Cloud mining: where to start and how to avoid becoming a victim of scammers

Cloud mining of cryptocurrencies
As the cryptocurrency market develops, probably every person interested in this topic has thought about purchasing mining equipment. After all, you can start with just one video card, however, the profit from this mining method will be minimal.

A pretty good alternative to conventional mining in 2022 is the so-called cloud mining, in which you do not need to purchase any equipment. Instead, the user is offered to enter into a contract to rent a certain amount of capacity for the production of a particular cryptocurrency.

However, there are both pros and cons to cloud mining, which we will discuss in this article.

• What is cloud mining
• How to start cloud mining
• Pros and cons of cloud mining
• How to choose cloud mining
• Best cloud mining Cloud mining: HashFlare
• IQMining SHA-256
• SHA-256 PRO
• Ethereum
• Equihash

What is cloud mining

What is cloud mining
Cloud mining

- this type of cryptocurrency mining frees the miner from the costs of equipment and electricity, as well as from other, less expensive, but more labor-intensive difficulties, such as setting up equipment.

Companies that rent out their equipment usually have large data centers that use ASIC miners and mining card farms. They offer mining for Bitcoin and almost all altcoins. It all depends on the service you use.

How does this benefit the companies themselves, you ask? The answer is simple - they purchase equipment directly from giants such as Bitmain, and often with deep discounts. In addition, each company sets its own commission, which can be daily or monthly. Again, it all depends on the service. Thus, the cost of mining and the cost of maintaining mining equipment are reduced significantly, which allows both the renter and the lessor to earn money.

And since every year it becomes more and more difficult for an ordinary user to start mining cryptocurrency on a home computer using a GPU, cloud mining services are gaining more and more popularity.

Because of this, renting equipment from trusted companies is not so easy - new capacity positions are sold out almost immediately after they are added to the site.

ALL ABOUT MINING

Get a 3% discount! Use bonus code: HF17TOPBTC3 Mining is the process of mining cryptocurrency, which involves the use of special equipment and software to compose blocks in the blockchain. For processing ongoing transactions, system users receive a reward in the form of Bitcoin coins or another altcoin. There are various ways to earn cryptocurrency.

Today, to work in the system, you can buy a special ASIC device, use computers with several powerful video cards, or invest in remote mining. It is about cloud mining that we will talk in more detail today and try to find out whether it is a scam or not?

Payback of cryptocurrency mining

Several years ago, owners of ordinary personal computers had the opportunity to earn the coveted coins. Today, PC power is no longer enough to somehow compete with large farms, which sometimes cost millions of dollars. However, you can still buy equipment specifically designed for earning Bitcoin and try your own luck.

There are several serious disadvantages to classical physical mining:

1. Constantly increasing complexity of solving mathematical problems to compose blocks and receive rewards.
2. Instability of the exchange rate of many cryptocurrencies.

It is because of these shortcomings that cloud work services have recently become increasingly popular. They involve purchasing or renting hardware capacity from companies involved in physical coin mining. Simply put, you can invest money in a company that produces coins on a regular basis in order to profit from the operation of the equipment used.

Many users are wary of such earnings. Many such services are ordinary financial pyramids, the main task of which is to collect funds from gullible people through promises of huge profits. But in reality, the money invested simply goes into the pockets of scammers and does not bring any return.

However, it cannot be said that all cloud mining is a scam. There are large, proven companies on the market that really give people the opportunity to make money from mining cryptocurrencies without purchasing hardware, but through a simple investment of funds.

When collaborating with honest companies, such earnings have several important advantages:

1. You don't have to buy expensive equipment.
2. You don’t have to waste time collecting and setting up your own farm.
3. You don't have to waste time servicing devices.
4. There are no disadvantages typical for installing a farm in your own apartment - noise, high temperature and a large amount of energy consumed.
5. There is no need to worry about the possibility of equipment failure.

Besides everything else, making money in the cloud is very easy. The user is only required to make a money transfer, after which he will not participate in any way in the mining process, but will receive his share of the profit.

But there is not a single way of earning money that does not have disadvantages. If we compare working in the cloud with a physical process, the disadvantages of the first include :

1. Using someone else's equipment that cannot be used at your own discretion. If you are building a farm based on a PC with powerful video cards, it can also be used for other purposes, for example, for games.
2. You won’t be able to stop mining and sell the equipment if you want to leave mining forever. You purchase power for a certain period and you will not be able to terminate the contract by returning the money.

How to choose a company to cooperate with?

Currently, there are a large number of organizations offering their clients to purchase or rent hardware capacity for cryptocurrency mining. Unfortunately, it is quite difficult to determine at first glance who you can trust and weed out scammers, cooperation with whom can only lead to loss of money.

The choice of service is complicated by the fact that it is very difficult to find information about some organizations on the Internet. In fact, cryptocurrency mining is carried out by people who do not pay taxes, they do not need fame and extra attention from government agencies, because they do not have phones, offices, and even communicating with their employees is sometimes not as easy as it seems.

Of course, having an office is not an accurate indication of an honest person or organization, but in the absence of one, the choice becomes even more difficult. It is not recommended to decide to cooperate with a particular company only on the basis of reviews on the official website. Reviews can be written by employees themselves or by third parties for financial compensation.

