Bitcoin Cloud Mining

bitcoin cloud mining Want to find the best Bitcoin cloud mining contracts? This post has you covered. Just know ahead of time - the truth about cloud mining in 2020 isn’t pretty.

Most Bitcoin Cloud Mining Companies are Scams

Like the heading says, most cloud mining contracts are scams. Why?

Because it’s easy for companies to take peoples’ money, and then not pay out. A company can claim to be a cloud mining company without any proof of actually owning any hardware.

So remember: 99.9% of cloud mining companies are scams.


Quick Tip

Mining is not the fastest way to buy bitcoins.

Buying bitcoin with a debit card is the fastest way.

Which Companies Are Not Scams?

We can’t recommend any cloud mining companies at this time.

Note: If you do find a legitimate one, you’ll need a wallet to receive payouts to. A secure hardware wallet like the Ledger Nano X is a good option.

nano x pairing with ledger live on mobile device
Ledger Nano X

Is Cloud Mining Profitable?

It depends what your goals are with cloud mining. If your goal is to obtain bitcoins, then there is really no reason to cloud mine or even mine at all.

You will get more bitcoins for your buck if you just buy bitcoins!

coinbase home page
Coinbase is an easy place to buy Bitcoin instead of mining it


QUICK TIP

If you find a legitimate cloud mining operation and you are making profit, you will very likely need to pay taxes on that profit. The best way to determine the taxes you owe is to use a crypto tax software.

Bitcoin Cloud Mining Scams History

The reason there are so many cloud mining scams is because it is very easy for anyone in the world to setup a website.

Once the website is setup it can claim that the company has a large mining facility.

The company can act legit by sending initial payments to its customers. But after that it can just keep the already received payments for hash power and then make no further payments.

Two of the most famous cloud mining companies have already been exposed as scams: HashOcean and Bitcoin Cloud Services.

hashocean scam headline
Hash Ocean exposed as a scam


Quick Tip

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Red Flags to Look Out for In Cloud Mining Operations

If you beleive you have found a legitimate clound mining company, you can really make sure by putting it to the test.

If any of these red flags are present, we recommend proceeding with caution.

NOTE: the following are taken largely from Puppet’s Cloud Mining 101 reddit post, which is a great supplement to this post.

Is there a way to direct hashing power to your chosen pool?

If you have purchased options for the right to some amount of hashing power, there is no reason why you shouldn’t be able to direct that hashing power to any pool that you want.

If this is not an option, it is very likely that the hashing power does not exist at all.

hashflare features page
Hash Flare does allow you to redirect hashing power, but this alone does not make them trustworthy

Has an ASIC manufacturer endorsed the cloud miner?

There are only a handful of ASIC manufacturers who could service a large scale mining operation with hardware. Any cloud mining operation would not only allow an ASIC manufacturer to disclose a large ASIC purchase, but they’d also want them to do so to prove they are serious. So far, no cloud mining operation we are aware of has has an ASIC manufacturer acknowledge they are selling hardware to a cloud mining company.

bitmain and bitdder partnership page
Bitmain has publicly endorsed BitDeer, which does indicate that Bitmain has supplied BitDeer with ASICs.

Does the cloud miner have an affiliate program?

Cloud mining operations that offer affiliate bonuses are very suspect, especially when they are offering numbers as high as 10%. Bitcoin mining is very competitive and has incredibly thin margins. There would be no way to mine profitably if they were paying not only you, but also the person who referred you.

cloud mining affiliate page
An image of a sketchy affiliate program paying way too high of referral fees

Can you find out who the owners are?

If there is no way to the know idenntity of the cloud mining operation, there is no way to hold them accountable if they run with the money. It also makes it harder to catch the person who stole your money.

hashflare about page
Hashflare lists no actual names on its 'about us' page.

If, for instance, Jack Dorsey or Elon Musk was an investor/founder of a cloud mining operation (and they were public about it in a verifiable way), it would speak volumes about the legitimacy of the operation because they are so wealthy and so public that they would have too much to lose by scamming a few thousand people out of a few Bitcoins.

WARNING: Just because a cloud mining website boasts a famous person as an investor or advisor does not mean that person is actually investing or advising.

Anyone can throw up a picture of Elon Musk on their site. The real proof is if Elon Musk himself says in a news clip that he is a founder.

Can you sell your shares?

Investments should never be a one-way transaction. If you can easily give the cloud miner money, but there is no obvious way to sell your position and get it back, then that is a good indication you will never get your money back.

hasflare shuts down headline
Hashflare closed all their contracts without notice.

Does the cloud miner guarantee profits?

Any investment that guarantees profits is a scam. If the cloud miner has so far made good on delivering its guarantees, it is because they are using funds from new investors to pay off old ones and appear solvent. Ponzi schemes work this way. Eventually, they are going to run with the money, but you never know when it will happen.

The other point to consider is: if a miner could guarantee profits, why would they sell that right to you? Why wouldn’t they take teh guaranteed profits for themselves?

hash ocean home page guarantees returns
Hash Ocean's home page, guaranteeing profits

Is there an unlimited amount of hashrate for sale?

If the amount of shares for sale in the cloud mining operation appear infinite, then they are definitely running a scam. No miner has an unlimited amount of hashing power. If they did, they could just 51% attack the network of their choosing.

What Payment Methods do Cloud Mining Companies Accept?

Most cloud mining companies accept Bitcoin, PayPal, and credit cards. If a cloud mining company accepts bitcoins then there is a good chance it is a scam.

This is because Bitcoin payments cannot be reversed. Once the scam company receives your bitcoin payment you have no way to get your coins back.

Are there Free Cloud Mining Trials?

No company would give away free cloud mining; this is basically giving away free money.

Any company offering free trials, especially if they require payment information, is most likely a scam.


Quick Tip

Mining or buying bitcoins? You can't do either without a Bitcoin wallet.

Our guide on the best bitcoin wallets will help you pick one. Read it here!

How does Bitcoin Cloud Mining Work?

Cloud mining means a host company owns Bitcoin mining hardware and runs it at a professional mining facility.

You pay the company and rent out some of the hardware. Based on the amount of hash power you rent, you will earn a share of payments from the cloud mining company for any revenue generated by the hash power you purchased.

At least…that’s how it works in theory.

In most cases, though, there is no mining facility or hardware. There is just a guy taking your money and paying part of it to someone who signed up before you did. Eventually he runs away with the money, and you are left with nothing.

Cloud Mining Viruses

There have been viruses that land on computers and then use the computers’ power to mine bitcoins.

This is particularly common with Monero since it is ASIC resistant and can be mined with GPUs.

Run a malware detector on your computer if you think you may have come under attack.

Is Mining Software the Same as Cloud Mining?

No.

Mining software is something you download on your computer. It is required when you OWN mining hardware. Software connects your hardware to the internet so that it can make hashes and communicate with the network.

hashr8 logo
Hashr8 is one of the biggest mining software companies on the market.

Just buy Bitcoins!

If you just want bitcoins, don’t bother with cloud mining. Just find an exchange in your country and buy some bitcoins.