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The information space is saturated with terabytes of information about bitcoin, altcoins, blockchain, as technologies that are about to change the global financial system beyond recognition. The covers of glossy magazines are full of pictures of newly minted millionaires who have made their fortune on cryptocurrency transactions. But is everything so simple in this business, especially for beginners?
Cryptocurrencies will definitely be an upward trend of the twenty-first century for a long time to come, and a huge number of investors and startups will become millionaires in this market. Cloud mining services are one of the available ways for ordinary users to start mining bitcoin or ethereum without investing in equipment. The scheme of this business is quite simple: the company buys mining facilities, starts mining cryptocurrencies and attracts investors to scale the business.
Thus, an ordinary person can invest a certain amount of money by buying a certain share in the company's facilities (sometimes it can be from 10 USD), the person receives his initially agreed profit from mining minus the company's commission. If the whole process is built transparently and without deception, both sides receive their profits. The company, in turn, receives an influx of investments to expand its business.
Risk of fraud
The attractiveness of this scheme attracted many crooks to the market, who, having collected investors' money, safely disappeared with all investments. The search page Google gives dozens of little-known pages that offer this service. And the real companies in this sector can be counted on the fingers.
The problem is that it is almost very difficult to determine how many ASICs (mining devices) a campaign has, where they are actually located, and whether it is possible to legally protect the interests of investors. Therefore, cloud mining is a mixture of real investments, gambling, and trust in a startup.
More or less reliable cloud mining can be selected by reading the information on serious forums that value their reputation.
Market volatility danger
Even if the company is 100 % alive and has been on the market for a long time, there is an audit—the investor may lose the expected profit with sharp and prolonged adjustments in the value of the crypt. For example, the prolonged drop in bitcoin prices in 2018 led to the fact that the profit received from mining could not cover investments in equipment; in which case both the company and the investor suffer losses, up to the bankruptcy of the company and the loss of depositors' funds.
Key takeaways for newcomers
- Cloud mining is not a “loot” button, but just one of the tools, and a high–risk one at that!
- If the desire to become a contributor to such a business model is still strong, it is advisable not to invest credit funds, and only the amount that is not critical to lose.
All of the above does not devalue the cloud mining model at all, but it aims to protect the investor from rash actions and reduce the risk of losing funds. This market is dynamic and does not stand still, and knowledge is a very good advisor and a guarantee of success.