It is best to consider the following factors when choosing a cloud mining site:

• Laconic and technically competent description of the field of activity. At the very least, you can have confidence that the company's employees understand what they say they do.
• Reviews on thematic forums. Always check the company name in Google and Yandex search. Search engines will help you find forums and read other users’ discussions about companies and their experience of working with them.

Try to avoid resources whose websites contain little technical information and do not describe how to mine cryptocurrencies. If the main and other pages of the site contain mainly promises, without any specific data, you are most likely on a scam site.

Typically, reliable and decent organizations do not need aggressive advertising campaigns. They have enough clients, so they shouldn’t make huge discounts of 50, 70, 90% of the initial cost of capacity. Trusted sites may have referral programs, but they are of an auxiliary nature and do not clog up the entire Internet.

Good organizations are most often found through friends or through reviews on special websites. They almost never use huge, bright, flashy banners, do not produce dozens of videos about how profitable it is to work with them, and do not promise their clients millions in profits with minimal investment the very next day.

Considering the high risks in any cryptocurrency area, it is not recommended to invest all your savings in any one project. It is best to divide the finances in order to use them for cooperation with several organizations at once - from 2 to 6 pieces. In this case, even if one project turns out to be fraudulent, you will not lose all your money, but will make a profit from others.

Examples of honest and reliable projects

There are not very many companies about which one could say with confidence that they do not pursue the goal of deceiving as many of their clients as possible, and then simply disappearing with the collected money. However, you can find such examples on the Internet.

The first of them is Genesis-mining . The organization has been operating since 2010 and is considered one of the largest in this market segment. Genesis hardware facilities are located in different countries around the world - in Canada, Bosnia and Iceland. The company works with different cryptocurrencies, not only Bitcoin, but also Dash, Monero, Litecoin, Dogecoin.

Another large company is Hashflare , which has been on the market for several years. It has proof of the availability of the equipment necessary for mining, works using Scrypt and SHA-256 technologies, consistently makes payments to its clients, which is why it is very popular.

How to start cloud mining

Equipment for cloud mining
To start mining cryptocurrencies through cloud mining services, you will need to follow a few simple steps:

1. Decide on a service provider
   . You should not rush to make a deposit on the first site that offers favorable conditions - first you need to study as many similar services as possible, compare the offered conditions, try to find out the reliability of the options under consideration by evaluating them according to a number of criteria (reputation, reviews, etc.).
2. Register on the website of the selected service
   , paying attention to the terms of service with which you agree.
3. Select a tariff
   (plan) on the basis of which a contract for renting computing power from the service will be concluded. In this case, you need to focus on the supported cryptocurrency algorithm, the hash rate, the cost and duration of the contract, payment terms (advance for the entire term or monthly payments), the presence and size of fees for equipment maintenance, minimum limits on profit withdrawal, etc. If different tariffs are offered for the same cryptocurrency, it is worth evaluating each of them based on the cost/profit ratio in order to choose the most profitable one.
4. Fulfill the terms of payment for the selected contract
   and start using the purchased service. As a rule, the cloud mining process starts without user intervention, since the service provider is responsible for setting up the equipment. If the tariff is not fixed, settings will be available in the user account to change the amount of computing power used, which will allow you to regulate the amount of costs.

How not to stumble upon scammers

There are more and more scammers selling non-existent mining equipment. After all, this is an easy way to get rich, and get rich by a huge amount. People are willing to pay hundreds of thousands of rubles for mining farms. Sometimes we are even talking about millions. Therefore, if you also decide to mine cryptocurrency, then you should choose your equipment supplier very carefully.

The most common way to sell mining rigs is with delivery and full prepayment. I think you understand why scammers act this way. You can get money, block the buyer everywhere and disappear. But the problem is that honest sellers offer the same conditions. Therefore, in this case, it is very difficult to distinguish who is a fraudster and who is not. Demanding that the order be sent by cash on delivery is also useless. The equipment is very expensive and requires careful handling. No one will take the risk of sending such an expensive order without prepayment by mail, where they do not handle parcels very carefully, pay a large amount for storage if the client is in no hurry to pick it up, and incur huge losses if he decides to refuse it altogether .

Therefore, the most reliable way to avoid being deceived is to buy a farm in person. In this case, the scammer simply will not have the opportunity to deceive you. Even if the video cards you need for a mining farm are located in another city, it is better to find the time and money to go there than to risk losing several hundred thousand rubles.

Pros and cons of cloud mining

Advantages and disadvantages of cloud mining
Pros:

• There is no need to monitor the equipment and configure it;
• Good passive income on cryptocurrency, allowing you to get about 200% per annum, and with the growth of the exchange rate, even more;
• The power of data center pools is significantly higher than a home mining farm, which means the reward for the mined block is greater;
• Returns can be predicted even in a bear market. If when buying shares on the stock market or tokens on the cryptocurrency market, you can go into the red, then when renting equipment you make a profit in any case - the amount of remuneration is fixed;
• You can mine different coins on one service;
• Some companies offer referral programs, which allows you to earn extra income;
• You can increase the power of “your” equipment in just a few clicks;
• Earning cryptocurrencies starts from the first day, however, first you will have to “work” in order to recoup the investment;
• You can rent cloud mining power for just a few dollars, although there may not be a profit from such small volumes. And you need to understand that income in most cases is proportional to the rented capacity.

