Mining Fraud

The notion of getting value out of something for a next-to-nothing investment has always intrigued people. So, running a program on your computer that would generate free money would absolutely fit that bill! With the popularity of Bitcoin and cryptocurrency increasing, mining has become a very competitive industry. The amount of processing power hashing away to mine these digital assets is truly amazing. However, over the years, especially when home mining turned into an industry, the cryptocurrency mining space became rife with fraudsters who claim to manufacture the most efficient mining rigs when they have none and be massive mining facilities when they don’t even own a single miner.

An increasing number of frauds are based on mining companies and the manufacture of mining rigs.

Commission Scam
Mining Companies make the percentages and charges they assess to you for mining with them. So, make certain that you carefully read all of the Terms and Conditions before agreeing to mine for someone else. A mining pool can use your mining power, give you small amounts of coin, hoping it remains unnoticed, or give you a myriad of reasons why you haven’t earned any coin.

Hashocean’s Exit Scam
A venture that started in 2014 was a cloud-mining operation called Hashocean. Hashocean claimed to have six super-large mining farms in locations across the world. It became a very large business operation, for about a year, as far as contract sales were concerned. In July of 2016, the company suddenly stopped paying out miners and silently went offline. It appeared as if Hashocean was an ‘exit scam.’ Moreover, even though Hashocean was in operation for roughly two years, Bitcoincloudmining.org posited that Hashocean “had a horrible reputation for paying out, even when the site was alive and well.” Core members of the Hashocean team claimed they were “hacked” promised to allow withdrawals, but nothing ever materialized.

Exchange Fraud
A scam to convert the regular currency to cryptocurrencies and vice versa. You take people’s money and cryptocurrency, and when you have enough, you disappear.

Software Miners
Mining is very processor-intensive and costs a lot of money to operate the machine and keep it cool. When you access their website, some companies will use your visit to use your processor to mine some hashes briefly. This was discovered in late 2017 when code to mine coins was located on CBS’s Showtime and Showtime Anytime websites. Investigation revealed potential fraudulent activity, as more than 14,000 other sites contained the processor cycle robbing code, rather than CBS trying to capitalize from the code.

Stealing Power
Even though criminals may have ceased to steal power to provide lighting and heating for growing marijuana, they have begun to utilize the same process for mining cryptocurrency. Stealing power could effectively remove a significant proportion of the cost of mining.

Misleading Promises
Many websites promise free bitcoin for either spending time on a website or visiting advertisements. Some promise an incredible 200 satoshis per 5 minutes. Sounds great until you realize that 200 satoshis represent just over 1 cent. Not illegal—just very misleading!

Fabricated Mining Rigs
Another scam is people promoting new mining machines that supposedly outperform all others on the market. However, the machine doesn’t really exist but is a photoshopped version of authentic machines currently produced from legitimate manufacturers. Just like some legitimate mining machine manufacturers, scam machine sellers seek pre-orders for their initial offerings of these cutting-edge, super-efficient mining machines.