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Bitcoin Cloud Mining
Want to find the best Bitcoin cloud mining contracts? This post has you covered.
Most Bitcoin Cloud Mining Companies are Scams
Like the heading says, most cloud mining contracts are scams. Why?
Because it’s easy for companies to take peoples’ money, and then not pay out. A company can claim to be a cloud mining company without any proof of actually owning any hardware.
So remember: 99% of cloud mining companies are scams.
Mining is not the fastest way to buy bitcoins.
Which Companies Are Not Scams?
We can’t recommend any cloud mining companies at this time.
Note: If you do find one, you’ll need a wallet to receive payouts to. A secure hardware wallet like the Ledger Nano X is a good option.
Is Cloud Mining Profitable?
It depends what your goals are with cloud mining. If your goal is to obtain bitcoins, then there is really no reason to cloud mine or even mine at all.
You will get more bitcoins for your buck if you just buy bitcoins!
If you think mining is cool and want to try, then cloud mining still is not a good option. Grab a cheap USB miner and run it at home.
VPNs for Mining
As a Bitcoin miner, you may also want to look into getting a VPN.
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You can never have enough security when it comes to bitcoin. Using a VPN adds an extra layer of security.
Bitcoin Cloud Mining Comparison
There is not much to compare, because we personally do not recommend buying any cloud mining contracts so we will not spend the time to compare the two companies above.
But check back in to see if we find any new, legit cloud mining companies.
Bitcoin Cloud Mining Scams History
The reason there are so many cloud mining scams is because it is very easy for anyone in the world to setup a website.
Once the website is setup it can claim that the company has a large mining facility.
The company can act legit by sending initial payments to its customers. But after that it can just keep the already received payments for hash power and then make no further payments.
In just the last few months, two cloud mining scams were uncovered: HashOcean and Bitcoin Cloud Services.
What Payment Methods do Cloud Mining Companies Accept?
Most cloud mining companies accept Bitcoin, PayPal, and credit cards. If a cloud mining company accepts bitcoins then there is a good chance it is a scam.
This is because Bitcoin payments cannot be reversed. Once the scam company receives your bitcoin payment you have no way to get your coins back.
Are there Free Cloud Mining Trials?
No company would give away free cloud mining; this is basically giving away free money.
Any company offering free trials, especially if they require payment information, is most likely a scam.
Mining or buying bitcoins? You can’t do either without a Bitcoin wallet.
Our guide on the best bitcoin wallets will help you pick one. Read it here!
How does Bitcoin Cloud Mining Work?
Cloud mining means a host company owns Bitcoin mining hardware and runs it at a warehouse.
You pay the company and rent out some of the hardware. Based on the amount of hash power you rent, you will earn a share of payments from the cloud mining company for any revenue generated by the hash power you purchased.
Cloud Mining Viruses
There have been viruses that land on computers and then use the computers’ power to mine bitcoins.
Run a malware detector on your computer if you think you may have come under attack.
Is Mining Software the Same as Cloud Mining?
Mining software is something you download on your computer. It is required when you OWN mining hardware. Software connects your hardware to the internet so that it can make hashes and communicate with the network.
Just buy Bitcoins!
If you just want bitcoins, don’t bother with cloud mining. Just find an exchange in your country and buy some bitcoins.
Best Bitcoin Mining Software
Best Bitcoin Mining Hardware
Best Bitcoin Mining Pools
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Beware of These 5 Bitcoin Scams
Bitcoin’s meteoric rise in prices in 2020 awakened mainstream interest in the original cryptocurrency. But the rise in interest has not been without consequences. One of the downsides of new investors entering the market is the increase in the number of scams, frauds, and stories of retail investors who lose their coins to shady ventures. From ICO scandals to wallet theft and fraud, regular consumers can fall prey to crime easily.
It may seem as though it’s the Wild West for investors, but it doesn’t have to be. While there are certainly risks in the market, the opportunities may be irresistible for some. However, being cautious is always a must, and there are clear signs of scams that investors can look for. By avoiding these traps, users can better their chances of success and protect their investments. These are some of the most common scams and how they can be avoided.
- Bitcoin investors can increase their odds for success by identifying common scams, such as Ponzi schemes, fake ICOs, and fraudulent exchanges.
