Power Mining Pool | What a Crypto Mining Scam Looks Like
The crypto world is rife with parasitic schemes and opportunistic swindlers, whether it’s Power Mining Pool today or Bitconnect yesterday. It’s the right time for them, and there’s money to be made.
Bitcoin mining scams are one of the most difficult to spot among the threats, and separating the good from the bad can be difficult. Bitcoin mining is already a technically challenging undertaking, so mining scams are a natural fit. They are marketed as a user-friendly way to gain exposure to Bitcoin mining, and when used in this manner, they bring considerable value to investors wishing to diversify.
Do you want to learn about cryptocurrency, blockchain, and mining but aren’t sure where to start? You don’t want to waste your money on courses that aren’t going to teach you anything?
Legitimate Bitcoin cloud mining pools are frequently hidden in search results and outranked by hordes of shady businesses. Finding legitimate pools is a difficult task that necessitates going through Reddit threads and Bitcointalk forum postings.
Having said that, there are legitimate mining enterprises operating. While usual, conduct your own research and maintain skepticism as we settle and develop this uncharted territory. For the time being, let’s look at what a crypto mining scam looks like in order to better prepare ourselves to see the crucial red signals.
What’s a Cloud Mining Pool?
A cloud mining pool is the most hands-off way to mine cryptocurrency. They enable a participant to rent or lease hashing power that they do not directly own. After then, the hired hashing power is pooled and distributed proportionately among the members (after fees and operational costs).
Instead, in a typical mining pool, members must provide their own hashing power and pool it with other miners. The participant is responsible for their own hardware and contributes to the total hashing power of the pool.
The ownership of the gear is the key distinction between a cloud mining pool and a typical mining pool.
Cloud mining: you don’t own the hardware (hashing power).
Traditional mining: you own hardware (hashing power).
Do you want to learn about cryptocurrency, blockchain, and mining but aren’t sure where to start? You don’t want to waste your money on courses that aren’t going to teach you anything?
Why pool at all? In short, block rewards become more difficult to obtain as overall hashing power of a particular blockchain increase.
Take Bitcoin as an example. There was a time in Bitcoin mining when a standard CPU could mine whole blocks itself. Gone are those days. Bitcoin mining is now big business with plenty of stakeholders leveraging their resources into the security of the blockchain.
Miners with serious hashing power make it improbable for small miners to reasonably expect block rewards. Their hashing power is just not enough to compete.
The solution: gather together all these smaller players and pool their hashing power. Miners in a pool no longer compete for blocks of their own, instead, they work together and proportionally share the booty.
Power Mining Pool: A Case Study for Cloud Mining Ponzi Schemes
Power Mining Pool was a typical Bitcoin mining pool Ponzi scheme and even included a multi-level marketing (MLM) styled referral system. Looking back it is a lot easier now to see the red flags that were present then. Hindsight is twenty-twenty.
Red Flag #1 Power Mining Pool didn’t have a public mining address and didn’t allow for mining outside their own pool.
Red Flag #2 No endorsement or sign of approval from hardware suppliers. Nothing to be found on Reddit, Telegram, BitcoinTalk, and so on.
Red Flag #3 A serious lack of informative images. An archive of the Power Mining Pool shows a website riddled with stock images and vague copywriting. In addition to the generic images, there is a video that provides no additional insight into the company.
Red Flag #4 No limits to how much you can invest. Power Mining Pool sold hashing power in the form of shares, which any investor could purchase without limit. Shares would not only be your claim to the guaranteed returns but also provide you with more ability to climb the ranks of the MLM reward system.
Red Flag #5 From Associate to President Millionaire, members could climb the ranks by both acquiring new shares in the pool and successfully referring new members. At each new rank in membership, you received bonuses and higher returns. For you to move up in ranks, however, your referrals also needed to move up. Not only do you need to bring in new successful members, but your referrals do too. Sound familiar?
Red Flag #6 The founders of Power Mining Pool are brothers and live in central Europe. And that’s all the information available. Searching their names, Andrew and Mike Conti, is about as helpful as the caricatures of themselves on their about page. Additionally, a WHOIS search of the company’s domain shows the admin contacts hidden behind a domain name privacy service.
Red Flag #7 After the cease and desist, Power Mining Pool has up and left with members’ principal investments. Initially, there were accounts of members receiving their daily mining profits as promised. However, it’s common for early adopters of Ponzi schemes to see earnings while their principal investments are siphoned off.
Red Flag #8 “Every share you purchase will earn you €70.” That’s a promise plucked directly from the former subpage subtly titled opportunities. Each share costs members €50 which means Power Mining Pool is guaranteeing 40 percent returns.
Power Mining Pool is only one example of a Bitcoin cloud mining service riddled with red flags and warning signs. In fact, there are breadcrumbs of evidence linking Power Mining Pool to other operational Bitcoin cloud mining scams. Battling these schemes is a game of whack-a-mole: closing down one just creates three more.
Do you want to learn about cryptocurrency, blockchain, and mining but aren’t sure where to start? You don’t want to waste your money on courses that aren’t going to teach you anything?
Conclusion
Just because red flags are present doesn’t always mean you have identified a scam. They are early warning signs and alarms telling us to look a little deeper, investigate further, and remain skeptical. Questions and suspicions are not inherently dangerous themselves but ignoring them is.
Power Mining Pool was peppered with reasons to raise concern and seek clarity. It is just one example in a long line of Bitcoin cloud mining Ponzi schemes. BitClub Network, HashOcean, Coinmulitplier Club, MinersLab, and Bitcoin Cloud Services are just a handful of other examples.
Unscrupulous operators are swindling and cheating people out of their money. If you see reasons to be concerned, then share it with the community, ask the operators for clarity, and be cautious. Don’t keep it a secret.
