs for us can be very low, down to $ 0.02 / kWh, with an average US price of $ 0.08 / kWh. The fact is that our firms can use capital in order to convince energy companies of the advisability of providing such discounts, this can significantly increase customer profits. "

Gromov notes another important plus - the price:

“In the case of purchasing equipment, the usersignificantly limited in choice. Suppose the cheapest miner at the moment is 1 TH / s. Despite the fact that the price of equipment has decreased in recent years, this option is not suitable for everyone, especially people who are just starting their acquaintance with bitcoin. "

"In this case, it will be much easier to use cloud mining services, where the cost of a basic package for 10 GH / s is less than $ 5."

Cloud mining today

There is no doubt that the industry is going through hard days.

“After bad experiences in the past, manyusers have lost faith in the reality of fair mining in the cloud, and therefore all new projects in the field are met with a great deal of skepticism,” &#8212; says Gromov.

“But this could be a good opportunity forentrepreneurs looking to plug holes in the outdated cloud mining business model. Companies must not lag behind the consumer base, they must become more open and transparent,” &#8212; Long adds.

To protect clients who are afraid to investtoo large amounts of money into cloud mining, Mintsy allows users to buy and sell mining contracts through a web-based trading platform. According to Long, everyone benefits from expanding the capabilities of the customer base and applying new technologies:

"An entrepreneurial cloud mining provider not only deserves customer loyalty, but also gains the momentum needed to operate efficiently."

Ponzi circuits?

Hashflare.io claims that it is not difficult to distinguish scammers from honest providers.

“If we draw an analogy between the latterby companies that have deceived their users, it is easy to notice common signs: a short period of presence in the market and statements about an unprecedentedly high profitability (200-400% per year) ”.

“This is just an advertisement and has little to do withreal mining. Therefore, problems can be easily avoided by investing in companies that themselves are manufacturers of the equipment on which mining is carried out, for example, HashCoins for HashFlare, AntMiner for Hashnest, or KnC for KNC Cloud. ”

Mintsy management sees this problem differently,offering the concept of “proof-of-hashrate”, whereby users using the blockchain “can make sure that we really own the declared hash rate, use all the power reserves and do not sell hashes a second time”.

Checking cloud mining providers forlegality, as well as their regulation, is a big problem, and investments in this area are still risky. Although times are not easy for honest mining companies, it will be interesting to see how healthy competition will become the main driving force for the development of digital currency mining.

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: CoinTelegraph