Minuses:

• The first and probably the most important disadvantage is the fairly high probability of stumbling upon scammers, especially if you do not study the market. The demand for cloud mining of cryptocurrencies has also given rise to a bunch of scammers selling non-existent capacities in equally non-existent data centers;
• Profit still depends on the cryptocurrency exchange rate. If there is a repeat of the decline, like in 2011, 2013 or 2022, there is a possibility that equipment rental profits will disappear;
• There is a possibility that the site where you rent equipment has been hacked. Online wallets provided by these services tend to have lower security than exchanges or even hot wallets;
• Increasing the difficulty of mining a particular coin that you choose will entail a decrease in income or a forced purchase of additional capacity.

But before you decide on any type of cryptocurrency mining, including cloud mining, we advise you to watch our video with the mining forecast in 2022:

Mining 2021

What to do if you were deceived

If you are faced with fraud and have already transferred money, then do not waste time and start taking action. The sooner you do something, the better your chances of getting your funds back. You need to do the following:

1. Contact law enforcement authorities to report fraud.
2. If you paid for the order with a bank card, then go to your issuing bank and write a statement about the fact of fraudulent activity with a request to suspend the financial transaction. If the money has not yet been withdrawn by criminals, then you have a chance to get it back.

Many scammers selling non-existent mining equipment require payment in cryptocurrency. Unfortunately, if you transferred bitcoins to them, then you are unlikely to be able to return them.

Due to the development and growth of cryptocurrency rates, purchasing mining equipment is a good investment. But remember that where there is big money, there are always many who want to fool others and profit at their expense. Therefore, when buying ready-made farms or video cards for them, carefully choose the seller and, best of all, meet him in person, otherwise there is a very high probability that you will simply lose your money and enrich the scammers.

How to choose cloud mining

How to choose cloud mining
It is important to approach the choice of a cloud mining service provider with all seriousness, since in this area every day there are more and more tempting offers, some of which are deceptions.

To reduce the likelihood of losing your investments during cloud mining, the companies in question should be assessed according to a number of criteria:

• Information openness
  . Availability on the website of data on the location of production facilities, video and photo reports on the work of offices and data centers in social media. networks, disclosing the identities of team members - all this increases the level of trust in the project. If nothing is known about the “inner kitchen” of the service, most likely it simply does not exist;
• Promised level of profitability
  . If you are offered exorbitant profit percentages in the shortest possible time, this should lead to thoughts of deception. You should choose only those cloud mining services that offer plausible profitability;
• Existence time
  . Cloud mining services that have been operating for several years will most likely continue to operate, fulfilling their obligations. But if the site has appeared recently, you should be wary of it;
• Range of cryptocurrencies
  available for mining. The more coins the service in question supports (especially a recently launched one), the higher the likelihood that scammers are behind it, since hosting multi-directional equipment requires huge data centers and considerable initial financial investments;
• Reviews
  . If they are entirely positive, are present in abundance on the Internet, but are written in the same style or in the form of intimate dialogues between different users about how much they have earned with such and such a company, there is a high probability that they were bought by it to imitate a good reputation. You should look for real comments on forums, in groups on social networks, perhaps on review sites, but definitely not under custom articles on thematic web resources;
• Terms of Service
  . It is important to carefully study the contact concluded with the service, paying special attention to the rules for depositing and withdrawing funds, fees for equipment maintenance and the presence of all kinds of details indicated in the “fine print”. For example, are there any conditions for mandatory additional payments to be able to withdraw profits or something like that.

Fraud scheme

Fraudsters work according to a very simple, but nevertheless very effective scheme. They sell ready-made mining rigs and components for them, but do not send anything. Air sales. Very expensive air. To attract victims, special websites are created to sell equipment for mining cryptocurrencies or corresponding advertisements are posted on message boards. For example, on the well-known Avito website just last summer, interest in such equipment increased by 445% and it does not fade. There are more and more people wanting to buy/sell farms and video cards for mining.

As soon as a client is found who wants to purchase equipment, they begin to “process” it. He is selected equipment according to his requirements and financial capabilities, given a detailed consultation and even offered to assemble a turnkey farm, which will only need to be connected to electricity, and it will be possible to collect cryptocurrency. Everything looks professional and very, very believable. To receive the equipment, a person only has to make payment and wait for his order. Well, then everything is standard - the buyer never receives anything, after making payment, he is blacklisted and blocked everywhere, and then disappears.

Considering the cost of mining farms, victims end up with huge amounts of money - 100-800 thousand rubles. Sometimes it happens that the fraudster does not immediately block his buyer, but creates the appearance of a real working store. The client is sent a confirmation of his order, which indicates the name and cost of the purchased equipment, and then they begin to feed him “breakfast”, promising that everything will reach him soon. And then... then the seller still disappears and blocks the buyer. This game is needed to gain time. This way the scammer can deceive several victims before disappearing.

Best cloud mining

The best cloud mining
When studying the cryptocurrency cloud mining market, you should look at at least four indicators:

1. Date of foundation of the company and creation of the service.
2. Total capacity.
3. How many users did the company serve?
4. Photo and video materials directly from data centers. Also a big plus is the publicity of the team of employees.