- One common scam, exposing bitcoin users to theft, is the sale of a hardware wallet with a compromised pre-configured seed phrase, which allows hackers to steal funds.
- Since bitcoin exchanges are unregulated, fraudulent exchanges can trap investors with the promise of unrealistic prices and heavy discounts on use.
- Websites featuring fake ICOs instruct users to deposit funds into a compromised wallet through their site, resulting in the theft of funds.
Hardware Wallet Theft
For users who are concerned with security and privacy, a hardware wallet—a physical device that stores their private keys—is an increasingly popular option. Usually, as small as keychain USB drives, these wallets offer an offline way to help crypto investors protect their bitcoin even further. However, there have been reports that some of them have built-in vulnerabilities that open them to hackers that could easily steal all a user’s holdings.
This is far from the only issue, however. According to Ofir Beigel, the owner of 99Bitcoins.com:
One scam entails selling hardware wallets to users with a ‘pre-configured’ seed phrase hidden under a scratch card. The new user is told that he should scratch the card . and set up the wallet with the compromised seed.
This creates a backdoor that allows hackers to drain funds once a wallet is activated. These scams are becoming more common, but they can easily be avoided by only accepting wallets from trusted sources.
Despite their decentralized nature, most cryptocurrencies are still bought and sold at exchanges. While this makes it easier to find the coins investors desire, there is still no regulatory body overseeing these exchanges in many countries. Thus, many investors have been left penniless when the exchanges they signed up for turn out to be traps. In December of 2020, several South Korean exchanges were exposed, leading to promises of stiffer regulations by the country’s authorities.
These scams are not hard to spot but can be costly if not avoided. One of the biggest red flags is the promise of unrealistic prices. Exchanges that promise heavy discounts on bitcoin use this strategy to lure in unsuspecting victims.
Additionally, users can check exchanges’ URLs. Web addresses should always begin with HTTPS, a sign that traffic is encrypted. Visiting unsecured websites is a bad idea, but alert investors can avoid losing thousands by looking for the right signs.
One of the best results of the cryptocurrency boom has been the rise of the initial coin offering as a way for companies to raise capital. With thousands of new blockchain-based companies entering the market with unique ideas and exciting projects, users can now back their favorite businesses easily. However, this massive explosion of ICO opportunities has inevitably raised the specter of fraud.
There are several ways scammers can separate investors from their bitcoin. One popular method involves creating fake websites that resemble ICOs and instructing users to deposit coins into a compromised wallet. Other times, it’s the ICOs that are at fault.
Centra Tech, for example, a blockchain venture backed by several celebrities, has been sued in the US. The company stands accused of portraying fake team members, misleading investors, and lying about their products. The best way to avoid these scams is close research that involves picking apart the white paper, reviewing the team behind the venture, key board members, and investors. Before making any investment, it’s vital to learn as much about the company as possible to avoid any unpleasant surprises.
Cloud Mining Schemes
Mining is the only way to extract new bitcoins without buying or exchanging them, but it has become an incredibly resource-intensive activity. Due to the unique way new coins are mined, it takes massive amounts of processing power and electricity, and thus money, to mine a coin. However, many companies now offer regular users the ability to rent some server space to mine coins for a set rate.
Some companies offer “lifetime contracts” that keep costs the same and supposedly offer outstanding returns. However, as the difficulty of mining increases, the same investment will return smaller amounts each time. Moreover, some companies make bold claims regarding their returns without being transparent about the true costs and diminishing returns. Others operate Ponzi schemes that can lead to massive losses. It’s vital to look into opportunities and understand the risks and costs associated with mining before investing.
Even in the digital spheres, many multilevel marketing schemes have emerged that offer naïve investors excellent “opportunities” for progressively larger sums of bitcoin. MLMs, as they’re known, are predicated on offering quick returns, but involve taking more money for the promise of even higher profits.
One major company that has been repeatedly outed is OneCoin, whose owners were implicated in several other shady operations. The company offered investors massive earnings, as well as luxury goods and perks for paying more.
However, there is little information on the company outside of its site, and users have left scathing reviews online. It’s important to pay attention to a company’s fine print and ensure that their claims are feasible and real. Avoiding these scams early can protect investors’ wallets.
