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How Not to Fall Victim to an Online Mining Scam?

July 18, 2023
min. read

Mining calculator

To engage in mining on your own, you need to devote all your energy and time to it. You will have to work hard to improve your own mining infrastructure, even if it’s just a couple of miners, because with the exception of infrequent periods of market optimism, the profitability issue will always be on top of the agenda.

Using mining calculators, e.g.,, you can roughly estimate the profitability of certain miner models in the current conditions with regard to your electricity costs. 2023. If your estimated return is about 20%, this is a very good result.

Online mining services

At the same time, there are many services on the Internet that offer online mining without the need to purchase equipment. With this approach, you won’t need to solve the numerous tasks related to the search, placement and maintenance of miners, and avoid the risks associated with fluctuations of electricity prices, recalculation of profitability, etc.

This service will offer you to use its miners, since it has a lot of them, which means that their maintenance costs are lower. The service earns the difference between mining “wholesale” and a retail offer, and you earn mining rewards minus service commissions. Ideally, it is a convenient scheme when each side wins, but in practice it’s fertile ground for fraud and scam.

Regardless of the name of the service that offers online mining (e.g., cloud mining), in order not to fall victim to a scam, you need to know the following:

  1. Profitability offered by the service cannot exceed current profitability from real mining.
  2. A specific miner model always produces the same amount of BTC, and its profitability depends on the cost of the electricity it consumes.
  3. Everyone uses the same miner models, so there is no magic solution where they’d earn (mine) more for someone than for others.
  4. Maximum profitability is always limited by the mining power of the miner itself.
  5. If you are offered a yield of 50-100-300%, use any mining calculator to compare it with the real possible mining yield.

In essence, paragraphs 2-5 simply paraphrase paragraph 1, but they allow you to see the essence from all sides: if you know that even the best money printing machine in the world prints $10 per hour, don’t expect to earn $20/hour or more using the same machine with someone’s help through some online service.

How does the perfect online mining service earn?

Find an ideal or at least an honest online mining service according to our instructions in the article How to Determine that a Mining Project Is Not a Scam?

Now let's look at how these services earn, allowing its customers to earn as well.

Let's say the mining farm of a cloud mining service consists of 1000 Bitmain Antminer S19 XP miners with 140 TH/s each. As a rule, large farms don’t emerge from scratch and have access to relatively inexpensive electricity, e.g., $0.05/kW. In that case, each miner will earn about $6.60/day (as of June 1, 2023):

An ordinary user engaged in mining on several devices won’t get a yield this high, since he most likely gets electricity at a price above $0.1/kW, earning, as you can see from the first table, a little more than $2/day (despite the fact that he has already spent a lot of money on buying those miners).

The service may well offer retail customers contracts with an estimated income of $3/day and even higher, since it has the required profitability margin. Nevertheless, the service has to take into account the risks of declining profitability, e.g., due to an increase in mining difficulty or a drop in the Bitcoin exchange rate, so the final offer will look quite balanced - for instance, a year-long contract worth $800 (with a potential earnings of $1000, i.e., 25% per annum).

In a favorable case (e.g., growth of the Bitcoin exchange rate), both the service and its customers will earn more, in a negative scenario - less, but most likely they will remain in the black.

How do scammers earn money under the guise of cloud mining?

If we now turn towards fraudulent services, everything will look different, e.g., a $1000-contract with a promise of 100% per annum (at best). There are also different variations of contract terms (2 days, a week, a month), profitability (700%, etc.) and various more exotic cryptocurrencies, whose rate fluctuations can kill all hope in a day.

On services of this kind, you won’t find any information about the mining pool used, total project hashrate and mining reward transactions. All these pitfalls are discussed in detail in the above mentioned article How to Determine that a Mining Project Is Not a Scam?

Never use services that don’t disclose information about their hashrate, mining pool and mining reward transactions!

How do tokenized hashrate projects earn?

An alternative to cloud mining is mining using a tokenized hashrate. It does not offer any contractual obligations: the carrier of value in such a service is hashrate tokens, which you can buy and sell at any time. 

For instance, in Minto, 100 BTCMT tokens (Bitcoin Mining Token) are equal to a hashrate of 1 TH/s, so by buying 10,000 BTCMT, you actually get to use a miner with a hashrate of 100 TH/s and start earning daily mining rewards in Bitcoins in proportion to your share of the total number of tokens in the project, and even multiplied by the so-called Multiplier.

Minto publishes mining statistics daily:

As of June 1, 2023, profitability for BTCMT token holders is about 16.5%. Regardless of the number of tokens sold, Minto mining rewards are paid FROM the ENTIRE HASHRATE of the project (73 PH/s), i.e., today it is 2.7 times more (see Multiplier) than it would be with a fully redeemed issue.

In addition, Minto is completely transparent and publishes all data about its hashrate, transactions, etc. The main thing that distinguishes the purchase of a tokenized hashrate from a cloud mining contract is its liquidity, transparency of mining rewards and the ability to purchase (and to sell) any amount of hashrate for any period.

Minto directs all funds from token sale to the purchase of miners and periodically increases project hashrate, thereby increasing the Multiplier and the size of daily mining rewards to its users. On June 1, 2023, Minto’s hashrate was increased from 70 to 73 PH/s, and energy efficiency was improved from 56 to 55.3/TH. The project is constantly developing and allows everyone who is not indifferent to Bitcoin, but is not ready to invest in mining hardware and engage in Bitcoin mining on their own, to earn by real mining.

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