Roughly ix months ago, Bitcoin Foundation Chief Scientist Gavin Andresen made a rather interesting comment on Reddit inward which he claimed, “I suspect many [cloud mining companies] volition plough out to endure Ponzi schemes.”
There select been a few cloud mining scams uncovered over the yesteryear twelvemonth or two, in addition to it appears that about other i could unravel inward the close future. An anonymous rootage has provided information to Bitcoin Magazine regarding the possibility of a scam involving Bitcoin Cloud Services (BCS), which is currently i of the largest cloud-mining providers on the market.
Founded yesteryear a known scammer amongst Photoshop
One of the mutual attributes of a Ponzi system inward the Bitcoin the world is a reliance on anonymous owners. BTC Cloud Services LTD is registered to Gabriel Kleiman in addition to Esteban Amador Soto Martinez.
While the showtime advert does non convey upwardly whatever identifying information online, the minute advert is associated amongst about other bitcoin-related scam, bitcoincloudhashing.com. This information is available publicly on the bitcointalk forums thank yous to Puppet’s Cloudmining 101 thread, simply it hasn’t stopped an estimated 4,300 users from signing upwardly at Bitcoin Cloud Services.
BCS also claims to endure a silvery fellow member of the Bitcoin Foundation on their website, fifty-fifty though the foundation late dropped the cloud mining fellowship equally a sponsor.
Further, the pictures of a supposed mining facility on the Bitcoin Cloud Services website contain no information most the mining facility or its owners also a unmarried banner hanging inward the background. Compare to the photo below from Genesis Mining showing CEO Marco Streng inward i of the company’s mining farms.
The “company” also released a poorly made video based off the Photoshopped images inward an crusade to convey to a greater extent than legitimacy to their activities:
The supporting bear witness on the blockchain
One of the commutation pieces of information provided yesteryear the anonymous rootage is a spreadsheet compiled via publicly available information on the Bitcoin blockchain. By watching Bitcoin Cloud Services’ payout address, the anonymous rootage was able to guess the discover of customers receiving payouts, along amongst BCS’s profits in addition to losses. BCS seems to select started to locomote at a loss close the terminate of April. How did BCS respond? By offering an extra twelvemonth on their currently available mining contracts.
This offering could endure an endeavour to proceed a Ponzi system going for equally long equally possible. After all, it volition concluding solely equally long equally novel money is coming in. The back-of-the-envelope math based on the spreadsheet indicates that the operators could run off amongst equally much equally 2,500 BTC ($570,000 at electrical flow prices).
If it looks similar a duck…
Going dorsum to Puppet’s Cloud Mining 101 thread, it seems clear that he understands the likelihood that BCS is a Ponzi scheme. The thread lists vii dissimilar criteria that are unremarkably constitute inward a Ponzi scheme, in addition to BCS fits the neb inward 6 out of vii criteria.
The solely examination that BCS seems to select passed is having pictures of their mining facility on their website. Of course, equally Puppet notes inward his thread, “Pictures tin endure faked.” This seems to endure what has happened inward the illustration of Bitcoin Cloud Services.
Puppet currently has BCS listed nether “Likely Ponzi scams that select even then to collapse,” in addition to it’s unclear how long BCS volition endure able to proceed upwardly the charade. Up to this point, Puppet has been right amongst 95 pct of his calls of belike Ponzi schemes.