With the current craze, being vigilant and doing one’s due diligence are a must before investing in bitcoin. The market is also showing signs of maturity, leading to better transparency and clearer rules. Regardless, a smart investor’s first step should always be careful research to ensure their investments are winners.
Fraud Risk Assessment: BX Mining
- BX Mining
- Reviewed by: Digiconomist
BX Mining (bx-mining.com) was launched in October 2020 providing Bitcoin cloud mining services from Canada. It is largely a copy of another scam valled Sea Mining. The website of the latter service redirects to BX Mining, proving they are related. The company’s legitimacy has been evaluated based on the items listed below. Every individual item has been checked for the presence of obvious red flags or warning signals. If these are present, an explanation detailing what triggered them has been included. A detailed description of the reasons to evaluate each of the included items can be found below the table.
|Total Flags: 16 (3 Warnings = 1 Flag)|
|Phantom Riches||The website advertises a get-rich-quick scheme that will produce free money in just 1-3 months.|
|Source Credibility||BX Mining tries to establish itself as a globally operating cloud mining company, run by “a diverse group of Mining Experts, Engineers, Entrepreneurs and Investors”. The opening dates of the locations, however, make little sense. The UK office is said to be “Coming by December 2020”. The BX Mining website wasn’t created until October 2020 (see Registration Details). A business registration in the UK cannot be found either.|
|Reciprocity||Users can get 1 KH/s up to 750 KH/s for free upon signing up.|
|Guaranteed Return||Investments are guaranteed for the first 15 days.|
|High Return / Low Risk||BX Mining states that an investment could be earned back completely in just three months. This comes down to an unrealistic and unsustainable rate of return of well over 20% per month.|
|Overly Consistent, Positive Returns||Returns may vary, but they are always strongly positive.|
|Downplaying Risks||The website adds a false sense of safety by claiming contracts start to be profitable “within 1-3 months”. It even adds the word “Guarantee!!” to that, even though that statement is weakened later on.|
|Public Mining Address||No|
|Pictures of Mining Equipment||None|
|Secretive or Complex Equipment||Users buy KH/s lacking any significant description of underlying equipment. At best, the website only mentions 2 mining farms supposedly exist.|
|Website Registration Details||BX-mining.com was registered October 29 2020. It is the successor of sea-mining.com, which still redirects to bx-mining.com.|
|Website Design||BX Mining is a typical lazy scam, with most of the content copied from its predecessor Sea Mining.|
|Grammar on Website||Even linguistic errors have been copied from Sea Mining (see Website Design)|
|Payments Options||Bitcoin only|
|Service Disruptions & Unbusinesslike Conduct||BX Mining is evidently linked to Sea Mining, which was nothing but an ordinary Ponzi scheme.|
|Contact Information||The address is included in the FAQ, but a telephone number is not provided.|
|Verified Address||The given address is:
142 Traders Blvd E, Unit# 42, Mississauga, ON L4Z 2E5
This address could not confirmed. The website registration details have been hidden (whois privacy protection), and also the business registration could not be verified (see Business registration). The address is, at least, also very popular for scams, as the Nexus Miner scam used to be “located” on the same business centre. Also Sea Mining used the same address.
|Verified Owner||The owner could not be determined due to a lack of information. The website registration details have been hidden (whois privacy protection).|
|Business Registration||Despite the given address a registration could not be confirmed. Ontario’s company register isn’t publicly accessible.|
Note that items with a warning instead of a flag indicate that these could occur at a legitimate company. For example, legitimate companies will normally try to persuade you into buying their products. Multiple warnings will, however, still trigger a flag. A description for the listed items is provided below. This list is meant to assist with identifying obvious scams, and therefore does not provide any guarantees that a company is truly legitimate.
The most common tactic used by fraudsters is called “phantom riches”. By dangling the prospect of wealth such as “big payoffs”, the scam artist tries to get you to stop thinking logically.
Using the fear of missing out, fraudsters create a false sense of urgency with statements such as “last chance” or “only so few available”. This causes people to agree hastily, before even having the opportunity to think about what they’re doing.
Persuasion is more likely when the source presents itself as being credible, expert and trustworthy. Common tactics used by scammers to make themselves look legitimate include using fake websites or hacked emails and pretending to be someone they are not. Alternatively, sources can also be external with claims such as “Warren Buffet has already invested in this”.