Over the past few years, three companies have proven themselves to be the most reliable in the cryptocurrency cloud mining market:

1. HashFlare is a company founded in 2015. Equipment used from companies such as Bitmain, Bitfury, Inno3d and others. Over the entire period, the service has been provided to 2.5 million users.
2. IQMining – the company was founded at the end of 2016. The largest data centers are located in China, Russia, Canada, Iceland, Georgia and Algeria. It provides the opportunity to mine cryptocurrency using the most popular algorithms.
3. Genesis Mining is a company founded in 2013, but its first data center appeared in Iceland in 2014. Over the years, more than 2 million clients from more than 100 countries have been served. GM offers mining of 10+ cryptocurrencies using 6 main algorithms.

Of course, there are many more such companies than three, but the rest have not yet managed to establish themselves at the same level, so below we will talk about each of them in more detail.

Cloud Mining: HashFlare

This service provides equipment rental for a year for cloud mining of cryptocurrencies using five algorithms - SHA-256 (Bitcoin), Scrypt (Litecoin), Ethash (Ethereum), Equihash (Zcash), X11 (DASH). And, what’s most interesting, at the moment the equipment is only available for ETH mining. And this indicates the popularity of the service.

Prices for all contracts:

• Bitcoin – $0.60 for 10 GH/s. Service is $0.0035 / 10 GH/s / 24 hours;
• Litecoin – $1.80 per 1 MH/s. Service is $0.005 / 1 MH/s / 24 hours;
• Ethereum – $1.40 per 100 KH/s. There is no service fee;
• Zcash – $1.40 per 1 H/s. There is no service fee;
• DASH – $3.20 per 1 MH/s. There is no service fee.

Cloud mining service HashFlare // Source: hashflare.io
Cloud mining HashFlare offers rental capacity for a year with the possibility of increasing the hashrate at any time. Each new contract is concluded for a new term. Since several large mining pools are available to the user at once, the user has the right to choose it himself, or to distribute his capacity among several.

Also quite interesting is the possibility of reinvestment. That is, the earned cryptocurrency can be immediately spent on renting new capacities. For those who decide to mine this or that coin in the long term, this is especially useful.

HashFlare tariffs
// Source: hashflare.io
Note that the HashFlare service does not charge a commission for withdrawing cryptocurrency. When withdrawing, only the standard Bitcoin network fee is charged. According to user reviews, investments pay off within six months, and then there is net income.

The HashFlare service has virtually no downsides. Some customers complain that they have to request every withdrawal. That is, the process is not automated. Others don’t like the fact that renting capacity is not so easy - most of it is already rented, and you have to wait until it becomes available.

But if you think about it, these are not such disadvantages. Especially when you consider the number of advantages.

IQMining

This service is somewhat different from the same HashFlare. For example, the fact that for each tariff there are three categories - Bronze, Silver and Gold. That is, when choosing one of them, the client sees his approximate income and how much he will pay for the tariff and what the commission will be.

IQMining offers cloud mining using three algorithms – SHA-256, Ethash and Equihash. At the same time, there are four tariffs themselves - SHA-256, SHA-256 PRO, Ethereum and Equihash Out of stock.

SHA-256

The minimum rental power (Bronze package) is 500 GH/s at a price of $13 per year. It is also possible to conclude a contract for two or five years, as well as the so-called “lifetime contract”.

The cost of servicing the minimum package per day for every 10 GH/s is $0.001. Note that when purchasing a Silver contract (from 3000 GH/s) or Gold (from 30,000 GH/s), the cost of every 10 GH/s decreases.

SHA-256 PRO

The minimum power in the Bronze package is 1200 GH/s and costs $30. The commission is also $0.001 per 10 GH/s per day.

If we talk about service and the contracts themselves for SHA-256, that is, when mining Bitcoin, the maximum rental capacity is 500,000 GH/s.

IQMining tariffs
// Source: iqmining.com

Ethereum

The contract is for two years with an option for five years. For rental in the Bronze package, a minimum power of 2 MH/s is available for $20. And the maximum capacity is 1000 MH/s. A special feature of ETH mining through this cloud service is that there is no commission.

Equihash

The minimum hashrate is 0.6 kSol with a contract price of $42 per 1 kSol. The commission is equal to $0.07 per 1 kSol per day.

The main difference between IQMining and other services is that cryptocurrency mining is carried out not for a specific coin, but for many altcoins with subsequent resale and distribution of profits. For example, with the SHA-256 PRO tariff, mining occurs for 100+ tokens at once.

This allowed us to achieve a profitability of 128% per annum. However, this applies specifically to the PRO tariff. For example, in regular SHA-256, the historical profitability is at the level of 73%, which the company honestly writes about on its website. True, mining Ethereum or Equihash is also profitable and gives a good income of more than 100% per annum.

For users from Russia, the IQMining service will be really convenient, since in addition to the usual purchase of capacity (like other services) for cryptocurrency or through a bank card, you can make a purchase through Sberbank Online, Alfa Bank or PromSvyazBank.

Genesis Mining

Genesis Mining
Genesis Mining provides hardware for cloud mining of Bitcoin, Ethereum, DASH, Litecoin, Monero and Zcash. Unfortunately, at the time of writing, equipment rental is only available for DASH mining.

