As Bitcoin’s value rises, people are considering Bitcoin mining, as opposed to buying the virtual currency, however, there are numerous mining scams. It is challenging to find a legitimate operation that isn’t a Ponzi scam. While you can mine Bitcoins yourself, it usually is not feasible. You will need loud Bitcoin-specific ASIC machines and access to very expensive electricity. Today, most Bitcoin investors buy shares in mining organizations and let someone else worry about purchasing and running the equipment.
Bogus Bitcoin mining operators will lure individuals in with the promise of sophisticated cloud-based mining machinery. The bogus company sells shares in their operation, promising miners that they will share the Bitcoins that they mine with their expensive equipment, which does not exist. As people join, the company takes the profits and pays the first miners, establishing themselves as a legitimate company in online reviews. However, only the first few people are paid, the rest are out of luck because the firm vanishes with the rest of the money. It is classic Bitcoin fraud.
Spotting Ponzi Mining Schemes
While the SEC is prosecuting operators of fraudulent mining investment schemes involving the popular cryptocurrency; you need to know how to spot Bitcoin scams yourself, before buying shares in a mining company. Avoid companies that cannot verify equipment purchases and do not give the location of their farms. Legitimate companies have a public mining address as well.
Research Mining Company Executives
Beware of companies that tell you nothing about their CEO and founders. You can search for their names on Google; you should find active social media accounts, interviews and positive press from legitimate, unbiased sources.
Beware Of Fake Reviews
People who run Bitcoin scams selling shares in their mining company need investors quickly because they need to get in and get out, before they are caught. To accomplish this, the firm offers bloggers high commissions to find new members to buy shares. If a website rating Bitcoin mining organizations highly recommends a brand new company that is not transparent about their address and their equipment, don’t believe the reviewer.
With cryptocurrency markets markets growing rapidly, Bitcoin scams are everywhere; beware of fake Bitcoin exchanges that keep your Bitcoins, phishing scams, bogus investment firms and wallets that secretly remove your Bitcoins. As long as you are cautious, the virtual currency has numerous benefits. It is becoming widely accepted by merchants because of its very low fees and no sales tax. Users enjoy anonymity and freedom from governments or banks freezing their account as well.