Fraudsters take advantage of herd behavior by creating the illusion of consensus or social proof that the investment is legitimate with claims that “everybody is already doing it”, or referral programs in which members encourage their friends and associates to invest as well. This automatically triggers something in the head that says: “if everybody [or someone from the inner circle] wants it, it must be good”.
A business is likely to receive far more of our trust when it provides a lot of free value, because of the rule of reciprocity which causes us to tend to feel obligated to return favors after people do favors for us
All investments carry some degree of risk, so a guaranteed profit is a clear red flag. A valid question would be why an organization would try to sell such a scheme instead of using it to get rich themselves.
High Return / Low Risk
Like a guaranteed return, a high return / low risk investment opportunity also defies the common risk-return relationship. The best advice is an old one: “if it sounds too good to be true, it probably is”.
Overly Consistent, Positive Returns
Cryptocurrency markets are among the most volatile markets, hence the performance of any related product or service is also expected to fluctuate.
External Risk Insurance
The fraudster may present some external risk insurance for the investment in order to add to its credibility. In reality, insurance is only seldom acquired and guarantees typically lack substance. Dummy companies are often used to act as the guarantor or insurer.
Public Mining Address
A cloud mining company must have a public cryptocurrency address in order to participate in the mining process. There is no reason for a legitimate company not to disclose this.
Pictures of Mining Equipment
Cloud Mining companies should be able to provide some pictures of the products they are selling besides any textual descriptions.
Secretive or Complex Equipment
Even in the world of cryptocurrencies one should be skeptical about special competitive advantages without any proper disclosure, or when the information is incomprehensible or incomplete. Too often only the positive elements are accentuated.
Considering the importance of domains and websites in the internet age, there is almost no reason for a legit company not to have one.
Website Registration Details
Very few scam websites survive longer than one year, so domains are generally registered for just one year unless otherwise required for the specific domain. For the same reason, websites created less than one year ago should be considered suspicious.
Amateurish, cluttered and disorganized websites can point to a scam as many scam sites use text and images from legit websites and other sources which may not work together very well.
Grammar on Website
Many scammers have limited English proficiency.
Even though cryptocurrency payment options are logical for a cryptocurrency company, it is also very convenient for scammers as the recipient essentially remains anonymous. The same goes for services such as Western Union and Moneygram. Hence a lack of alternative payment options should still be considered a warning signal.
Service Disruptions & Unbusinesslike Conduct
Especially Ponzi scheme promotors will encourage participants to “roll over” their investment. These schemes are not very fond of investors cashing out, which may lead to difficulties receiving payments and a non-responsive or difficult to reach customer service.
Legitimate companies have very little reason not to list their contact information.
First, you should never hand your hard-earned money over without knowing where it is going. Second, you should do a background check to avoid handing it to a known scammer. Be weary of people without an online identity. Scammers will typically try to hide their identity or conceal their true identity to avoid being easily discovered.
Audits certainly do not root out every instance of fraud, but auditors do have a responsibility to detect errors or fraud in the company’s financial statements.
Adapted from ADMMR Circular 59, Mining Scams (1995) by Michael N. Greeley
“A time-honored method to bilk the public of millions of dollars is the ubiquitous mining swindle. Since an unusually rich ore deposit, or bonanza, has historically produced enormous profits for the developer, many of us believe that we too, like the ’49ers’, can strike it rich.”
Money can be made in mining but we have a responsibility to urge the public to exercise prudence in its investment. Too many people have lost their hard-earned savings on an ill-advised mineral scheme. Archives are full of outrageous examples of mining scams and swindles in which the only beneficiary was a glib entrepreneur with unbounded optimism. In most cases, he disappeared before his investors realized what happened.
When making an investment in any mineral enterprise, there are a number of factors or key features to consider. A checklist of significant considerations follows.
Prerequisite to the investment in the development of a mineral deposit is legal access to the resource. The potential investor should know who ultimately owns or administers the subject mineral property and commodity. The property may be controlled by the State, Federal Government, Indian tribe, or a private individual or organization. Moreover, jurisdiction over the land surface may be separate from the jurisdiction of the underlying mineral resource. Where ownership or control of the mineral rights is severed from the surface rights, obvious legal problems can arise.