For each cryptocurrency, cloud mining Genesis offers 4 tariff plans that differ in power - gold, platinum, diamond and an individual package, in which the client chooses how much power he wants to rent.

Let us note that when it comes to commissions, Genesis Mining is probably the least profitable of the three companies we have presented. However, this does not prevent it from being reliable.

• Bitcoin – the minimum package for BTC mining costs $77 for 2.5 TH/s, and the maximum package costs $5600 for 200 TH/s. The contract is for 9 months, and the daily service fee is $0.099 per TH/s. In this case, the fee is fixed in USD, but is calculated from daily payments in BTC;
• DASH – the minimum package costs $57.50 for 5000 MH/s, and the maximum package costs $4750 for 500,000 MH/s. The contract is for 2 years, and the commission is $0.00001 per MH/s per day;
• Ethereum – the minimum tariff is $525 for 25 MH/s, and the maximum is $6650 for 350 MH/s. The contract is also for 2 years, and the commission per MH/s per day is $0.004.

Tariffs for Genesis-Mining // Source: www.genesis-mining.ru

• Litecoin – the minimum tariff is $28 for 2 MH/s, and the maximum is $2400 for 200 MH/s. The advantage is that there is no service fee and the contract is for 2 years;
• Monero – the minimum contract is $830 for 1000 H/s, and the maximum is $7200 for 9000 H/s. By renting equipment for mining this coin, the client has the opportunity to receive payments in Zcash, DASH and other altcoins using the auto-distribution function. There is also no service fee. Contract duration is 2 years;
• Zcash – the minimum tariff costs $530 for 200 H/s, and the maximum is $7650 for 3000 H/s. Since the coin is mined using the Equihash algorithm, the client can receive payout in BTC, ETH and other coins. There is no commission and the contract is valid for 2 years.

Based on user reviews, Genesis Mining cannot be called the most profitable. Commissions play a significant role in this, as does the state of the market as a whole. But the company has been operating for a long time and has established itself as a reliable supplier of capacity.

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We recommend Genesis Mining review

Stay away from cloud mining, with some exceptions

So, ASICs are unprofitable and mining on video cards is a little bit profitable, but what about cloud services? Briefly, cloud mining is the best way to lose your money, and in some cases, not to receive income even due to the growth of the exchange rate.

Firstly, these are various groupbuys (in Russian 'sharing')

.., when users on a forum or in a chat send money to someone in order to purchase expensive devices for mining cryptocurrencies, in the hope of receiving income as a percentage of investments.
This makes sense, since it makes sense to engage in mining in large volumes (I remind you, for example, 1 kW/h of energy expenditure for mining based on video cards will bring an income of only about 52 thousand rubles per year, with an equipment cost of ~300 thousand rubles / kW without taking into account the risk of equipment breakdowns, etc., it is possible many times more if you speculate a little, although the risks of a depreciation will be added), and it is impossible/inconvenient to keep large capacities at home, but purchasing premises is expensive. But when the amount of equipment increases, the costs of premises become escalating, plus those who are collecting money for hardware may already have this place available at a favorable price or for free.

Secondly, the development of group buy into a full-fledged business

.., a web service with a personal account and automatic payments, large capacities and premises, a legal entity to solve problems with customs, etc.
In this case, the service collects money by pre-order in the same way, otherwise the idea is the same, just on a different scale.

Thirdly, further development until the pre-order phase is eliminated

If in the previous case, the acquisition of equipment occurs simultaneously with the appearance of new clients, then in this case, clients buy capacity directly from the service, which independently makes a decision and orders new equipment with its own money, and also mines for itself if there are not enough clients.

Fourthly - another step in development, the opportunity to sell capacity

.., new clients or the service itself.
In my opinion, this is the most interesting way to generate income for cloud mining clients. This makes it possible to speculate in contracts and, if there is liquidity, sell all purchased contracts before they become unprofitable. In fact, this is a simplification of the real life cycle of mining equipment - you buy it, keep it for a while and then sell it to the next buyer at a reduced price, only in the case of cloud mining, the equipment does not actually move anywhere and everything happens quickly and without extra costs. Often, such a service offers options for both purchasing pre-ordered capacity and purchasing newly purchased capacity. In the future, users themselves set their own prices on the market (the first example from Google is Chinese oxbtc, which has been operating in the cloud mining market for 3 years).

Fifthly - multipool, an intermediary for the capacity exchange - nicehash

If we consider cloud mining, nicehash is a unique service.
Instead of purchasing mining equipment yourself, we offer a service for buying and selling capacity between clients. nicehash itself acts as a regular pool for miners selling their power, and buyers have the opportunity to purchase contracts for the selected power on the classic exchange, which will be available immediately or during a specified period, and nicehash itself acts as a guarantor of power delivery, in case of refusal by the miners produce the required power, unspent payment will be returned. I do not advertise this service in any way, and although I already wrote about it in a previous article, I continue to insist on my opinion - using their pool for mining cryptocurrencies is noticeably less profitable than using other pools and selling the mined money yourself, but it is very convenient, because everything happens automatically.

So, where are the profits, or rather losses?

