What Are Crypto Cloud Mining Scams?

As cryptocurrency has flourished, online attackers have developed more sophisticated ways to trick investors and traders into divulging their personal information. This is certainly the case in the cloud mining market. So how do cryptocurrency cloud mining scams work and how can you avoid them?

What is crypto cloud mining?

Some of you may be wondering what cloud mining is. Is it the same as regular crypto mining? Well not exactly. A typical cryptocurrency miner needs a specific piece of hardware to mine coins or tokens. This can be something as simple as a CPU, or a specialized unit like an ASIC miner. In either case, hardware is required to solve mathematical equations, mine coins, and verify transaction blocks.

But not everyone can afford to invest in the necessary hardware for mining. These days, you will generally need a single GPU, GPU rig, or ASIC miner to mine successfully, which can cost a lot of money. this is where Cloud mining comes into play. For those who don’t want to incur large upfront mining costs or those with limited technological knowledge, cloud mining can be a cheaper and easier alternative. but how does it work?

Crypto mining websites are run by people who have access to mining hardware. These are usually farms that can house large amounts of hash power to increase the chances of success. A customer will pay these cloud mining websites a fee to mine for them, which means they can still earn mining rewards without having to run a full node on their own.

But this type of model can be easily exploited by scammers looking to trick users into handing over funds without offering any of the benefits of a legitimate cloud mining service. So how are cryptocurrency cloud mining scams carried out?

What is a cloud mining scam?

When you pay a fee for Netflix, ExpressVPN, or many other types of online services, you’ll be able to access what you’re paying for right away. However, with cloud mining websites, you are paying a fee to get a reward that will come later. Essentially, you are putting your faith in this service for profit.

Because of this, cloud mining sites are often scams. In fact, the vast majority of cloud mining services are run by cybercriminals, making the entire enterprise incredibly risky. Cloud mining scams are now also coming in the form of mobile apps, as scammers look for more ways to reach unsuspecting victims.

When you sign up for a cloud mining site, you will usually have different plans to choose from, all of which differ in price and profitability. You will also usually be able to choose from various mining coin options such as Bitcoin or Ethereum, as well as different minimum hash rates. You will then need to pay for the mining contract of your choice. This payment is what scammers are after.

Mining contracts can vary wildly in price, from about ten dollars to a few thousand. So scammers can make a lot of profit here.

Once the scammer has sufficiently convinced you and made the payment for your mining contract, it is already too late. It may even take days or weeks to realize you’ve been scammed, as it can take a while for the mining rewards to start arriving. In addition to this, if you enter your payment details on a fake cloud mining website, you run the risk of them being stolen and used. This opens up a new element of danger, as you may start to see funds coming out of your bank account without your authorization.

Some cloud mining websites may also be behind your wallet private key. Private keys can be used to access crypto wallets and thus your funds. If a user does not know that a private key must be forever is kept secret, they may not think of handing it over to a cloud mining website when it is stated that the key is needed for them to receive funds.

Obviously, a lot of damage can be done through illegitimate cloud mining websites, but there are ways through which you can spot a fake site and keep your data and funds safe.

How to avoid cloud mining scams

Spotting a suspicious cloud mining site can sometimes be easy. After all, not all scammers are sophisticated, which is why some illegitimate cloud mining sites are riddled with grammatical and spelling errors. These errors can often be an indicator of a fraudulent website, so keep an eye out for lazy typing.

Additionally, some fake cloud mining sites will offer unbelievably high returns in an effort to entice potential customers into handing over their cash. While cloud mining can be profitable, keep in mind that you are splitting your rewards with other clients, so you likely won’t earn large amounts of money on a regular basis through this company. In addition to this, if the site offers instant rewards after signing up, consider it a red flag.

Mining is a long-term gameso the promise of an immediate benefit is often a promise without merit.

You should also do some research on your prospective cloud mining service to see if it owns a mining farm. Secure cloud mining sites will often provide information about their mining operation to prove their legitimacy. However, scam sites sometimes leave out such information or even make up a farm address. Alternatively, the site could use the address of an existing farm. So, if an address is provided, do some research around you to see which company is in charge of the farm, or if the farm exists.

You can also check the age of a given provider’s website domain to see if it has been in business for as long as it claims. Many fraudulent websites will state that they have been in operation for several years to increase their legitimacy in the eyes of victims. So try using a domain age verification website like Duplicate Checker either Small SEO tools to check if a company is as old as it says it is.

Cloud mining scams are everywhere, but they can be spotted

Unfortunately, the cloud mining industry is riddled with cybercriminals, so it can be difficult to avoid scams when looking to try cloud mining. But by staying vigilant and using the tips above, you can remove fake sites and stay safe from malicious parties looking to get your funds and data.