If a mining claim or prospecting permit for minerals is not legitimate, the money invested is wasted from the beginning. In addition, the investor should understand basic differences between leasable and locatable minerals and lode and placer deposits. These classifications determine the type of mining agreement and/or claim established on the resource. Very specific requirements must be met and procedures followed to gain the right to develop a mineral deposit. Furthermore, encumbrances against the deposit, though legal, may be detrimental to its development.
Typical examples of cloudy or illegal title to a mineral deposit include oversized claims, inappropriate claim designation and improper filing, failure to perform annual assessment or to file affidavits of labor, or location of claims on a privately held mineral estate. The investor should establish exactly what rights he has to the property in question and what conditions are imposed before he spends one penny on exploration or development.
Sampling and Assaying
Perhaps the next major consideration in evaluating a mineral investment is the sample and assay data. One sample does not make a mine. A person who brings a rock that contains two ounces of gold per ton, to an investor, may be carrying the entire mine in his hand. One such high-grade ore specimen is not representative of the deposit. Many samples, commonly numbering in the thousands, are required to give a reasonably accurate measure of the tenor, or quality, and tonnage of the ore.
Depending on the configuration and geologic setting of a mineral deposit, there are recommended scientific procedures to follow and methods to use to properly sample the mineralization. The investor should be satisfied that the samples referred to by the mine promoter were collected specifically from the property of interest and also that they were collected in a proper way. The sampling method should be adequately described and each sample site precisely located, preferably on a map.
It is important not to forget the practice of deliberately salting, or adulterating, samples. Ingenious ways have been devised to fraudulently enhance the grade of samples either before or after they are collected, regardless of the method of collection. The temptation to salt is particularly appealing when dealing with a mineral of high unit-value such as diamond or gold.
Once collected the samples must be properly prepared and assayed. In general, the final sample preparation and assay should be done by qualified laboratories. Assayers registered in Arizona are generally familiar with different types of ore and are knowledgeable about the proper method to test for particular metals or other components.
All ores are amenable to rigid testing and comments to the effect that the ore is unassayable are simple not true. Statements belittling the methods of registered assayers, complaining for example that they never report all the gold, are immediately suspect. Modern copying devices also make it a rather simple procedure to later falsify the assayer’s report. If there is any question, of course, the sample pulps (unused prepared portion) may be sent to another lab for comparison.
Spectrographic analyses do not provide an accurate test of mineral samples. This type of analysis, though relatively inexpensive and useful in providing a list of components in a sample, does not yield a reliable, quantitative measure of tenor. Often a billion- or trillion-dollar “ore body” is created by simply multiplying the generalized amount of each of the metals listed in a spectrographic analysis by their current market price. An ore body, however, is not that simple. At this time, there is no commercially acceptable process known whereby each element can be recovered from a deposit.
A degree of skepticism should also be reserved for ores said to contain uncommon metals or minerals. Because of their rarity, these substances may command a very high price and are therefore extremely attractive to the investor. The platinum-group metals including platinum, palladium, rhodium, ruthenium, iridium, and osmium, are the darlings of the swindler. Considering their high unit-value, even minute amounts of these metals appear to be a reasonably good bet to the innocent investor.
The problem here is usually the grade or tonnage, or a combination of both. The amount of platinum, for example, is generally too low to realistically consider extraction, or the tonnage is almost limited to a hand specimen. As a primary ore, platinum has never been mined in Arizona; its only production has come from trace amounts recovered in the final stage of refining copper ores. The geologic environment of Arizona, diverse as it is, does not encourage the search for platinum-group metals, graphite, cobalt, nickel, bauxite, diamonds, and a number of other commodities.
As plans are drawn to mine an ore deposit, proposals are made which frequently are misinformed and ill-advised. There are innumerable examples of deep shafts and long adits driven to nowhere. Many of these openings have been cut at great expense and with little or no evidence to suggest they would meet success.
An example of a mining scheme which can be described at best as ignorant was recently sold to a number of investors in the Chemehuevis Placer District, near Lake Havasu City, Arizona. The plan called for an investor to purchase a plot of ground 60 x 120 feet in size from which 8,000 cubic yards of unconsolidated gold-bearing gravel would be dug and treated. In order to recover 8,000 cubic yards of gravel from this plot, the excavation would require vertical walls, 30 feet deep!