• The cloud service itself wants to eat, no one will work for free!
  Usually this is a service fee as a percentage of the mined coins, but sometimes there is no direct fee and it is hidden in the inflated cost of electricity. An excellent example was recently observed in a chat; a user showed a screenshot of the personal account of some cloud service, where the number of mined coins was shown and the maintenance costs were so high that the final profit decreased tens of times. And we remember that mining income is on the verge of energy costs, which at best is 30% of income.
• Favorable contract prices, if available, are available in a very short period of time. In order to catch such a moment, you will have to sacrifice or take risks, for example, keeping the required balance in the service account. And we remember that any service in the crypto-economy is not regulated, and protection from the state may not be expected, which means the chance of losing your investments is not illusory.
• A more or less noticeable income that you can really get from indirect services of the service - referral links, dice games or free coin distribution, which for me are exclusively a way to attract new users, controlled by the owners of the service, which means at the right time all your bets will lose . I don’t know a single person who would earn significant amounts of money from referral links, but in theory it is possible.
• The only real benefit I have seen from purchasing mining power from nicehash is the promotion of a new mining pool, when by investing sums in purchasing power and directing it to this pool (nicehash gives this opportunity), you can increase its power during periods of failure, returning almost all costs back (but it still results in a small expense if you repeat this constantly, since nicehash eats its percentage one way or another).

Scammers

At one time, a huge number of new cloud mining services ultimately turn out to be scammers who do not actually acquire any capacity and pay income to old clients through a Ponzi scheme - from new clients.
Or they can simply run away without making a single payment (the first groupbuys often turned out to be like this). Now this has become less, I believe because the market for cloud mining offers is very saturated, it is simply very difficult to find new clients. Plus, as I already said, Bitcoin mining, when purchasing equipment at the manufacturer’s price, is on the verge of payback per year, and since cloud mining cannot obtain devices cheaper (if it is not the manufacturer itself), then scammers can, without deceiving anyone, simply pay clients their investments as if they were actually mining, and at the end of the contracts, keep the difference for themselves. It doesn't look like a scam - but clients are going to lose money anyway, so why bother.

You can cheat the service, as I wrote above, perhaps by manipulating the cost of service, making it very high. High cost of electricity, inflated cost of purchased capacity, early closure of the contract as 'not profitable' (most services do not offer endless mining, but only until it is unprofitable plus a little time) as well as manipulation of the internal market for trading capacity between clients .

How to protect yourself from deception

First, before you transfer money to cloud mining services, make sure that they are what they say they are and not virtual trading of numbers on the site.
To do this, the service must publish information about miners, their capacities, as well as the blocks mined by the service pool. This does not protect against fraud, but usually complete scammers cannot provide such information, almost all pools of mined cryptocurrency blocks are known in one way or another, and you can simply check if the fraudster is not slipping in statistics that are not his own. Secondly, the service must clearly indicate the cost of the capacity being sold. No abstract contracts for a fixed price in fiat currency. Strictly - cost T/G/Mhash. Moreover, it is advisable to indicate exactly what kind of equipment is used and what its characteristics are.

Third, very clear and unambiguously interpretable costs. The cost and costs of electricity for the purchased capacity (how much a kilowatt costs and how many kilowatts the contract consumes), the availability and method of collecting commissions (before or after subtracting electricity costs).

Fourth, there are clear deadlines for completing the contract, usually a fixed period (one to three years) and a condition for closure as soon as energy costs exceed income (for example, the cryptocurrency exchange rate has dropped significantly).

No cloud service can promise you a guaranteed income; it depends on a bunch of conditions that are beyond your control. It is good practice to inform clients about this. But, you can show the history of income from previous contracts, and the fact that I have not found a single service that shows this (nicehash draws a history for the last month at most, something but not enough) proves that mining is not profitable.

Conduct income calculations yourself. Take the history of changes in difficulty over the past year, for Bitcoin this is a completely predictable value, the growth rate has been constant for the last three years, approximately 13%-15% per month, plug the same growth into the calculator or calculate it yourself, at least monthly income, At least everything calculators allow you to set your own complexity if they do not know how to take into account its growth. Count in the cryptocurrency you mine (or use Bitcoin), but it is clear that if you have an altcoin, then its uncertain exchange rate (again in Bitcoin) will also introduce noticeable risks.

Calculate energy costs according to a pessimistic scenario, at the lowest rate considered by the majority, read at least a little about technical cost analysis or ask others. You must understand that the current rate for selling capacity on the internal exchange will be very different from the future, be prepared to use automatic means for selling (bots) since manually you may not have time to do this when you find that mining is no longer profitable - you are on this the stock exchange is not alone.

And also, carefully think about whether the risks are worth the meager income that you suddenly receive.

Cloud mining without investment

Cloud mining without investment
In theory, mining cryptocurrencies through cloud mining does not always require investment. Some sites offer new users a small amount of computing power for free and without investment to test the service before investing in it.

True, serious companies now rarely resort to this practice.

Typically, such offers can be found on sites that only masquerade as cloud mining services, but in fact are ordinary hype, luring gullible customers with the help of free “samples”.

Fakes in free cloud mining
On such a web resource, you can try to earn some minimum while it continues to function and make payments. True, in most cases it turns out that in order to withdraw funds you need to make a real deposit, which not everyone is lucky enough to get back.

Of all the verified companies, only BitDeer currently has the option of receiving free test access for a short period. When registering a new account on the site, the user receives 1 TH/s free of charge for 3 days.

