The False Lure of Cloud Mining
Mining Bitcoin years ago was still an avenue that had a fairly good draw card. The entire network had it's origins on one laptop. Mining was pretty easy and most importantly profitable. A few years into Bitcoin's existence, we saw the rise of companies like Genesis Mining and the like. Don't get me wrong, I believe Genesis Mining is a very reputable and legitimate company. However, the scammers saw a gap in the market they could exploit and attract newbies, who had no idea of what they were getting involved in. Fairly similar to the ICO craze of 2017. Legitimate projects started doing ICO's and once again the scammers saw an opportunity to exploit. People get drawn into making an investment they believe is going to far exceed their wildest expectations. The idea that someone is running an operation somewhere, that they are now utilizing to make a profit feeds the ego but defeats logic. Do some research regarding individuals who have purchased mining contracts with Genesis. For much of the time these purchased contracts produce a loss. That is the reality of mining that a greedy newbie does not understand or care to understand. These individuals are the perfect prey for scammers promoting projects that do not exist. Not only do they not exist but mathematically they cannot exist.
The Answer is In Plain sight
When it comes to mining, China has the cheapest production cost. Last time I checked it was in the region of around $3000 to produce 1 Bitcoin. Take a look at how the hashrate has dropped in the last two weeks. Miners have had to turn their miners off because they are no longer profitable, thus causing a dramatic drop in hashrate. So big and small mining operations alike were running at a major loss, enough to cause them to close up shop. This poses a very good question!
How Do Cloud Mining Operations Pay Out Such Amazing Profits?
The simple answer is they don't. Many of these sites offer 3% daily on your investment. Firstly, due to difficulty and price fluctuations you cannot set a fixed dollar amount to any contract. Another tell tale sign is the "free miner" on registration carrot these scammers love to put out there. Users are unable to withdraw these earnings until they purchase a contract. Yes, some members do receive payments for a short time but this is how these scams operate. They create momentum, paying out a little here and there to the early users. Then without any notice, the site disappears and the once vibrant Telegram group is full of users cursing and crying. Please do your own due diligence before parting with your hard earned money. Stick with the trusted leaders in the space and make sure you always do your homework before jumping on board!