Since loose gravel cannot be mined at a slope exceeding its natural angle of repose, approximately 45 degrees, the maximum amount of material that an investor could ideally and safely expect to obtain from an isolated parcel is about 62 percent of the total, or 5,000 cubic yards. No attempt was made to explain to the purchaser that, in this case, after an investment of $50,000 he would actually get less than two-thirds of what he paid for. This scenario illustrates one catch to a sales promotion involving fractional interests in a mineral property. The entire land package, comprised of all individually- owned parcels, must be mined together to insure each investor’s return.
An interesting twist to this story is the statement made later by the developer that only 40 percent of the aggregate was gold-bearing. Consequently the investor was now entitled to 20,000 cubic yards of gravel (to yield 8,000 cubic yards of gold-bearing material) from his plot. Since 5,000 yards was the maximum he could physically dig, this is truly adding insult to injury.
There is a tendency among many of us to want to build. We want others to see our accomplishments. To some degree this attitude explains why a mine tunnel is begun with little justification.
The same propensity for building might explain why a mineral processing mill is erected or a leaching facility is frequently constructed without any obvious sign of ore. Another reason these engineering marvels are installed is due to their impressiveness. The humming, turning, grinding, and screeching of equipment and the smoke and odors of a mine plant are exciting to the potential investor. He sees industry in action – his money at work – and profits just around the corner.
Unfortunately, however, he is commonly one of a multitude who has emptied his pockets for a pipe dream. With a paltry amount of ore stockpiled, a dump laden with debris, or an old mine map showing the “lost” ore body, the developer spends the last dime of every investor getting ready to treat the mineral-rich rock. The $500,000 mill, designed to treat 500 tons per day, mills nothing, and the dreams of many become a nightmare.
Even when good ore exists, the treatment facility is often poorly designed. Frequently its component parts are improperly matched or not sized adequately. Materials handling procedures are commonly cumbersome and energy intensive. An adequate supply of water may be lacking. Hazardous operating conditions may be present. These circumstances are a few costly examples that can shut a plant down abruptly.
The recovery process is in many cases a mystery to the investor. Technological methods vary according to the metal or mineral recovered. In addition there are many variants based on the size of the mineral component, its gangue association, its state of chemical alteration, the hardness and specific gravity of the ore, permeability of the ore, and a myriad of other factors.
The milling and metallurgical treatment of ores is comprised of both physical and chemical means of beneficiation. These processes though technically sound and well understood by the professional are frequently vague and confusing to the lay person. An investor not familiar with basic physical-chemical laws is easily misled.
Proprietary methods utilizing secret chemicals and “black box” techniques, therefore, are often praised as technological breakthroughs. According to the developer, these so-called miraculous inventions will convert formerly worthless rock to metal-rich ore or improve, manyfold, the recovery of a metal or other commodity that heretofore had been difficult to extract. One should exercise caution when evaluating such claims.
Developers often speak of 100 percent recovery. Complete extraction, however, of most constituents is essentially unknown over the long term. At the turn of the century a mining firm in Ajo built a giant retort into which ores were to be shoveled and melted. Spigots were tapped into the vessel at various locations and labeled copper, lead, zinc, gold, silver, etc. All the investor had to do, after he had helped finance the operation, was turn the spigot for the metal he desired. Understandably the entire operation fizzled.
In many cases difficult technical problems are oversimplified. The ill- informed investor is merely asked to retain faith in the management and to perhaps ante a bit more so that this “minor problem” can be speedily resolved.
Permitting and Reports
A host of other factors should be evaluated by the prospective investor before spending money on a mine or a beneficiation plant. Proper permitting must be obtained at various stages of development from local, state, and federal authorities. In addition to routine reports required by certain government agencies, internal reports generated for management and for the investors should be factual, accurate, and timely.
Security and Safety
On-site security should be adequate to protect expensive equipment and supplies as well as the mine or plant product. Of course appropriate security measures must be taken also whenever the product, especially a high-value material such as bullion, is transported from the treatment facility. Acceptable safety procedures must be implemented and must be adhered to rigidly from the start to finish of any operation. Even after termination of operations, it is imperative that hazardous materials be properly disposed of and unsafe conditions, such as open shafts, be resolved.