Of course, you won’t be able to earn a lot from this, but it will be enough to get acquainted with the process of cloud mining. To withdraw the profit of several tens of cents obtained in this way, you will have to purchase one of the tariff packages available on the site and wait until your account balance increases to the minimum withdrawal limit.

As a result, cloud mining without investment is more suitable for testing services than for real earnings on the Internet.

Entry under permit sign

In fact, mining is not prohibited in Russia. As Pavel Patrikeev, head of the legal department of the hosting provider reg.ru, notes, the current Federal Law “On Digital Financial Assets” dated July 31, 2020 (259-FZ), which currently regulates the circulation of bitcoins in the Russian Federation, does not define this concept at all, and, accordingly, does not prohibit this type of activity.

“If a person pays taxes in accordance with the law - and digital assets are recognized as property and personal income tax is paid on profits from the sale of cryptocurrency - and does not use cryptocurrency in a prohibited manner - for example, as a means of payment - then he does not violate the law during direct mining,” says Patrikeev.

As for the “gray” schemes involving connecting farms to household networks, miners obviously save costs on electricity and try to increase mining capacity using the cheapest and most accessible means possible, resorting to not entirely legal schemes.

The legal way, explains the head of the Comino company, Evgeny Vlasov, is to use the services of data centers that install IT equipment capable of mining, rendering video, and so on. At the same time, mining itself cannot be prohibited under any circumstances, since this will have a negative impact on the entire economic chain: miners, along with data centers, will move to more friendly countries, the income of energy generating companies will fall, and even more “gray” schemes will appear.

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Photo: Global Look Press/EIBNER/DROFITSCH

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Why are investors buying a token that has fallen to zero?

— Now there are many blockchains, and in one it is necessary to create transactions, in another - subtokens. In Europe, everything is simple - you get electricity, and for it you provide IT services to a certain extent, pay taxes and create jobs. This is the only true path,” says Vlasov.

Moreover, according to the expert, in Russia electricity is an industry that generates surplus, and mining generates income for energy companies. The wisest approach, in his opinion, is to monetize one’s resources and develop digital business in the country.

There is a lot of experience in successful interaction between the crypto industry and the state in the world, says managing partner of GMT Legal Andrey Tugarin, so there are options for establishing it in Russia. Among these countries is Kazakhstan, which legalized mining by law dated June 25, 2020. After its adoption, various regulations appeared regulating certain aspects of mining, which allowed the country to take second place in the world in the Cambridge University ranking in terms of the amount of computing power used for Bitcoin mining.

— Russia ranks third in the same ranking. Thus, the Russian legislator should study the experience of other countries and form their own position regarding various aspects related to mining activities, which will meet the interests of miners, the state and society as a whole, says Tugarin.

Small time: Ethereum rate could reach $6 thousand by the end of the year

Why the demand for altcoins has increased sharply and which of them will continue to rise in price

Pavel Patrikeev from reg.ru, in turn, appeals to the experience of Switzerland and Iceland, as well as Malta, where the law on virtual financial assets was adopted back in 2018.

Be careful, SCAM!

Scam in cloud mining
Below is a list of services for cloud mining of cryptocurrencies, which for one reason or another stopped paying clients money, and in some cases did not do so in the first place.

Table of cloud mining scams Table of SCAM services for cloud mining

Ethereum Cloud Mining

Ethereum mining
During the general market downtrend of 2018, the price of Ethereum constantly decreased, which is why cloud mining of this cryptocurrency lost its popularity. However, in 2022, against the backdrop of a recovery in the exchange rate, interest in its production resumed. Now among altcoins this direction is one of the most popular, as evidenced by the frequent lack of free equipment for ETH mining on most large sites.

Ethereum mining by cloud mining is possible through services that have tariffs that support the Ethash hashing algorithm. There are quite a lot of such suppliers, but, of course, you should only buy computing power from the most reliable ones:

• HashFlare - tariff for a year at a price of $1.4 per 100 KH/s (the final price depends on the user-selected hashrate);
• Genesis Mining - contracts for 2 years, minimum for 25 MH/s for $525, maximum for 350 MH/s for $6650;
• IQ Mining - packages for 2 and 5 years, as well as an option with lifetime rental of equipment; cost from $0.45 to $0.75 per 0.1 MH/s depending on the size of the contract;
• BitDeer - tariffs of 300 MH/s for 120, 180, 240 and 360 days; price 1 MH/s - from $0.0138 to $0.0104 per day.

The first two services do not currently have free contracts for Ethereum cloud mining. IQ Mining has all available options available. BitDeer only has 240 and 360 days left.

Considering the current Ethereum rate, the profit from cloud mining, for example through IQ Mining, on average will cover the cost of purchasing a 2-year contract for 300 MH/s ($1845) in about a year. That is, at the end of this tariff, the initially invested funds will increase by 2 times. In this case, daily payments will range from $3.8 to $4.7.

For other sites, according to user reviews, payback occurs in 8–12 months. Considering that the Ethereum rate may rise during this time, there is a chance of a significant increase in the final profitability.

"Church of the Holy Beat"

A striking case demonstrating the life of illegal mining in Russia occurred recently in Smolensk, where the local prosecutor’s office organized an inspection at the local state sports university and discovered a working mining farm. According to preliminary estimates, the damage to the educational institution, which had been paying for electricity for the machines all this time, amounted to more than 5 million rubles.

