Want to find the best Bitcoin cloud mining contracts? This post has you covered. Just know ahead of time - the truth about cloud mining in the year 2022 isn’t pretty.
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: 99.9% of cloud mining companies are scams.
If really want to mine Bitcoins, you should read out set up your own mining operation or become part of a colocation mining operation. You can learn how to do both of those on our Bitcoin Mining Guide.
➤ MORE: Bitcoin mining profit calculator
We can’t recommend any cloud mining companies at this time. The closest thing to cloud mining that is not a scam is something called “colocation mining”.
We cover colocation mining in-depth on our Bitcoin Mining Guide.
Note: If you do find a legitimate one, you’ll need a wallet to receive payouts to. A secure hardware wallet like the Ledger Nano X is a good option.
➤ MORE: Bitcoin mining pools & sites
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 find a legitimate cloud mining operation and you are making profit, you will very likely need to pay taxes on that profit. The best way to determine the taxes you owe is to use a crypto tax software.
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 set up, 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.
Two of the most famous cloud mining companies have already been exposed as scams: HashOcean and Bitcoin Cloud Services.
Even as recently as October 2021, cloud mining scams are stealing people’s money. The SEC equivalent of the Philippines even issued a warning to customers of Mining City to get out now and have told promoters of the company that they could go to jail for up to 21 years if they don’t stop immediately.
Cloud mining scams are not a thing of the past. They very much so still happen today, so be vigilant or, better yet, just avoid them.
If you believe you have found a legitimate cloud mining company, you can really make sure by putting it through the following test.
If any of these red flags are present, we recommend proceeding with caution.
NOTE: the following are taken largely from Puppet’s Cloud Mining 101 reddit post, which is a great supplement to this post.
➤ MORE: Bitcoin mining machines & hardware
If you have purchased options for the right to some amount of hashing power, there is no reason why you shouldn’t be able to direct that hashing power to any pool that you want.
If this is not an option, it is very likely that the hashing power does not exist at all.
There are only a handful of ASIC manufacturers who could service a large scale mining operation with hardware. Any cloud mining operation would not only allow an ASIC manufacturer to disclose a large ASIC purchase, but they’d also want them to do so to prove they are serious. So far, Bitdeer is the only cloud mining operation we are aware of has has an ASIC manufacturer acknowledge they are selling hardware to them.
Cloud mining operations that offer affiliate bonuses are very suspect, especially when they are offering numbers as high as 10%. Bitcoin mining is very competitive and has incredibly thin margins. There would be no way to mine profitably if they were paying not only you, but also the person who referred you.
If there is no way to the know the identity of the cloud mining operation, there is no way to hold them accountable if they run with the money.
If, for instance, Jack Dorsey or Elon Musk was an investor/founder of a cloud mining operation (and they were public about it in a verifiable way), it would speak volumes about the legitimacy of the operation because they are so wealthy and so public that they would have too much to lose by scamming a few thousand people out of a few Bitcoins.
WARNING: Just because a cloud mining website boasts a famous person as an investor or advisor does not mean that person is actually investing or advising.
Anyone can throw up a picture of Elon Musk on their site. The real proof is if Elon Musk himself says in a news clip that he is a founder.
Investments should never be a one-way transaction. If you can easily give the cloud miner money, but there is no obvious way to sell your position and get it back, then that is a good indication you will never get your money back.
Any investment that guarantees profits is a scam. If the cloud miner has so far made good on delivering its guarantees, it is because they are using funds from new investors to pay off old ones and appear solvent. Ponzi schemes work this way. Eventually, they are going to run with the money, but you never know when it will happen.
The other point to consider is: if a miner could guarantee profits, why would they sell that right to you? Why wouldn’t they take the guaranteed profits for themselves?
If the amount of shares for sale in the cloud mining operation appear infinite, then they are definitely running a scam. No miner has an unlimited amount of hashing power. If they did, they could just 51% attack the network of their choosing.
➤ MORE: Is bitcoin mining profitable in 2022?
Most cloud mining companies accept Bitcoin, PayPal, and credit cards. Be wary of cloud miners accepting bitcoin since bitcoin is exactly what the cloud miner is making in the first place.
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!
Cloud mining means a host company owns Bitcoin mining hardware and runs it at a professional mining facility.
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.
At least…that’s how it works in theory.
In most cases, though, there is no mining facility or hardware. There is just a guy taking your money and paying part of it to someone who signed up before you did. Eventually he runs away with the money, and you are left with nothing.
There have been viruses that land on computers and then use the computers’ power to mine bitcoins.
This is particularly common with Monero since it is ASIC resistant and can be mined with GPUs.
Run a malware detector on your computer if you think you may have come under attack.
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.
If you just want bitcoins, don’t bother with cloud mining. Just find an exchange in your country and buy some bitcoins.