Proposed or actual marketing of the mine or mill product should be reviewed thoroughly by the investor. There may be assessed charges for further treatment of the product. There may be by-product credits returned to the miner. The investor should also be aware of the involvement of any intermediate sales agents and their remuneration.
Another obvious consideration is the distribution of profits. What liens, including ownership royalties, loan payments, and rental fees, must be deducted from the gross to determine the net profit? Are estimates of operating expenses and pro-forma statements realistic? The investor should be satisfied with the form of payment whether it is in cash, stock, or in-kind.
Like other high-risk investments, mine and mineral developments are often subjected to careful scrutiny by the Internal Revenue Service. Beware of accelerated tax write-offs. Such an advantage was one of the attractions in the Chemehuevis Placer scam referred to earlier. Supposedly the investor would receive a $50,000 write-off on his tax statement the first year of his investment by merely paying an advance of $10,000 and signing a promissory note for an additional $40,000. (The prospectus projected within four years a net income, based on gold production, of $139,000.)
In this particular case, the courts apparently upheld an IRS ruling disallowing the tax deduction. Reportedly the original developers of this program, some $3 million richer, are now unavailable.
Sequence of Development
In every mineral development there is a logical sequence of events with which the enthusiastic, yet uninitiated, investor may be unfamiliar. Each project can be broken into phases, the completion of which can be evaluated before expending large sums of additional funds. There is no legitimate reason for throwing good money after bad. Classic examples exist which have expensive land being purchased on the basis of someone else’s assays or a costly mill being constructed without proven ore.
Engineering reports are useful tools that will assist the mine developer and investor. Decisions to pursue a project into the next stage, and in a particular manner, will be made easier and more logically after consultation with the appropriate professional engineer, whether a geologist, mining engineer, or metallurgist. Other professional assistance such as financial and legal is generally warranted.
Bitcoin Scam Site Warning – Hashminers
It appears yet another cloud mining scam has appeared on the bitcoin scene. To be more specific, Hashminers likes to position itself as a cloud mining company, even though it has all of the traits of a HYIP Ponzi scheme. With users earning hourly returns, it is evident Hashminers will not be around for that long. Do not invest in this company if you want to keep money safe.
Hashminers Is Not Mining Nor Investing
It is evident from the Hashminers website this company has no legitimate plans whatsoever. Even though the company sounds like it is a mining operation, their hourly investment return scheme has all of the traits of a HYIP. A company claiming to offer fixed daily – or hourly – returns need to be avoided, as they will eventually run off with your money. Hashminers will not be different in this regard.
What is even more strange is how Hashminers claims all deposits will be valid for the lifetime of users’ accounts. Considering investors can earn between 3.12% and 7.68% every day, they stand to gain a lot of money from this company, assuming they survive long enough. Then again, the minimum investment amount for this Ponzi scheme is 0.001 Bitcoin, which may sway some people’s mind to give them a try.
As one would expect from such a shady company, there is no evidence of how they intend to make money on behalf of investors. Even their FAQ doesn’t mention their actual business activity, other than vaguely referring to being a “representative of the international computer technology market”. To put this into perspective, investors are not dealing with a company, nor with any business operations. It is evident someone wants to scam users and take their bitcoins, there is not much more to it.
Moreover, Hashminers has been yet another bitcoin Ponzi scheme registered in the United Kingdom. Anyone who has been keeping tabs on our coverage of scam sites may have noticed a lot of these companies present a document showing they are an official UK business. Never be fooled by these tricks, as it is very inexpensive to obtain such a document. They have no value in terms of validating any claims made by a company offering bitcoin investment opportunity.
The statistics found on the website should be ignored as well. Hashminers claims to have 1,958 active users who invested 42 Bitcoin. That is rather surprising for a company that has only launched earlier this week. Moreover, it would also indicate most of their users are only investing very small amounts. However, once no new money comes in, it is doubtful they will continue paying out.
No one will be surprised to learn the WHOIS information for this domain has been obscured. Even though Hashminers lists their company address on the website, they prefer to keep the details hidden from anyone looking up their domain name in the WHOIS database. Another validation the company’s address has nothing to do with Hashminers. Stay away from this company or you will end up losing money rather quickly.
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