When the attacker is found, local courts will probably benefit from the experience of their Irkutsk colleagues, where they have been successfully working with claims against illegal miners for many years, regardless of which person is in the dock - an individual or a legal entity. Thus, in August of this year, the judicial panel for civil cases of the Eighth Court of Cassation upheld the decision of the Leninsky District Court of Irkutsk dated September 14 last year, which obliged one of the local residents to pay Irkutskenergosbyt almost 1.7 million rubles for the electricity that “ate” his mining farm.

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Photo: IZVESTIA/Alexey Mayshev

This is how it mines: energy consumption in Russia may increase 2.5 times due to crypto miners

What risks did business see for supplying citizens with electricity?

In 2018, the local arbitration court rejected the claim of the Church of Evangelical Christians “Grace” for compensation of 1.1 million rubles, which the organization paid to the same sales company after the latter, having identified signs of mining, transferred the company to another category of payers - Before that, according to the agreement, the tariff “consumers equal to the population, located in an urban settlement” was applied to it.

For Irkutsk, the problem of illegal miners is becoming more and more urgent every year: in a conversation with Izvestia, Irkutskenergo press secretary Evgenia Romanova said that since the beginning of this year alone, the company has identified 1,100 such violations, filed 85 lawsuits in court for 73.3 million rubles and has already won nine cases.

In a comment to Izvestia, Maxima Legal’s head of intellectual property and information law practice, Maxim Ali, said that in the latter case, the court’s decision looks like the energy sector did not have any particular difficulties in collecting evidence. Therefore, in order to facilitate judicial practice in such cases, there is no point in making any changes to the existing legislation.

— Strictly speaking, such cases have little relation to the legislation on digital assets. As we see from this case, “ordinary” legislation was quite enough to resolve the dispute, says Ali.

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Photo: RIA Novosti/Vladimir Astapkovich

According to the expert, difficulties could arise if someone created fake, obviously insolvent legal entities - then Irkutskenergosbyt would hardly be able to defend its interests without the help of law enforcement agencies.

CEO of the Bitnalog service Dmitry Machikhin, in turn, noted that although the legal system in Russia is not based on case law, it is still necessary to form such judicial practice, since de facto court decisions still have weight for making subsequent court decisions, although This is not legally established.

On the verge of a breakthrough: Bitcoin may update its record at the beginning of 2022

Why did the cryptocurrency fall in price by $15 thousand in one day and what will determine the future forecast?

— The role of judicial practice is especially important when there is insufficient legislative regulation of a certain industry. If there are no exact laws, then judges begin to formulate legal regulation on these issues; decisions of the Supreme Court of the Russian Federation are especially important precedents in such cases,” says Machikhin. — This is completely applicable to the cryptocurrency sphere.

Cloud mining of bitcoins

Bitcoin mining
Equipment that works with the SHA-256 hashing algorithm, on which Bitcoin mining is based, is present in almost all cloud mining services. Additionally, there are sites that only support Bitcoin. For example, this is Hashing24, where a 2-year rental contract for 53,000 GH/s (the power of the Antminer S17 ASIC) will now cost $3,625.

For other proven services, where Bitcoin is only one of the assets available for cloud mining, the tariffs for similar capacities will be slightly different:

• Genesis Mining - $2300 in 18 months
• HashFlare - $3180 per year;
• BitDeer - $1900 for an annual package;
• IQ Mining - $1944 for 2 years or $1202 for a 12 month contract.

Among the listed services, only HashFlare currently does not have available contracts for renting capacity for Bitcoin mining, while BitDeer has sold out all tariffs by 80–97%.

Given the current rate and complexity of the Bitcoin network, the payback of cloud mining on average occurs in six months. And only on HashFlare this can take up to 12 months, given the initially high cost of computing power compared to other companies.

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You can read more about cloud mining of Bitcoin in our detailed article.

Reviews about cloud mining

Reviews about cloud mining
Judging by user reviews, cloud mining is becoming attractive again in 2019-2020. Profits now, of course, are not as sky-high as in 2017, but there are also no losses, as there were last year. But this is if we talk about those who interact with real long-proven leaders in this field - Genesis Mining, HashFlare and IQ Mining.

If you read the reviews of users who are clearly careless about choosing projects for cloud mining of cryptocurrencies, they often become victims of scam hypes, of which, as before, there are many now appearing.

The list of fraudulent cloud mining services is posted above.

Some, after such an experience, do not even believe that there are real cloud mining providers.

User reviews about cloud mining services

Those who were lucky enough to receive payments from at least some of the tested projects remain dissatisfied with the need for a long wait before making a profit, forgetting that the situation is exactly the same with classical mining. More experienced users advise studying little-known companies before entrusting them with your money.

Reviews of cloud mining services

In general, as of 2022, nothing has changed in this industry. There are both many fraudulent projects and real cloud mining services that deservedly enjoy the trust of grateful users.

Positive review about the cloud mining service IQ Mining

The only alarming thing is that some of the reviews about industry leaders are far from positive - they are accused of blocking accounts, lack of payments, or simply cursed without specifying the reason for the indignation.

Reading them, one involuntarily thinks that even established companies do not always play fair. Although it may well be that this is slander ordered by competitors.