Identifying Cryptocurrency Mining Scams

Identifying cryptocurrency mining scams

New industries on the market come with various scams, so Bitcoin and Ethereum are no exceptions to this rule. It goes from scam coins to mining rigs and contracts where a variety of methods to steal your hard earned money is present.

For example, when choosing a particular mining company, you should check if that company’s Bitcoin mining contract appears in some reputable lists of trusted services or other mining platforms. When it comes to the equipment, rules are pretty much the same. If the equipment is not tested yet, or there’s no sufficient evidence of its existence, or maybe a decent track record of the mining company, the equipment will probably be not listed on the most reputable mining services. Forums can be also a good idea to see other people’s experiences, but there’s always a risk that an amount of posts are made by scam users who wish to send potential users to their own websites.

Here’s the list of things you should be aware of. Scammers usually have these problems:

– The domain name is not registered to a real user but it’s hidden instead
– Companies avoid showing proof of their equipment when they’re asked
– Companies are registered in some of the famous world capitals, but their directors are usually foreign nationals, coming from some countries where identity requirements can be easily faked
– Some of them set aside some funds and use funds from clients to make payouts in order to show respectability and honesty, hoping that it will generate more clients. They show you the verifiable Bitcoin address from which the payments are being done, but one day, that address suddenly disappears
– Some of them advertise by making videos of fake representatives and offices, without the proof of equipment

 Avoiding the Ponzi Scheme scams

When investing funds, you will come across some investments that promise some particular market returns. You should be cautious when dealing with these brokers because many clients became victims of a Ponzi Scheme. Thanks to this scheme, many investors lost tens of billions of dollars in last two centuries.

The thing about Ponzi Scheme is that fraudsters usually promise some incredibly reliable returns, which they do, but just for a while. Instead of investing the funds in something, these scammers use client’s funds to pay obligations to some their old promised returns. As there’s not enough money to sustain this system, it usually collapses at some point, leaving people empty-pocketed.

Ponzi Scheme in cryptocurrency world

 The major concern today is the promotion of the Ponzi Scheme using digital currencies, such as Bitcoins. In this case, money from new investors is usually used to pay those who joined the investment in early stages. The operation slowly grows to unsustainable levels which cause the imminent collapse.

Here are some of the ways to protect yourself from scams:

Being very cautious

If someone offers you a huge and immediate return with little or no risk, it probably includes some kind of fraud. There was a case of Bernie Madoff who provided clients with 1% return per month for 10 years before everything collapsed. So, be very cautious about the returns that are being generated by something you never heard of.

Be aware of unsolicited offers

It happens that investors get suddenly invited by the unknown person to attend an investment seminar, which probably means trouble.


See if the investment is verified

Ponzi Schemes often offer unverified investments, so it is smart to ask the person who offers it if the investment is verified and to ask why it is not verified if it’s the case.

Get to know the investment

If you don’t fully understand the investment, try to understand how it works from the start to the end, or simply avoid it. There are many online resources which can help you understand how to invest and how to evaluate opportunities for risk and gain.

Most common sources of cryptocurrency scams

 To give you an idea how it usually works, here are some of the most common things that you can come across:

Malware downloads

 There’s a number of fake Bitcoin wallets that contain some malware downloads. It often happens by clicking an URL posted on the social media page. Fake Bitcoin surveys are also a source of malware distribution.

Bitcoin phishing

Bitcoin phishing impersonators are largely present on the social media. Phishing websites offer search service to users who need to enter their private Bitcoin key to see if it’s in their database. Once they entered, the private key is immediately being compromised.


People often get caught in this trap, because they’re offered with an instant exchange of bitcoins for money after they pay an initial startup fee. Potential investors are being told that would get a double return, but Bitcoins are actually stolen immediately.

Bitcoin pyramid scams

Even though these scams are harder to recognize than flipping-scams, the result is the same. Users give a low initial fee and try to multiply it by bringing new users using referral links. When there are enough users in the database, scammers just go away and the “pyramid” collapses, leaving the people empty handed.


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